Filing Under Rule 424(b)(2)
Registration Statement
File Number 61863
PROSPECTUS
$75,000,000
COLONIAL GAS COMPANY
Secured Medium Term Notes, Series A
Due from 9 months to 40 years from Date of Issue
_________________________
Colonial Gas Company (the "Company") intends to offer, from time to
time, up to $75,000,000 aggregate principal amount of its Secured Medium
Term Notes, Series A (the "Notes") having various maturities from 9
months to 40 years from their dates of issue. The Notes will be issued
only in fully registered form, without coupons, and will be denominated
in U.S. dollars, in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The Notes will bear interest at
a fixed rate to be determined by the Company at or prior to the sale
thereof and set forth in a pricing supplement relating to the Notes (a
"Pricing Supplement"). Interest rates may vary with each Note issued by
the Company. Unless otherwise specified in the applicable Pricing
Supplement, interest on the Notes will be payable semiannually on
February 15 and August 15 of each year, and at maturity or, if
applicable, upon redemption at the option of the Company.
The Notes will be issued as a new series of First Mortgage Bonds under
the Company's Second Amended and Restated First Mortgage Indenture and,
pursuant to such Indenture, secured by a lien on certain property owned
by the Company. See "Description of Notes."
The aggregate principal amount, interest rate, purchase price,
maturity and redemption, if applicable, and any other material financial
terms not described herein of each Note will be set forth in the
applicable Pricing Supplement.
Each Note will be issued as a Book-Entry Note and will be represented
by a Global Note registered in the name of The Depository Trust Company,
as Depositary, or its nominee, unless otherwise specified in the
applicable Pricing Supplement. Beneficial interests in a Global Note
will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary and its participants. Owners of
beneficial interests in a Global Note will not be considered holders
thereof and will not be entitled to receive physical delivery of Notes
in definitive form, except under circumstances described herein. See
"Description of Notes - Book-Entry Notes."
________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT HERETO.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Agents' Proceeds to the
Public Commission Company (2)(4)
(1) (2)(3)
Per Note 100% .125% - 99.875% -
.750% 99.250%
Total $75,000,000 $ 93,750 - $74,906,250 -
$562,500 $74,437,500
(1) Unless otherwise indicated in a Pricing Supplement, the Notes will
be issued at 100% of their principal amount.
(2) The Company will pay to an Agent a commission ranging from .125% to
.750% of the principal amount of any Note, depending on its stated
maturity, sold through such Agent. The Company also may sell the
Notes to an Agent at a discount for resale to one or more investors or
other purchasers at varying prices related to prevailing market prices
at the time of resale, as determined by such Agent. Unless otherwise
indicated in a Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof, less a percentage equal to the
commission applicable to an agency sale of a Note of identical
maturity, and may be resold by such Agent. The Notes may also be sold
by the Company directly to investors, in which case no commission will
be payable to any Agent.
(3) The Company has agreed to indemnify the Agents against civil
liabilities, including liabilities under the Securities Act of 1933,
as amended.
(4) Before deduction of expenses payable by the Company estimated at
$180,000.
___________________________
The Notes are being offered on a continuing basis by the Company
through the Agents, each of which has agreed to use its reasonable
efforts to solicit purchases of the Notes. The Company reserves the
right to sell the Notes directly to purchasers on its own behalf. The
Company also may sell the Notes to the Agents acting as principal for
resale to one or more purchasers. The Notes will not be listed on any
securities exchange, and there can be no assurance that all or any
portion of the Notes offered by this Prospectus will be sold or that
there will be a secondary market for any of the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby
without notice. The Company or the Agent that solicits any offer may
reject such offer to purchase Notes, in whole or in part. See "Plan of
Distribution."
___________________________
Smith Barney Inc. A.G. Edwards & Sons, Inc. PaineWebber Incorporated
___________________________
The date of the Prospectus is September 27, 1995
IN CONNECTION WITH THE DISTRIBUTION OF NOTES UNDERWRITTEN BY AN
AGENT ACTING AS PRINCIPAL, SUCH AGENT MAY OVERALLOT OR EFFECT
TRANSACTIONS WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET
PRICE OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports and other information
with the Securities and Exchange Commission (the "Commission").
Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the
Commission: New York Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048, and Chicago Regional Office, 500
W. Madison Street, Suite 1400, Chicago, Illinois 60661; and
copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents heretofore filed with the Commission
pursuant to the Exchange Act are hereby incorporated in this
Prospectus by reference and made a part hereof:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995 and June 30, 1995.
All documents filed with the Commission by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of the
offering of the Notes shall be deemed to be incorporated in this
Prospectus by reference and to be part hereof from the date of
filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded, for
purposes of this Prospectus, to the extent that a statement
contained in this Prospectus or in any other subsequently-filed
document which also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The information relating to the Company contained in this
Prospectus summarizes, is based upon, or refers to information
and financial statements contained in one or more of the
documents incorporated by reference herein. Accordingly, such
information contained herein is qualified in its entirety by
reference to such incorporated documents and should be read in
conjunction therewith.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered,
including any beneficial owner, upon the written or oral request
of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated in this
Prospectus by reference, other than certain exhibits to such
documents. Requests should be directed to Manager of Financial
Services, Colonial Gas Company, 40 Market Street, Lowell,
Massachusetts 01852 (Telephone: (508) 458-3171).
THE COMPANY
The Company, a Massachusetts corporation formed in 1849, is
primarily a regulated natural gas distribution utility that
serves approximately 136,000 customers in 24 cities and towns
located northwest of Boston, Massachusetts and on Cape Cod.
Through its wholly-owned energy trucking subsidiary, Transgas
Inc. ("Transgas"), the Company also provides over-the-road
transportation of liquefied natural gas, propane and other
commodities. References in this Prospectus to the Company do
not, unless otherwise required by the context, refer to or
include Transgas.
The Company's combined natural gas distribution service areas
cover approximately 622 square miles and have a year-round
population of approximately 500,000. The Company is currently
serving approximately 48% of potential customers in its service
areas. Of its 136,000 customers, approximately 90% are
residential accounts. The Company added 4,456 firm customers in
1994. Approximately 55% of such growth resulted from new
construction in its service areas and approximately 45% resulted
from conversions to gas from other energy sources for existing
homes and businesses.
The address of the Company's principal executive office is 40
Market Street, Lowell, Massachusetts 01852 (Telephone: (508)
458-3171).
SELECTED FINANCIAL INFORMATION
(Dollars in thousands)
Twelve Months
Ended
Year Ended December 31, June 30,1995
1992 1993 1994 (Unaudited)
Operating Revenues $145,054 $166,261 $166,259 $154,216
Utility Operating Income $ 17,151 $ 18,890 $ 17,517(a) $ 17,152(a)
Net Income $ 10,643 $ 12,022 $ 11,009(a) $ 9,114(a)
Ratio of Earnings to 3.08 3.18 2.92 2.38
Fixed Charges(b)
June 30, 1995
(Unaudited)
Long-term Debt (excluding current portion) $ 75,035
Common Equity 104,566
Total Capitalization $179,601
__________________
(a) Includes effect of a restructuring charge recorded in
December 1994 in the amount of $1,965 after tax.
(b) Ratios of Earnings to Fixed Charges for the years ended
December 31, 1990 and 1991 were 1.74 and 2.31, respectively.
Fixed charges include the financing costs of the Company's gas
inventories which the Massachusetts Department of Public
Utilities allows to be fully recovered through the Cost of Gas
Adjustment Clause and which are reported in the Company's
consolidated statement of income as cost of gas sold. Fuel
financing costs were $1,078, $671, $433, $390, $504 and $636 for
the years ended December 31, 1990, 1991, 1992, 1993 and 1994, and
for the twelve months ended June 30, 1995, respectively.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby will
be used for utility plant construction and, to the extent
described in a Pricing Supplement, refunding of maturing long-
term indebtedness, and for repayment of short-term bank debt
incurred for such purposes.
DESCRIPTION OF NOTES
The following statements are a summary only, do not purport to
be complete, and are subject to the detailed provisions of the
Second Amended and Restated First Mortgage Indenture dated as of
June 15, 1992 between the Company and The First National Bank of
Boston, as Trustee (the "Trustee"), and indentures supplemental
thereto, including the supplemental indenture creating the Notes,
the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part and to which
reference is hereby made (collectively, the "Indenture"). This
summary incorporates by reference the Indenture and is qualified
in its entirety by such reference. Certain of the terms used
below are used herein with the meanings ascribed to such terms by
the Indenture.
General
The Notes will be issued as a new series of additional First
Mortgage Bonds (the "Bonds") under the Indenture. The Notes will
be limited in aggregate principal amount to $75,000,000.
The Notes will be issued in fully registered form only, without
coupons. The Notes will be issued in book-entry form (the "Book-
Entry Notes"). The denominations of Notes will be $1,000 and
multiples thereof.
The Notes will be offered on a continuing basis and will mature
from nine months to forty years from their issue dates. Each
Note will bear interest at a fixed rate. The Notes will not have
any conversion rights.
The Pricing Supplement relating to the Notes will describe the
following terms: (i) the purchase price of such Notes which may
be expressed as a percentage of the principal amount at which
such Notes will be issued; (ii) the date on which such Notes will
be issued; (iii) the date on which the principal of such Notes
will become due and payable; (iv) the rate per annum at which
such Notes will bear interest; (v) the date or dates from which
any such interest shall accrue; (vi) the terms for redemption, if
any; and (vii) any other terms of such Notes not inconsistent
with the Indenture.
Payment of Principal and Interest
The Notes will bear interest at a fixed rate from the later of
their date of issue or the most recent date on which any interest
has been paid or duly provided for at the fixed rate per annum
specified therein and in the applicable Pricing Supplement, until
the principal of such Notes is paid or made available for
payment. Interest on the Notes will be payable semi-annually
each February 15 and August 15 (unless otherwise indicated in the
applicable Pricing Supplement) and at maturity or redemption.
Each payment of interest will include interest accrued to but
excluding the interest payment date. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
Principal of and interest on Notes will be paid in immediately
available funds in the manner described below under "Book-Entry
Notes." The principal of and premium, if any, and interest at
maturity on all Notes will be paid in immediately available funds
to the holders of record of such Notes (which, in the case of a
Global Note (as defined herein) representing Book-Entry Notes,
will be the Depositary (as defined herein) or its nominee), on
the date of such payment as provided in the indenture provided
that, in the case of Notes not represented by a Global Note, such
Notes are presented to the Trustee in time for the Company to
make such payments in such funds in accordance with its and the
Trustee's normal procedures. The Company may use one or more
paying agents.
Redemption
To the extent set forth in the applicable Pricing Supplement,
the Notes may be redeemable, at the option of the Company, in
whole or in part, at the redemption prices set forth therein.
The Notes are also subject to redemption at the principal amount
thereof, in whole or in part, through the application of eminent
domain moneys or proceeds of insurance arising from loss or
casualty. The applicable Pricing Supplement may also set forth
the terms of any rights of the holders of notes to require the
redemption or repurchase thereof by the Company.
Except as may otherwise be specified in the applicable Pricing
Supplement, notice of redemption shall be published or mailed to
the registered owners of the Notes to be redeemed at least 30
days but not more than 60 days prior to the redemption date.
Security
The Indenture constitutes a first mortgage lien upon
substantially all of the fixed property and franchises of the
Company, consisting principally of gas distribution property,
real estate and buildings, subject to permitted liens. The lien
of the Indenture secures all Bonds (including the Notes) from
time to time issued and outstanding under the Indenture, equally
and ratably and without distinction as to series (except as to
sinking funds and other analogous funds established for the
exclusive benefit of a particular series). At June 30, 1995, the
Company had $82,363,636 aggregate principal amount of Bonds
outstanding, consisting of five separate series. These
outstanding series of Bonds, and any future series of Bonds to
the extent so designated at the time of their issue, are referred
to in the Indenture as Prior Series Bonds, and as such are
entitled, so long as they are outstanding, to approve certain
actions and to waive certain restrictions under the Indenture.
Except to the extent described below under "Restrictive
Covenants" or specified in a Pricing Supplement, the Notes will
not be designated as Prior Series Bonds.
The Indenture subjects to the lien thereof property of the
character initially mortgaged which is subsequently acquired by
the Company. Such after-acquired property may be subject to
prior liens which are outstanding or created at the time of such
acquisition in an amount not in excess of 60% of the cost or fair
value, whichever is less, of such after-acquired property,
subject to an overall limit on debt secured by such prior liens.
The property excepted from the lien of the Indenture consists
principally of: cash and securities (unless deposited with the
Trustee); contracts, accounts receivable, leases and operating
agreements; equipment, spare parts, tools, materials, supplies
and fuel held for sale, lease, use or distribution in the
ordinary course of business of the Company; vehicles; leasehold
interests and leasehold improvements; and other real and personal
property which is not an integral part of the gas distribution
operations of the Company. Neither the capital stock of Transgas
nor any assets of Transgas are subject to the lien of the
Indenture.
The Company's principal plants and properties, insofar as they
constitute real estate, are owned in fee; certain other
facilities of the Company are located on premises held by the
Company under leases, permits or easements; and the Company's gas
distribution systems (which constitute a substantial portion of
the Company's investment in physical property) are for the most
part located under highways, streets, other public places or
property owned by others for which permits, grants, easements,
licenses or franchises (deemed satisfactory but without
examination of underlying land titles) have been obtained.
The Indenture provides that the Trustee shall have a lien on
the mortgaged property, prior to the Bonds, for the payment of
its reasonable compensation and expenses and for indemnity
against certain liabilities.
Issuance of Additional Bonds
The maximum principal amount of Bonds which may be issued under
the Indenture is not limited. Additional Bonds of any series may
be issued from time to time, upon meeting the requirements of the
Indenture, in principal amounts equal to:
(1) 60% of the lesser of the cost or fair value of the net
amount of additional property not previously funded, which
means, in general terms, the fixed assets of the Company
constituting "gas utility property" less any retirements;
(2) the principal amount of Bonds which have been or are
then being retired, and which have not previously been
funded, plus certain excess sinking fund and similar
payments; or
(3) the amount of cash deposited with the Trustee for such
purpose up to a maximum of $2,000,000 of cash held by the
Trustee at any time.
In order to issue Bonds based on additional property or cash,
the Company must have net earnings for any twelve consecutive
month period within the fifteen months preceding the date of
issuance equal to at least twice the annual interest payments on
all outstanding Bonds (including the Bonds proposed to be issued)
and any other debt secured by a lien equal or superior to the
lien of the Indenture, and at least 90% of the required net
earnings must be from the Company's gas utility operations. This
net earnings requirement also must be met for the issue of Bonds
based on retired Bonds unless the Bonds being issued bear
interest at a rate no higher than the retired Bonds or are issued
no later than 3 years after the stated maturity of the retired
Bonds.
In addition to the foregoing, without the approval of the
holders of 66 2/3% of the outstanding principal amount of each
series of Prior Series Bonds, secured long-term debt of the
Company, which would include Bonds with a maturity of more than
one year, may not exceed 55% of the total capitalization of the
Company. Total capitalization consists of long-term debt,
preferred stock and common equity of the Company.
The Company expects to issue the Notes primarily on the basis
of additional property. At July 31, 1995, the Company had
approximately $69,920,000 net amount of additional property and
$10,548,864 of retired Bonds, entitling it in accordance with the
provisions of the Indenture to issue approximately $52,500,000 of
additional Bonds.
The issuance of the Notes has been approved by the
Massachusetts Department of Public Utilities, provided that not
more than $65,843,062 of Notes may be issued prior to August 31,
1996.
Release of Property
The Indenture provides for the release of property of the
Company from the lien of the Indenture under various
circumstances, so long as no default exists, based, in most
circumstances, on the net proceeds received in connection with
the disposition of the property being applied to acquire other
gas utility property of at least equal value which becomes
subject to the lien of the Indenture on being deposited with the
Trustee.
Restrictive Covenants
The Indenture contains the following covenants for the benefit
of the holders of all Bonds:
Limitation on Encumbrances. The Company will not create or
suffer any other encumbrance or lien upon the property subject
to the lien of the Indenture except (i) certain routine
permitted liens; (ii) liens on after-acquired property which
do not exceed 60% of the cost or fair value, whichever is
less, of the acquired property and which existed at the time
of acquisition or were contemporaneously created to secure the
purchase price, provided that such liens may not, except in
certain circumstances, exceed 15% of the principal amount of
outstanding Bonds without the consent of the holders of at
least 66 2/3% of the principal amount of outstanding Bonds;
and (iii) liens on after-acquired property acquired through a
sale and leaseback transaction which complies with the debt
restrictions described below.
Reserve for Depreciation. The Company will maintain an
annual reserve for depreciation of not less than 2% of its
depreciable property (excluding certain discontinued gas
manufacturing facilities).
The Indenture also provides that, so long as any Prior
Series Bonds are outstanding, the Company will not, without
the consent of the holders of at least 66 2/3% of the
principal amount of each series of Prior Series Bonds then
outstanding:
Dividend Restrictions. Make any restricted payments to
common stockholders unless the sum of restricted payments made
on or after January 1, 1992 will not exceed 100% of the
Company's net income available for common dividends from that
date (reduced by certain stock repurchases in excess of net
proceeds of stock sales), plus an amount which starts at
$8,000,000 and increases to $12,500,000 when certain series of
Prior Series Bonds cease to be outstanding.
Debt Restrictions. Incur (i) any indebtedness for money
borrowed unless all indebtedness for money borrowed (taking
into account the proposed transaction) would not exceed 63% of
the sum of short-term debt plus total capitalization of the
Company or (ii) any secured long-term debt unless all secured
long-term debt (taking into account the proposed transaction)
would not exceed 55% of total capitalization. The foregoing
restrictions would apply to the issuance of additional Bonds
under the Indenture.
Operating Lease Restrictions. Become liable as lessee or
purchaser under any operating lease or installment purchase
contract having a term of more than 3 years if the aggregate
payments under all such operating leases and contracts in any
12 month period would exceed 3% of total capitalization of the
Company. The determination of the status of leases in
existence on December 31, 1991 as operating or capital leases
is made as of that date.
For purposes of the debt restrictions above, but not otherwise,
the Notes will be considered Prior Series Bonds.
Events of Default
The Indenture provides generally that the following events
constitute a default: (i) failure by the Company to pay the
principal of any Bond when due; (ii) failure by the Company to
pay interest on any Bond for a period of ten days after such
payment is due; (iii) failure of the Company to pay any sinking,
replacement or analogous fund installment when due; (iv) breach
of certain representations, warranties and covenants of the
Company (in the case of certain covenants, after a 30 day grace
period); (v) failure to pay certain other indebtedness or failure
to perform any covenant with respect to such indebtedness after
any applicable grace period, the effect of which causes, or
permits the holders thereof to cause, such indebtedness in an
amount in excess of 3/4 of 1% of tangible net worth of the
Company to become due prior to its stated maturity or permits the
holders of such indebtedness to elect a majority of the board of
directors of the Company; (vi) failure to perform any covenant
relating to preferred stock of the Company, the effect of which
would require, or permit the holders thereof to require, the
Company to redeem such preferred stock prior to any mandatory
redemption date; (vii) a final judgment against the Company in a
specified material amount which remains unstayed for more than 60
days; and (viii) certain events of bankruptcy, insolvency and
reorganization of the Company. The failure of the Company to
redeem the Series CE Bonds at the request of the original owner
of those Bonds in the event of a change of control of the Company
(as defined in the supplemental indenture providing for the issue
of Series CE Bonds) is also a default under the Indenture.
If a default exists, the Trustee may and, at the request of the
holders of at least 25% of the principal amount of the
outstanding Bonds, shall declare all of the Bonds to be
immediately due and payable, subject to the right of the holders
of a majority of the principal amount of the outstanding Bonds to
rescind such declaration if the default has been cured. The
holders of at least 66 2/3% of the principal amount of the
outstanding Bonds (including at least 60% in principal amount of
Bonds of any Prior Series specially affected) may waive any
default except a payment default or a lien default. Upon a
default, all outstanding Bonds generally share ratably in
accordance with the principal, premium, if any, and interest then
owing on such outstanding Bonds. In addition to principal and
interest, the Indenture provides that the holders of the Series
CE and CH Bonds are entitled to receive upon default, a make-
whole premium.
Subject to provision for indemnification of the Trustee, the
holders of a majority in principal amount of outstanding Bonds
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee under the
Indenture. No holder of any Bond will have any right to
institute any proceeding with respect to the Indenture or for any
remedy thereunder, unless such holder shall have previously given
to the Trustee written notice of an existing default and unless
also the holders of at least 25% in principal amount of the
outstanding Bonds shall have made written request, and offered
reasonable security or indemnity, to the Trustee to institute
such proceeding as trustee, and the Trustee shall have failed to
institute such proceeding within 30 days. However, the holder of
any Bond will have an absolute right to receive payment of the
principal of and premium, if any, and interest on such Bond on or
after the due dates and to institute suit for the enforcement of
any such payment.
The Indenture requires the Company to certify to the Trustee at
the time of the issuance of any Bonds whether there is a default
in the performance or observance of any provision of the
Indenture. The Indenture also requires an annual opinion of
counsel as to the maintenance of the lien of the Indenture.
Modification of the Indenture
Modification and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the holders of at
least 66 2/3% in principal amount of the outstanding Bonds of all
series affected thereby and of each series affected thereby in a
manner different than other affected series; provided, however,
that no such modification or amendment may (i) without the
consent of the holder of a Bond, affect or impair the obligation
of the Company in respect of the principal of or premium and
interest on such Bond or change the amount or rate or extend the
time of such payment, or (ii) without the consent of the holders
of all Bonds outstanding, reduce the percentage required for a
modification or amendment or the creation, except as authorized,
of a lien prior to or on a parity with the lien of the Indenture.
The Company and the Trustee may agree to certain routine
modifications and amendments of the Indenture without the consent
of the holders of the Bonds, including modifications in regard to
matters arising under the Indenture as may be necessary or
desirable and not inconsistent with the security and protection
intended to be conferred upon the Trustee and the Bondholders.
Satisfaction and Discharge of the Indenture
The Indenture provides that when, among other things, all Bonds
not previously delivered to the Trustee for cancellation (i) have
become due and payable, (ii) will become due and payable at their
stated maturity within seven months, or (iii) are to be called
for redemption within seven months, and the Company deposits or
causes to be deposited with the Trustee a sum sufficient to pay
the whole amount of the principal of and premium, if any, and
interest due or to become due on the Bonds, then the Indenture
will cease to be of further effect (except as to the Company's
obligations to compensate, reimburse and indemnify the Trustee
pursuant to the Indenture and certain other obligations), and the
Company will be deemed to have satisfied and discharged the
Indenture.
Consolidation, Merger and Sale of Assets
The Indenture does not prevent the consolidation or merger of
the Company with or into any other corporation, or the merger
into the Company of any other corporation, or the sale or lease
by the Company of its assets substantially as an entirety,
provided that (i) any consolidation, merger, sale or transfer
shall be on terms that do not impair the lien of the Indenture or
any of the rights or powers of the Trustee or the holders of the
Bonds; (ii) the successor corporation shall expressly assume the
due and punctual payment of the Bonds and the observance and
performance of all covenants, conditions and provisions of the
Indenture; (iii) immediately after a merger or consolidation, the
surviving corporation shall be in compliance with the provisions
of the Indenture in all material respects; and (iv) so long as
the Series CH Bonds are outstanding, the successor corporation
shall be able to incur $1.00 of additional indebtedness for
borrowed money. See "Restrictive Covenants."
Book-Entry Notes
Unless otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in book-entry form
("Book-Entry Notes"). Upon issuance, all Book-Entry Notes having
identical terms and provisions will be represented by a single
global security (each, a "Global Note"). Unless otherwise
specified in a Pricing Supplement, each Global Note representing
Book-Entry Notes will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary"), and registered in
the name of a nominee of the Depositary. Except as set forth
below, a Global Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the
Depositary or any nominee to a successor of the Depositary or a
nominee of such successor.
The Depositary has advised the Company and the Agents that it
is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of its participants and
to facilitate the clearance and settlement of securities
transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities
brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not
participants may beneficially own securities held by the
Depositary only through participants.
Upon the issuance of Book-Entry Notes by the Company
represented by a Global Note, the Depositary will credit, on its
book-entry registration and transfer system, the respective
principal amounts of the Book-Entry Notes represented by such
Global Note to the accounts of participants. The accounts to be
credited shall be designated by the Agent through or by which
such Book-Entry Notes are sold. Ownership of beneficial
interests in a Global Note will be limited to participants or
persons that may hold interests through participants. In
addition, ownership of beneficial interests by participants in a
Global Note will be evidenced only by, and the transfer of any
such ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Note.
Ownership of beneficial interests in such a Global Note by
persons that hold through participants will be evidenced only by,
and the transfer of any such ownership interest within such
participant will be effected only through, records maintained by
such participant. The laws of some states require that certain
purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global
Note.
So long as the Depositary, or its nominee, is the registered
owner of a Global Note, the Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the
Book-Entry Notes represented by such Global Note for all purposes
under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note representing Book-Entry
Notes will not be entitled to have such Book-Entry Notes
registered in their names, will not receive or be entitled to
receive physical delivery of Notes in certificated form and will
not be considered the owners or holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest
in a Global Note must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of
the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture or such
Global Note. The Company understands that, under existing
industry practice, in the event that the Company requests any
action of holders of Book-Entry Notes or an owner of a beneficial
interest in a Global Note desires to take any action that the
Depositary, as the holder of such Global Note, is entitled to
take, the Depositary would authorize the participants to take
such action and that the participants would authorize beneficial
owners owning through such participants to take such action or
would otherwise act upon the instructions of beneficial owners
owning through them.
Payments of principal, interest and premium, if any, on the
Book-Entry Notes represented by one or more Global Notes will be
made by the Company through the Trustee to the Depositary, or its
nominee, as the case may be, as the registered owner of such
Global Note or Notes. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests. The Company expects that the Depositary,
upon receipt of any payment of principal, interest and premium,
if any, in respect of a Global Note, will credit immediately the
accounts of the related participants with payment in amounts
proportionate to their respective holdings in principal amount of
beneficial interests in such Global Note as shown on the records
of the Depositary. The Company also expects that payments by
participants to owners of beneficial interests in a Global Note
will be governed by standing customer instructions and customary
practices, as is now the case with securities held for the
accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
The Company will issue Notes in certificated form in exchange
for Global Notes representing Book-Entry Notes only if (i) the
Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the
Company within 90 days, (ii) the Company at any time determines
not to have Book-Entry Notes represented by one or more Global
Notes, or (iii) a default under the Indenture has occurred and is
continuing. In any such instance, an owner of a beneficial
interest in any Global Note will be entitled to physical delivery
of Notes in certificated form which are equal in principal amount
to such beneficial interest and to have such Notes registered in
its name. Such Notes so issued will be issued in registered form
only without coupons and in denominations of $1,000 and multiples
thereof. If notes are issued in certificate form, the Company
will execute a supplemental indenture providing for such
certificates and, among other things, establishing appropriate
record dates for the payment of interest.
The information above concerning the Depositary and the
Depositary's book-entry system has been obtained from the
Depositary. None of the Company, the Trustee or the Agents takes
responsibility for the accuracy or completeness thereof.
None of the Company, the Trustee or any agent for payment on or
registration of transfer or exchange of any Global Note will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests
in such Global Note or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
Concerning the Trustee
The First National Bank of Boston, as Trustee under the
Indenture, is the trustee for Bonds of the Company currently
outstanding under the Indenture. It has from time to time and
may continue to provide loans to the Company in the ordinary
course of business.
CERTAIN TAX CONSIDERATIONS
The following summarizes certain United States Federal income
tax considerations that may be relevant to a holder of Notes and
is based on laws, existing Treasury regulations, rulings,
judicial decisions and other authorities as of the date hereof,
all of which are subject to change. Prospective investors should
consult their own tax advisors in determining their tax
consequences from purchasing, holding or disposing of Notes,
including the application to their particular situations of the
tax considerations discussed below, and in determining the
application of state, local or other tax laws as well as
prospects for changes in Federal income tax laws or
interpretations.
Payments of interest on a Note (other than an OID Note, as
discussed below) will generally be taxable to a holder as gross
income at the time it is paid or accrued in accordance with the
holder's method of tax accounting. A Note may be issued for an
amount less than its stated redemption price at stated maturity,
and that difference may give rise to original issue discount
("OID"). Notes issued with OID are referred to as "OID Notes."
Holders of OID Notes should be aware that they must, in general,
include OID income on an accrual method, i.e., in advance of the
related cash payments. Notice will be given in the applicable
Pricing Supplement when the Company determines that a particular
Note will be an OID Note.
PLAN OF DISTRIBUTION
Under the terms of a Distribution Agreement between the Agents
and the Company, the Notes are being offered on a continuing
basis by the Company through the Agents, which have agreed to use
their reasonable efforts to solicit offers to purchase the Notes.
The Notes will be issued at 100% of the principal amount thereof,
unless otherwise indicated in the applicable Pricing Supplement.
The Company will pay to the Agents a commission of from .125% to
.750% of the principal amount of each Note, depending on its
maturity, sold through the Agents. The Company has reserved the
right to appoint other agents, upon 30 days' prior written notice
to the Agents, but only if such other agent agrees to be bound by
the terms of the Distribution Agreement; any such other agents
will be named in the appropriate Pricing Supplement. The Company
and the Agents will have the right to accept offers to purchase
Notes and may reject any such offer, in whole or in part.
The Company also may sell Notes to any Agent, acting as
principal, at a discount to be agreed upon at the time of sale,
for resale to one or more investors or to another broker-dealer
(acting as principal for purposes of resale) at varying prices
related to prevailing market prices at the time of such resale,
as determined by such Agent. An Agent may resell a Note
purchased by it as principal to another broker-dealer at a
discount, provided such discount does not exceed the commission
or discount received by such Agent from the Company in connection
with the original sale of such Note. The Company may also sell
Notes directly to investors on its own behalf at a price to be
agreed upon at the time of sale. In the case of sales made
directly by the Company, no commission or discount will be paid
or allowed.
The Notes will not have an established trading market when
issued and will not be listed on any securities exchange. The
Agents may make a market in the Notes but are not obligated to do
so and may discontinue any market-making at any time without
notice. There can be no assurance of a secondary market for any
Notes, or that any Notes will be sold.
The Agents, whether acting as agent or principal, and dealers
to which the Agents may sell for resale to investors or other
purchasers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act").
The Company has agreed to indemnify the Agents against certain
civil liabilities, including liabilities under the Securities
Act, or to contribute to payments the Agents may be required to
make in respect thereof. The Company also has agreed to
reimburse the Agents for certain expenses.
The Agents have in the past performed, and in the future may
perform, various services for the Company in the ordinary course
of business.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company
by Palmer & Dodge, counsel to the Company, One Beacon Street,
Boston, Massachusetts, and certain legal matters will be passed
upon for the Agents by Winthrop, Stimson, Putnam & Roberts, One
Battery Park Plaza, New York, New York.
EXPERTS
The financial statements and schedules included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994, incorporated by reference in this Prospectus and in the
Registration Statement, have been audited by Grant Thornton LLP,
independent auditors, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said
reports.
No dealer, salesperson or any
other person has been
authorized to give any
information or to make any $75,000,000
representation not contained
in this Prospectus (including
any accompanying Pricing Colonial Gas
Supplement) and, if given or Company
made, such information or
representation must not be
relied upon as having been
authorized by the Company or
by any of the Agents. This
Prospectus (including any SECURED MEDIUM TERM
accompanying Pricing NOTES, SERIES A
Supplement) does not
constitute an offer to sell or
a solicitation of any offer to ________________
buy any of the securities
offered hereby or thereby in
any jurisdiction to any person PROSPECTUS
to whom it is unlawful to make
such offer in such
jurisdiction. Neither the September 27, 1995
delivery of this Prospectus by _________________
the Company or any of the
Agents nor any sale made Smith Barney Inc.
hereunder shall, under any
circumstances, create any A.G. Edwards & Sons, Inc.
implication that there has
been no change in the affairs PaineWebber Incorporated
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 its
date.
_______________
TABLE OF CONTENTS
Page
Available Information
Incorporation of Certain
Information by Reference
The Company
Selected Financial
Information
Use of Proceeds
Description of Notes
Certain Tax Considerations
Plan of Distribution
Legal Opinions
Experts
