<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 31, 1993)
$100,000,000
Kansas Gas and Electric Company
First Mortgage Bonds, 6.20% Series Due 2006
(Interest payable on January 15 and July 15)
_________
The First Mortgage Bonds, 6.20% Series Due 2006 (the "Offered Bonds")
mature on January 15, 2006 and will not be redeemable prior to maturity.
_________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________
Underwriting
Price to Discounts and Proceeds to
Public* Commissions* Company***
Per Bond 99.900% .675% 99.225%
Total $99,900,000 $675,000 $99,225,000
* The Offered Bonds will bear interest from the date of delivery, and no
accrued interest will be paid on the date of delivery.
** The Company has agreed to indemnify the Underwriters against certain
civil liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
*** Before deducting expenses payable by the Company estimated at $220,000.
_________
The Offered Bonds are being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the Offered Bonds will be ready for
delivery on or about January 20, 1994 in New York, New York, against payment
therefor in New York funds. The Underwriters are:
Dillon, Read & Co. Inc. Salomon Brothers Inc
The date of this Prospectus Supplement is January 12, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_________
USE OF PROCEEDS
The net proceeds from the sale of the Offered Bonds (estimated at $99.0
million) will be used to repay short-term borrowings. Of such short-term
borrowings, $79 million was used to retire, on November 22, 1993, $25 million
principal amount of the Company's First Mortgage Bonds, 7-3/8% Series due 2002
at the redemption price of 102.120% of principal amount, $25 million principal
amount of the Company's First Mortgage Bonds, 8-3/8% Series due 2006 at the
redemption price of 103.470% of principal amount and $25 million principal
amount of the Company's First Mortgage Bonds, 8-1/2% Series due 2007 at the
redemption price of 104.210% of principal amount, in each case together with
interest accrued to the redemption date. The balance of such proceeds will be
used to repay other short-term indebtedness of the Company, which had a
weighted average rate of 3.63% on January 12, 1994, and to pay issuance
expenses.
ADDITIONAL INFORMATION
The following information replaces the last two sentences of the second
paragraph under "The Company -- The Merger" in the accompanying Prospectus.
Under an order issued by the State Corporation Commission of the State of
Kansas, the Company must be combined with Western Resources by January 1, 1995
unless good cause is shown for not doing so. In connection with a requested
ruling that a merger of the Company into Western Resources would not adversely
affect the tax structure of the transaction by which the Company was acquired,
the Company has received a response from the Internal Revenue Service that the
IRS would not issue the requested ruling. In light of the IRS response, the
Company has decided to withdraw its request for a ruling.
The Company will consider alternative forms of combination or seek
regulatory approvals to waive the requirements for a combination. There is no
certainty as to whether a combination will occur or as to the form or timing
thereof.
S-2
CERTAIN FINANCIAL INFORMATION
The following summary of certain financial information of the Company is
qualified in its entirety by the information appearing in the Prospectus to
which this Prospectus Supplement relates and the information and financial
statements appearing in the documents incorporated by reference in the
Prospectus, including the discussion of the Merger in Note 1 of the Notes to
Financial Statements included in the Company's Form 10-K for the year ended
December 31, 1992. See "The Company -- The Merger" in the Prospectus.
Capitalization Summary
September 30, 1993
(unaudited)
(Dollars in thousands)
First Mortgage Bonds $ 660,978 34.7%
Other Long-Term Debt (excluding current maturities) 13,747 0.7
Common Stock Equity(1) 1,231,986 64.6
Total Capitalization $1,906,711 100.0%
Short-Term Debt (including current maturities of
long-term debt) $ 62,233 --
___________
(1) Includes $490 million reflecting the acquisition premium attributable to
the acquisition of Old KG&E by Western Resources.
Income Summary
Pro Forma
1993 1992
12 Months Ended
September 30,
(unaudited)
(Dollars in thousands)
Operating Revenues $607,958 $564,176
Operating Income 150,475 112,745
Income Before Interest Charges 172,554 121,835
Net Income 109,939 51,161
The pro forma information for the twelve-month period ended September 30,
1992 gives effect to the Merger as if it had occurred on October 1, 1991 and
was derived by combining the historical information of Old KG&E for the
six-month period ended March 31, 1992 with that of KG&E for the six-month
period ended September 30, 1992. No purchase accounting adjustments were made
for the period prior to the Merger in determining pro forma amounts because
such adjustments would be immaterial. This pro forma information is not
necessarily indicative of the results of operations that would have occurred
had the Merger been consummated on October 1, 1991, nor is it necessarily
indicative of future operating results or financial position.
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges for each of the periods indicated
is as follows:
Pro Forma
1992 1991 1990 1989 1988
Predecessor
Year Ended December 31,
1.89 1.59 1.71 1.48 1.84
The pro forma ratio shown above for the year ended December 31, 1992
combines the results of operations of Old KG&E for the three months ended
March 31, 1992 with those of the Company for the nine months ended December 31,
1992. The ratio of earnings to fixed charges of the Company for the 12 months
ended September 30, 1993, without giving effect to the issuance of the Offered
Bonds, was 2.58.
S-3
DESCRIPTION OF THE OFFERED BONDS
The Offered Bonds are to be issued under and secured by the Mortgage and
Deed of Trust, dated as of April 1, 1940 (the "Original Indenture"), between
the Company and Guaranty Trust Company of New York (now Morgan Guaranty Trust
Company of New York, the "Corporate Trustee") and Henry A. Theis (W.A. Spooner,
successor), as Trustees, as supplemented and amended by thirty-six supplemental
indentures and as to be supplemented and amended by the Thirty-Seventh
Supplemental Indenture to be dated as of January 15, 1994 (the Original
Indenture as so supplemented and amended being herein called the "Mortgage").
Under the net earnings test described in the Prospectus, the Company
could have issued approximately $1.11 billion principal amount of additional
Bonds based on the results for the 12 months ended September 30, 1993 (6.20%
interest rate assumed and after the issuance of the Offered Bonds and the
application of the net proceeds therefrom as described under "Use of
Proceeds"). As of September 30, 1993, unfunded net property additions totaled
approximately $1.23 billion. These unfunded property additions were sufficient
to permit the issuance of approximately $864 million of additional Bonds, under
the provisions of the Mortgage summarized in the Prospectus. See "Description
of New Bonds -- Issuance of Additional Bonds" in the Prospectus.
The following description of the particular terms of the Offered Bonds
supplements the description of the general terms and provisions of the Bonds
issued and to be issued under the Mortgage set forth in the Prospectus under
"Description of New Bonds."
General
The Offered Bonds will be limited to an aggregate principal amount of $100
million and are to mature January 15, 2006. Interest at the rate set forth on
the cover hereof is payable semiannually on January 15 and July 15 in each
year, commencing July 15, 1994, and (subject to certain exceptions provided in
the Mortgage) is payable at the office of the Corporate Trustee in New York
City to the persons in whose names the Offered Bonds are registered at the
close of business on the tenth day prior to the interest payment date or, at
the option of the Company, may be paid by checks mailed to such persons at
their registered addresses. Interest payable on July 15, 1994 will accrue from
the date the Offered Bonds are first issued. Principal of the Offered Bonds is
to be payable at the agency of the Company mentioned above.
The obligations of KG&E under the Bonds will not be obligations of, be
guaranteed by, or be secured by the assets of Western Resources. In the event
that the Company is combined with Western Resources, Western Resources may be
required to assume such obligations, but such obligations will not be secured
by any assets of Western Resources and the security for the Bonds will continue
to be as described under the heading "Descriptions of New Bonds -- Security" in
the Prospectus. See "The Company -- The Merger" in the Prospectus.
Redemption Provisions
The Offered Bonds are not redeemable prior to maturity.
Other Provisions
The supplemental indentures relating to the Offered Bonds and any
subsequently issued Bonds will reserve the right of the Company to amend the
Mortgage without the consent of holders of the Offered Bonds (or subsequently
issued Bonds) to provide that after any combination of the Company in which the
Company survives (i) bonds could continue to be issued under a mortgage having
a prior lien, and (ii) the Company could issue additional Bonds based on
property additions attributable to property subject to a prior lien. Such
provisions are intended to allow the Company to maintain existing financing
flexibility in the event the Company is the surviving entity of any combination
with another company, such as a merger with Western Resources.
S-4
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement,
Dillon, Read & Co. Inc. and Salomon Brothers Inc (the "Underwriters") have
severally agreed to purchase from the Company the principal amounts of Offered
Bonds set forth opposite their names. The nature of the Underwriters'
obligation is such that they are severally committed to purchase and pay for
all of the Offered Bonds if any are purchased.
Principal Amount of
Underwriter Offered Bonds
Dillon, Read & Co. Inc. . . . . . . . . . . . $50,000,000
Salomon Brothers Inc . . . . . . . . . . . . 50,000,000
Total . . . . . . . . . . . . . . . . . $100,000,000
The Underwriters have advised the Company that the Offered Bonds will
initially be offered to the public by the Underwriters at the public offering
price set forth on the cover hereof under "Price to Public," and to certain
dealers at such price less a concession of .400% of the principal amount of the
Offered Bonds. The Underwriters may allow, and such dealers may reallow, a
concession not exceeding .250% of the principal amount of the Offered Bonds, on
sales to certain other dealers. After the initial public offering, the offering
price, the concession and the reallowance may be changed by the Underwriters.
The offering of the Offered Bonds is made for delivery when, as and if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the Offered Bonds.
The Company has agreed in the Purchase Agreement to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments made or required to be
made by the Underwriters with respect to such liabilities.
Dillon, Read & Co. Inc. and Salomon Brothers Inc have rendered certain
financial advisory and other related services to the Company.
The Company does not intend to apply for the listing of the Offered Bonds
on any national securities exchange. The Company has been advised by the
Underwriters that they intend to make a market in the Offered Bonds. The
Underwriters are under no obligation to do so and may discontinue, at any time
and without notice, any such market making in which they may engage. The
Company cannot predict the liquidity of any trading market for the Offered
Bonds.
S-5<PAGE>
PROSPECTUS
Kansas Gas and Electric Company
First Mortgage Bonds
_________________
Kansas Gas and Electric Company (the "Company") intends, from time to
time, to issue up to $150,000,000 aggregate principal amount of its First
Mortgage Bonds (the "New Bonds"), in one or more series, on terms to be
determined at the time or times of sale. For each offering of New Bonds for
which this Prospectus is being delivered (the "Offered Bonds"), there will be
an accompanying Prospectus Supplement (the "Prospectus Supplement") that sets
forth the series designation, aggregate principal amount, maturity or
maturities, rate or rates, and the payment of interest, redemption terms, any
sinking fund terms, and any other special terms of the Offered Bonds. The New
Bonds will be offered as set forth under "Plan of Distribution."
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August 31, 1993.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, information statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at certain of its Regional Offices at Seven World Trade Center, 13th Floor,
New York, N.Y. 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Il. 60661. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549.
On March 31, 1992, Kansas Gas and Electric Company (the "Predecessor" or
"Old KG&E") was acquired by a wholly owned subsidiary of Western Resources,
Inc., formerly The Kansas Power and Light Company ("Western Resources"). See
"The Company The Merger." As used in this Prospectus, the term "KG&E" or
the "Company" refers to Kansas Gas and Electric Company both prior and
subsequent to the acquisition, except as otherwise indicated.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents filed with the Commission (File No. 1-7324) pursuant to the
1934 Act:
1. KG&E's Annual Report on Form 10-K for the year ended December 31,
1992, as amended May 20, 1993 (the "1992 Form 10-K").
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993 and June 30, 1993.
3. KG&E's Current Reports on Form 8-K dated February 24, 1993 and March
8, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of this offering shall also be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
(including any beneficial owner) to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any
or all documents referred to above which have been or may be incorporated by
reference in this Prospectus other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents). The
Company will furnish to holders of securities offered hereby, upon the written
or oral request of any such holder, annual reports containing consolidated
financial statements audited by an independent public accounting firm and
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial information. Requests for such copies should be directed
to Richard D. Terrill, Esq., Secretary, Treasurer and General Counsel, Kansas
Gas and Electric Company, c/o Western Resources, Inc., 818 Kansas Avenue,
Topeka, Kansas 66612, (913) 575-6322.
2<PAGE>
THE COMPANY
General
The Company, a Kansas corporation, is an electric utility which generates,
transmits, distributes and sells electricity in the southeastern quarter of the
State of Kansas, including the Wichita metropolitan area. At December 31,
1992, electric service was being provided to 265,000 retail customers and to 27
communities and one rural electric cooperative. The Company has contracts for
the sale, purchase or exchange of electricity with other utilities at
wholesale. Its system net generating capacity in 1992 was 2,458 megawatts
("MW"). In 1992, approximately 50%, 45% and 5% of the Company's electricity
was generated from coal, nuclear and gas-oil fuel sources, respectively. The
Company owns no gas properties.
The Company was incorporated under the laws of the State of Kansas in 1990
for the purpose of acquiring Old KG&E. Old KG&E was incorporated under the
laws of the State of Kansas in 1973 and is the successor by merger to a West
Virginia corporation formed in 1909. The Company's principal executive
offices are located at 120 East First Street, Wichita, Kansas 67202 and its
telephone number is (316) 261-6611.
The Merger
On March 31, 1992, Western Resources, through a wholly owned acquisition
subsidiary, acquired all of the outstanding common and preferred stock of Old
KG&E for $454 million in cash and 23,479,380 shares of Western Resources common
stock. Simultaneously, Old KG&E merged (the "Merger") into the acquisition
subsidiary, which continued the name "Kansas Gas and Electric Company." The
total cost of the acquisition was $1.066 billion. As of June 30, 1993,
following the Merger, the combined assets of Western Resources, including KG&E,
were $5.56 billion and its common stock equity was $1.27 billion.
The merger agreement provides that, for a three year period after the
Merger, Western Resources will operate the business of the Company as a direct
or indirect subsidiary or division and maintain the headquarters for such
business in Wichita. Under the order issued by the State Corporation
Commission of the State of Kansas, the Company must be combined with Western
Resources by January 1, 1995 unless good cause is shown for not doing so.
There is no certainty, however, as to whether or when such a combination will
occur or as to the terms and conditions thereof.
USE OF PROCEEDS
The net proceeds from the sale of New Bonds will be added to the general
funds of the Company to be used for repayment of indebtedness and general
corporate purposes. Information concerning the use of proceeds from the sale
of each series of the New Bonds will be set forth in the Prospectus Supplement
relating to such series.
3
CERTAIN FINANCIAL INFORMATION
The following summary of certain financial information of the Company is
qualified in its entirety by the information appearing elsewhere in this
Prospectus and the information and financial statements appearing in the
documents incorporated by reference in this Prospectus, including the
discussion of the Merger in Note 1 of the 1992 Form 10-K.
Income Summary
Twelve Months Ended
June 30,
(Unaudited)
Pro forma
1993 1992
(In thousands)
Operating revenues . . . . . . . $583,842 $581,158
Operating income . . . . . . . . 147,142 116,789
Income before interest changes . 165,360 123,990
Net income . . . . . . . . . . . 99,520 51,766
The pro forma information for the twelve-month period ended June 30, 1992
gives effect to the Merger as if it had occurred on July 1, 1991 and was
derived by combining the historical information of Old KG&E for the nine-month
period ended March 31, 1992 with that of KG&E for the three-month period ended
June 30, 1992. No purchase accounting adjustments were made for the period
prior to the Merger in determining pro forma amounts because such adjustments
would be immaterial. This pro forma information is not necessarily indicative
of the results of operations that would have occurred had the Merger been
consummated on July 1, 1991, nor is it necessarily indicative of future
operating results or financial position.
Capitalization Summary
June 30, 1993
(Unaudited)
(In millions)
First mortgage bonds . . . . . . . . . . . . . . $ 661 32.9%
Other long-term debt (excluding
current maturities) . . . . . . . . . . . . . 164 8.1
Common stock equity(1) . . . . . . . . . . . . . 1,185 59.0
Total capitalization . . . . . . . . . . . . $ 2,010 100.0%
Short-term debt (including current
maturities of long-term debt) . . . . . . . . . $ 86 -
________________
(1) Includes $490 million reflecting the acquisition premium attributable
to the acquisition of Old KG&E by Western Resources.
4<PAGE>
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges of KG&E for each of the periods
indicated is as follows:
Year Ended December 31,
Pro Forma Predecessor
1992 1991 1990 1989 1988
1.89 1.59 1.71 1.48 1.84
The pro forma ratio of earnings to fixed charges of the Company for the
year ended December 31, 1992 combines the results of operations of Old KG&E for
the three-month period ended March 31, 1992 with those of the Company for the
nine-month period ended December 31, 1992, without giving effect to the
issuance of the New Bonds for which this Prospectus will be delivered.
The ratio of earnings to fixed charges for the Company for the 12 months
ended June 30, 1993 was 2.37.
DESCRIPTION OF NEW BONDS
General
The New Bonds are to be issued under the Company's Mortgage and Deed of
Trust, dated as of April 1, 1940, to Guaranty Trust Company of New York (now
Morgan Guaranty Trust Company of New York) and Henry A. Theis (W.A. Spooner,
successor), as Trustees, as supplemented by indentures supplemental thereto,
all of which (collectively referred to as the "Mortgage") are exhibits to the
Registration Statement of which this Prospectus is a part. The statements
herein concerning the New Bonds and the Mortgage are a brief summary of certain
provisions contained in the Mortgage and do not purport to be complete. They
make use of terms defined in the Mortgage and are qualified in their entirety
by express reference to the cited Sections and Articles.
Reference is made to the Prospectus Supplement for the following terms,
among others, of the New Bonds offered thereby: (i) the designation, series
and aggregate principal amount thereof, (ii) the percentage or percentages of
their principal amount at which they will be sold by the Company, (iii) the
date or dates on which they will mature, (iv) the rate or rates per annum at
which they will bear interest, (v) the times at which such interest will be
payable, and (vi) redemption and other specific terms.
Form and Exchange
The New Bonds will be registered bonds without coupons. They will be
exchangeable without charge for other New Bonds of the same series of different
authorized denominations, in each case for a like aggregate principal amount,
and may be transferred without charge, other than for applicable stamp taxes or
other governmental charges.
Interest and Payment
Reference is made to the Prospectus Supplement for the interest rate or
rates of the New Bonds offered thereby and the dates on which such interest is
payable. Principal and interest are payable at Morgan Guaranty Trust Company
of New York in New York City.
5
The Mortgage provides that the Company will pay interest on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) upon overdue installments of interest on the Bonds of all
series at the rate of 6% per annum.
Redemption and Purchase of Bonds
Reference is made to the Prospectus Supplement for the redemption terms of
the New Bonds offered thereby.
If at the time notice of redemption is given the redemption moneys are not
on deposit with the Corporate Trustee, the redemption may be subject to their
deposit with the Corporate Trustee on or before the date fixed for redemption
and such notice shall be of no effect unless such moneys are so received.
Cash deposited under any provisions of the Mortgage (with certain
exceptions) may be applied to the purchase of Bonds of any series. (Mortgage,
Art. X and Sec. 38.)
Sinking or Improvement Fund
The sinking or improvement fund payments are 1% of the greatest principal
amount of Bonds of each series outstanding prior to the beginning of the year
in which such payment is due. Payments may be made (a) in cash, (b) in
principal amount of Bonds, or (c) with property additions on the basis of 70%
of cost or fair value. The requirement may be anticipated at any time.
(Mortgage, Secs. 39 and 40.) The provision for the sinking or improvement fund
will cease to be effective upon retirement of the May, 1996 Series Bonds.
(Tenth Supplemental Indenture, Sec. 5.)
Security
The New Bonds, together with all other Bonds now or hereafter issued under
the Mortgage, will be secured by the Mortgage, which constitutes, in the
opinion of the General Counsel for the Company, a first mortgage lien on all of
the present properties of the Company (except as stated below), subject to (a)
leases of minor portions of the Company's property to others for uses which, in
the opinion of such counsel, do not interfere with the Company's business,
(b) leases of certain property of the Company not used in its electric utility
business, (c) excepted encumbrances and (d) minor defects and irregularities in
titles to properties. There are excepted from the lien all cash and
securities, certain equipment, materials or supplies, vehicles and automobiles
and receivables, contracts, leases and operating agreements.
The Mortgage contains provisions for subjecting after-acquired property
(subject to pre-existing liens) to the lien thereof, subject to limitations in
the case of consolidation, merger or sale of substantially all of the Company's
assets. (Mortgage, Art. XV.)
The Mortgage provides that the Trustees shall have a lien upon the
mortgaged property, prior to the Bonds, for the payment of their reasonable
compensation and expenses and for indemnity against certain liabilities.
(Mortgage, Sec. 96.)
Western Resources has outstanding first mortgage bonds (the "WR Bonds")
which are secured by a lien on substantially all of Western Resources' fixed
property and franchises purported to be conveyed by the Mortgage and Deed of
Trust and the various Supplemental Indentures creating the WR Bonds
(collectively, the "WR Mortgage"). In the event of a combination of KG&E
with Western Resources, the after-acquired property clauses of the WR Mortgage
may cause the lien of the WR Mortgage to attach (but in a subordinate position
to the prior lien of the Mortgage) to the property of KG&E owned by KG&E at the
date of combination. All property subject to the after-acquired property
clause of the WR Mortgage acquired by Western Resources after the effective
date of the combination of KG&E with Western Resources will be subject to the
first lien of the WR Mortgage (assuming Western Resources is the surviving
6
entity), with the exception of betterments, extensions, improvements and
additions to the property formerly owned by KG&E, property made the basis for
the issuance of new KG&E Bonds, if any, or property acquired with insurance or
eminent domain proceeds relating to the former KG&E property or property
acquired to comply with the covenants contained in the Mortgage, on all of
which property the Mortgage will continue to constitute a first, and the WR
Mortgage a subordinate, lien. Western Resources may not issue additional WR
Bonds on the basis of property additions subject to the prior lien of the KG&E
Mortgage.
Issuance of Additional Bonds
The maximum principal amount of Bonds which may be issued under the
Mortgage is not limited, but until changed by supplemental indenture the amount
of advances (over and above the original issue of $16,000,000 of Bonds) which
may be secured by the chattel lien created by the Mortgage shall not exceed two
billion dollars. Bonds of any series may be issued from time to time on the
basis of (1) 70% of property additions after adjustments to offset retirements;
(2) retirement of Bonds or prior lien bonds; and (3) deposit of cash.
With certain exceptions in the case of (2) above, the issuance of the
Bonds is subject to net earnings for 12 consecutive months out of the preceding
15 months before income taxes and before provision for retirement and
depreciation of property being (i) at least two and one-half times the annual
interest requirements on all Bonds at the time outstanding, including the
additional issue, and on all indebtedness of prior rank or (ii) at least 10% of
the principal amount of such Bonds and prior indebtedness. On the basis of the
most restrictive of these earnings tests, the Company, as of June 30, 1993,
would have been able to issue an additional $843 million of Bonds, including
the New Bonds, at an assumed annual interest rate of 7.5%.
Cash deposited as a basis for the issuance of Bonds may be withdrawn from
time to time in an amount equal to the principal amount of Bonds which the
Company would otherwise be entitled to issue (without, however, applying any
earnings test) upon waiver of the right to issue the same or may be used for
the purchase, payment or redemption of Bonds.
Property additions generally include electric, gas, steam or hot water
property, acquired after December 31, 1939, but may not include securities,
vehicles or automobiles, or property used principally for the production,
gathering or transmission of natural gas. When the May 1996 Series Bonds have
been retired, property additions theretofore funded to satisfy sinking or
improvement funds for such series will revert to unfunded status. The Company
has reserved the right to amend the Mortgage without any consent or other
action by the holders of Bonds of the 2000 Series or any subsequently created
series (including the New Bonds) to include nuclear fuel (and similar or
analogous devices or substances) as property additions.
As of June 30, 1993, unfunded net property additions totalled
approximately $1.21 billion. These unfunded property additions were sufficient
to permit the issuance of approximately $847 million of additional Bonds,
including the New Bonds.
The Mortgage contains certain restrictions upon the issuance of Bonds
against property subject to liens and upon the increase of the amount of such
liens. (Mortgage, Secs. 4-7, 20-32, 46; Sixth Supplemental Indenture, Sec. 4;
Ninth Supplemental Indenture, Sec. 5; Tenth and Twenty-third Supplemental
Indentures, Sec. 4.)
Release and Substitution of Property
Property may be released against (1) deposit of cash or, to a limited
amount, purchase money mortgages, (2) property additions, and (3) waiver of the
right to issue Bonds, without applying any earnings test. Cash so deposited
may be withdrawn upon the bases stated in (2) and (3) above. The Mortgage
contains special provisions with respect to prior lien bonds pledged, and
disposition of moneys received on pledged prior lien bonds. (Mortgage, Secs.
5, 31, 32, 37, 46-50, 59-61, and 100.)
7<PAGE>
Modification
The rights of the Bondholders may be modified with the consent of the
holders of 70% of the Bonds and, if less than all series of Bonds are affected,
the consent also of the holders of 70% of the Bonds of each series affected.
The Company has reserved the right to amend the Mortgage without any consent or
other action by holders of the 2000 Series Bonds or any subsequently created
series (including the New Bonds) so as to substitute for the foregoing
provisions a provision to the effect that the rights of the Bondholders may be
modified with the consent of the holders of 60% of the Bonds and, if less than
all series of Bonds are affected, the consent also of the holders of 60% of the
Bonds of each series affected. In general, no modification of the terms of
payment of principal or interest, no modification of the obligations of the
Company under Section 64 (except as above mentioned), and no modification
affecting the lien or reducing the percentage required for modification is
effective against any Bondholder without his consent. (Mortgage, Art. XVIII;
Ninth Supplemental Indenture, Sec. 4; Tenth Supplemental Indenture, Secs. 4 and
6.)
Relationships with Corporate Trustee
The Company maintains bank accounts with, and from time to time makes
borrowings from, Morgan Guaranty Trust Company of New York. At July 31, 1993,
Western Resources, Inc., the Company's parent, had outstanding $100 million of
such borrowings.
Defaults and Notice Thereof
An event of default is defined as being: default in payment of principal;
default for 60 days in payment of interest; default in payment of interest or
principal of prior lien bonds continued beyond grace period; default for 60
days in payment of installments of funds for retirement of Bonds; certain
events in bankruptcy, insolvency or reorganization; and default for 90 days
after notice in other covenants. (Mortgage, Sec. 65.) The Trustees may
withhold notice of default (except in payment of principal, interest or fund
for retirement of Bonds) if they think it in the interests of the Bondholders.
(Mortgage, Sec. 66.)
In case of default, the holders of 25% of the Bonds may declare the
principal and interest due and payable, but the holders of a majority of the
Bonds may annul such declaration and destroy its effect if such default has
been cured. (Mortgage, Sec. 67.) No holder of Bonds may enforce the lien of
the Mortgage unless such holder shall have given the Trustees written notice of
a default and unless the holders of 25% of the Bonds have requested the
Trustees in writing to act and have offered the Trustees reasonable opportunity
to act. (Mortgage, Sec. 80.) The Trustees are not required to risk their
funds or incur personal liability if there is reasonable ground for believing
that repayment is not reasonably assured. (Mortgage, Sec. 94.) Holders of a
majority of the Bonds may direct the time, method and place of conducting any
proceedings for any remedy available to the Trustees, or exercising any trust
or power conferred upon the Trustees. (Mortgage, Sec. 71.)
Evidence of Compliance with Mortgage Provisions
Compliance with Mortgage provisions is evidenced by written statements of
the Company's officers or persons selected or paid by the Company (such as an
engineer with respect to the value of property being certified or released, an
accountant with respect to a net earnings certificate and counsel with respect
to property titles and compliance with the Mortgage generally). In certain
major matters the accountant or engineer must be independent. Various
certificates and other papers are required to be filed annually and upon the
happening of certain events; however, no general periodic evidence is required
to be furnished as to the absence of default or as to compliance with the terms
of the Mortgage in general.
8
PLAN OF DISTRIBUTION
The Company may sell New Bonds in any of the following ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or
(iii) through agents. The applicable Prospectus Supplement will set forth the
terms of the offering of any New Bonds, including the names of any underwriters
or agents, the purchase price of such New Bonds and the proceeds to the Company
from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which such New Bonds may be listed.
If underwriters are used in the sale, New Bonds will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Such New
Bonds may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the applicable Prospectus Supplement, the
obligations of the underwriters to purchase such New Bonds will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all of such New Bonds if any of such New Bonds are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time. Only under-
writers named in a Prospectus Supplement are deemed to be underwriters in
connection with the New Bonds offered thereby.
New Bonds may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer
or sale of New Bonds will be named, and any commissions payable by the
Company to such agent will be set forth in the applicable Prospectus Supple-
ment. Unless otherwise indicated in the applicable Prospectus Supplement,
any such agent will act on a best efforts basis for the period of its ap-
pointment.
If so indicated in a Prospectus Supplement with respect to New Bonds,
the Company will authorize agents, underwriters or dealers to solicit offers
by certain institutions to purchase such New Bonds from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery
on the date or dates stated in the Prospectus Supplement. Each Contract will
be for an amount not less than, and the aggregate principal amount of the New
Bonds sold pursuant to the Contracts shall be not less nor more than, the
respective amounts stated in the Prospectus Supplement. Institutions with
whom the Contracts, when authorized, may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions, and other institutions, but will in
all cases be subject to the approval of the Company. The Contracts will not
be subject to any conditions except (i) the purchase by an institution of the
New Bonds covered by its Contract shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which
such institution is subject, and (ii) if the New Bonds are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of the New Bonds less the principal amount thereof covered
by the Contracts. The underwriters will not have any responsibility in
respect of the validity or performance of the Contracts.
If dealers are utilized in the sale of any New Bonds, the Company will
sell such New Bonds to the dealers, as principal. Any dealer may then resell
such New Bonds to the public at varying prices to be determined by such
dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the Prospectus Supplement with respect to
such New Bonds being offered thereby.
It has not been determined whether any series of New Bonds will be
listed on a securities exchange. Except as may be otherwise stated in the
Prospectus Supplement, underwriters will not be obligated to make a market in
any series of New Bonds. The Company cannot predict the activity of trading
in, or liquidity of, any series of New Bonds.
9
Any underwriters, dealers or agents participating in the distribution of
New Bonds may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of New Bonds may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribution
with respect to payments that the agents or underwriters may be required to
make in respect thereof. Agents and underwriters may be customers of,
engaged in transactions with, or perform service for, the Company or its
affiliates in the ordinary course of business.
LEGAL OPINIONS
The statements as to matters of law and legal conclusions set forth in
this Prospectus and in the documents incorporated by reference herein have
been reviewed by Richard D. Terrill, Esq., Secretary, Treasurer and General
Counsel of the Company, and are set forth or incorporated herein in reliance
upon the opinion of Mr. Terrill.
Certain legal matters in connection with the New Bonds will be passed
upon by Richard D. Terrill, Esq., Secretary, Treasurer and General Counsel of
the Company, by Cahill Gordon & Reindel, a partnership including a profes-
sional corporation, counsel for the Company, and by Sidley & Austin, counsel
for the underwriters, dealers, purchasers or agents. Cahill Gordon & Reindel
and Sidley & Austin will not pass upon the incorporation of the Company and
will rely upon the opinion of Richard D. Terrill, Esq. as to matters of
Kansas law and the Public Utility Holding Company Act of 1935.
EXPERTS
The financial statements and financial statement schedules included in
KG&E's Annual Report on Form 10-K, incorporated by reference in this Prospec-
tus, have been audited by Deloitte & Touche, independent public accountants,
as stated in their report which is incorporated herein by reference, and have
been so incorporated in reliance upon such report given upon the authority of
that firm as experts in accounting and auditing.
The statements made as to matters of law and legal conclusions in KG&E's
Annual Report on Form 10-K have been reviewed by Richard D. Terrill, Esq.,
Topeka, Kansas. Mr. Terrill is Secretary, Treasurer and General Counsel of
KG&E. All such conclusions are set forth in reliance upon the opinions of
said individual, given upon his authority as an expert in the field of law.
10
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement and the Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell or a solicitation of an offer to buy any securities other than
the Offered Bonds to which this Prospectus Supplement relates. This Prospectus
Supplement and the Prospectus do not constitute an offer to sell or a
solicitation of an offer to buy such securities in any circumstance in which
such offer or solicitation is unlawful. Neither the delivery of this Prospectus
Supplement or the Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
or incorporated by reference herein is correct as of any time subsequent to the
date of this Prospectus Supplement.
_________
TABLE OF CONTENTS
Page
Prospectus Supplement
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Certain Financial Information. . . . . . . . . . . . . . . . . . . . . . . S-3
Description of the Offered Bonds . . . . . . . . . . . . . . . . . . . . . S-4
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Prospectus
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certain Financial Information. . . . . . . . . . . . . . . . . . . . . . . . 4
Description of New Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Kansas Gas and Electric Company
_________
$100,000,000
First Mortgage Bonds,
6.20% Series Due 2006
PROSPECTUS SUPPLEMENT
_________
Dillon, Read & Co. Inc.
Salomon Brothers Inc
