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RULE NO. 424(b)(5)
REGISTRATION NO. 33-60996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 21, 1993)
$25,000,000
LACLEDE GAS COMPANY
FIRST MORTGAGE BONDS, 6 1/2% SERIES DUE OCTOBER 15, 2012
INTEREST PAYABLE APRIL 15 AND OCTOBER 15
The First Mortgage Bonds, 6 1/2% Series due 2012 (the "New Bonds") mature on
October 15, 2012. Interest on the New Bonds is payable semiannually on April
15 and October 15 of each year commencing April 15, 1998. The New Bonds are
not redeemable except through the operation of the maintenance and improvement
fund, or with certain deposited cash and proceeds of released property if
substantially all of the Company's property subject to the lien of the
Mortgage is taken by the exercise of eminent domain or is sold to a
governmental body. See "Supplemental Description of New Bonds--Redemption of
New Bonds" herein.
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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 ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) DISCOUNTS(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per New Bond 98.682% .326% 98.356%
Total $24,670,500 $81,500 $24,589,000
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(1) Plus accrued interest from October 15, 1997.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting estimated expenses of $100,000 payable by the Company.
The New Bonds are offered by the Underwriter, as specified herein, subject to
receipt and acceptance by it and subject to its right to reject any order in
whole or in part. It is expected that the payment for and delivery of the New
Bonds will be made in New York, New York against payment therefor in same-day
funds on or about October 21, 1997.
ABN AMRO CHICAGO CORPORATION
October 16, 1997
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NEW BONDS.
SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, NEW BONDS IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
SUPPLEMENTAL DESCRIPTION OF NEW BONDS
The following description of the particular terms of the New Bonds
supplements the description of the general terms and provisions of the New
Bonds set forth in the accompanying Prospectus under the heading "Description
of New Bonds", to which description reference is hereby made. As used
hereinafter, the terms "Bonds" and "Mortgage" shall have the same meanings as
the same terms used under the heading "Description of New Bonds" in the
accompanying Prospectus.
INTEREST AND PAYMENT. The New Bonds will mature on October 15, 2012, and
will bear interest at the rate shown in their title, which interest will be
payable on April 15 and October 15 commencing April 15, 1998 to the holders of
record on the April 1 or October 1 next preceding each such payment date.
Principal and interest are payable in New York City or, at the option of the
holder, in St. Louis, Missouri.
REDEMPTION OF NEW BONDS. The New Bonds are not redeemable except, under
certain circumstances, by the application of cash deposited with the Trustee
(as defined in the Mortgage) as the result of the operation of the maintenance
and improvement fund, or with certain deposited cash and proceeds of released
property if substantially all of the Company's property subject to the lien of
the Mortgage is taken by an exercise of eminent domain or is sold to a
governmental body or a designee of a governmental body. In such cases, the
cash deposited with the Trustee shall be used to redeem Bonds, including the
New Bonds, in whole or in part, on at least 30 days' notice, at 100% of the
principal amount thereof, together with accrued interest thereon to the date
fixed for redemption.
If, for a period of ten days after the redemption date, as set forth in the
notice of redemption, the redemption moneys are not on deposit with the
Trustee, such failure, if continued, shall constitute a completed default
under the Mortgage.
SINKING FUND. There will be no sinking fund with respect to the New Bonds.
TRUSTEE. Effective February 28, 1997, in connection with the acquisition of
certain corporate trust assets of Mercantile Bank of St. Louis National
Association by State Street Bank and Trust Company of Missouri, N.A. ("State
Street"), Mercantile Bank of St. Louis National Association resigned as
trustee under the Mortgage and State Street accepted the appointment as
successor trustee. The Company has no other banking relationship with State
Street.
RECENT DEVELOPMENTS
REGULATORY MATTERS. In certain proceedings, the Missouri Public Service
Commission (the "MoPSC") has examined the operation of purchased gas
adjustment clauses under which gas distribution utilities, such as the
Company, pass through to customers increases and decreases in the wholesale
cost of natural gas. In January 1996, the MoPSC issued an order in which it
rejected arguments that such clauses were unlawful and affirmed the legality
of such a clause utilized by another utility. In December 1996, the Circuit
Court of Cole County, Missouri upheld the MoPSC's order. The Circuit Court's
decision was subsequently appealed by several parties to the Missouri Court of
Appeals, Western District, where the matter is now pending. The Company
participated in the proceedings before the MoPSC and the Circuit Court and is
currently participating in the appellate proceedings pending before the
Missouri Court of Appeals. Oral argument in such proceedings is scheduled for
November 5, 1997.
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The Company's purchased gas adjustment ("PGA") clause provides for changes
in the prices of wholesale gas costs to be passed on to the Company's
customers. Under new procedures approved by the MoPSC in July 1997, the
Company will make only two scheduled PGA filings each year, one for the winter
period and one for the summer period. In addition, the Company may make one
unscheduled PGA filing during the winter if significant, unforeseen increases
or decreases in gas costs occur. The new procedures also authorize the Company
to purchase financial instruments that are designed to provide the Company and
its customers with additional protection from unusually large winter period
gas price increases. The Company has been authorized by the MoPSC to recover
the cost of purchasing these instruments through the operation of the PGA
clause. The Company expects that these new procedures will provide better gas
price stability for the Company's customers.
As part of its annual review of the Company's gas costs, the Staff of the
MoPSC has recommended an adjustment which, if approved by the MoPSC and upheld
by the courts, would require the Company to refund to its customers
approximately $3.6 million of gains realized by the Company from various off-
system sales made between November 1995 and March 1996. The Company will
vigorously oppose the Staff's recommended adjustment before the MoPSC on the
grounds that such adjustment violates Missouri law, is impermissible under the
Company's MoPSC-approved tariffs, and is otherwise unlawful and unreasonable.
The Company believes that the outcome of this matter is unlikely to have a
material adverse impact on the Company.
NEW LEGAL PROCEEDING. On October 6, 1997, Energy Source, Inc. (Energy
Source, Inc. and its affiliates are hereinafter referred to individually and
collectively as "ESI") filed an amended petition ("Amended Petition") in the
district court of Harris County, Texas, in which ESI now names the Company as
a party defendant to certain litigation previously initiated among ESI,
Panhandle Eastern Pipe Line Company ("PEPL") and PanEnergy Corporation
("PanEnergy") (PEPL and PanEnergy are hereinafter referred to individually and
collectively as "Panhandle"). ESI previously supplied natural gas to the
Company under an agreement which has expired. The Company selected a different
supplier to furnish gas beyond the expiration date of such agreement. PEPL
provided pipeline transportation services under both the arrangement with ESI
and the Company's new arrangement with the Company's current supplier. In its
Amended Petition, ESI asserts, among other things, that the Company: (a)
allegedly conspired with Panhandle, in violation of the Texas Business and
Commerce Code, in Panhandle's alleged attempt to monopolize certain gas
transportation markets, through unlawful tying arrangements and other anti-
competitive means; and (b) interfered with ESI's contractual arrangements with
Panhandle by misrepresenting to ESI the status of the Company's then pending
negotiations with ESI, and other potential suppliers. Based upon management's
understanding of the relevant facts and circumstances, and its preliminary
review of this recently filed Amended Petition, the Company believes that
ESI's claims against the Company are without merit, and that the outcome of
this litigation is not likely to have a material adverse impact on the
Company.
USE OF PROCEEDS
The net proceeds to be received by the Company from the issuance and sale of
the New Bonds will be used for the repayment of certain outstanding short-term
borrowings and for the financing of, or reimbursement of the Company's
treasury for, expenditures incurred or to be incurred in connection with the
Company's construction program undertaken to maintain and expand its gas
service capabilities; and/or for other corporate purposes. The cost of the
Company's construction program during the period October 1, 1997 to September
30, 1998 is estimated to amount to $46,133,000. The construction program, its
cost and the amount and timing of financing required, if any, are necessarily
subject to change.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the five fiscal years
ended September 30, 1996, 1995, 1994, 1993 and 1992 are 3.8, 2.6, 3.1, 3.5 and
2.7, respectively. Such ratio for the twelve months ended June 30, 1997 is
3.6. For the purpose of computing such ratios, earnings consist of income
before income taxes and fixed charges. Fixed charges consist of all interest
expense and the interest component of rentals, which component is estimated to
be one-third of such rentals.
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EXPERTS AND LEGALITY
The legality of the New Bonds will be passed upon for the Company by Mary C.
Kullman, Associate Counsel of the Company, and for the Underwriter by
Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New
York. However, all legal matters pertaining to the organization of the
Company, title to property, franchises, and the lien of the Mortgage and all
matters of Missouri law will be passed upon only by Mrs. Kullman.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to the Underwriter, and the Underwriter has
agreed to purchase from the Company, $25,000,000 principal amount of the New
Bonds. Under such terms and conditions, the Underwriter is committed to take
and pay for all of the New Bonds, if any are taken.
The Underwriter proposes to offer the New Bonds directly to the public at
the initial public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession
of .30% of the principal amount per New Bond, and the Underwriter and such
dealers may allow a discount of .20% of such principal amount per New Bond on
sales to certain other dealers. After the New Bonds are released for sale to
the public, the offering price and other selling terms may from time to time
be varied by the Underwriter.
The New Bonds are a new issue of securities with no established trading
market. The Company has been advised by the Underwriter that the Underwriter
intends to make a market in the New Bonds but is not obligated to do so and
may discontinue any such market making at any time without notice. No
assurance can be given as to the liquidity of the trading markets for the New
Bonds.
In connection with the issuance of the New Bonds, the Underwriter may engage
in transactions that stabilize, maintain or otherwise affect the price of the
New Bonds. Specifically, the Underwriter may overallot the offering, creating
a syndicate short position. In addition, the Underwriter may bid for, and
purchase, New Bonds in the open market to cover syndicate shorts or to
stabilize the price of the New Bonds. Any of these activities may stabilize or
maintain the market price of the New Bonds above independent market levels.
The Underwriter is not required to engage in these activities, and may end any
of these activities at any time.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933.
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