Rule 424 (b)(1)
Registration Nos. 33-53673
33-53673-01
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 10, 1994
4,000,000 Preferred Securities
Met-Ed Capital
9% Cumulative Monthly Income Preferred Securities ("MIPS"*),
Series A
(liquidation preference $25 per Preferred Security)
guaranteed to the extent the issuer has funds
as set forth herein by
METROPOLITAN EDISON COMPANY
__________________
The 9% Cumulative Monthly Income Preferred Securities, Series
A (the "Series A Preferred Securities"), representing the limited
partner interests offered hereby, are being issued by Met-Ed
Capital, L.P., a limited partnership formed under the laws of the
State of Delaware ("Met-Ed Capital"). All of the general partner
interests in Met-Ed Capital are owned by Met-Ed Preferred Capital,
Inc. (the "General Partner"), a Delaware corporation and a wholly
owned subsidiary of Metropolitan Edison Company, a Pennsylvania
corporation (the "Company"). Met-Ed Capital exists for the sole
purpose of issuing its partner interests and using the proceeds
thereof to purchase the Company's subordinated debentures. The
limited partner interests represented by the Series A Preferred
Securities will have a preference with respect to cash
distributions (hereinafter called "Dividends") and amounts payable
on liquidation over the general partner interests in Met-Ed
Capital. See "Description of Preferred Securities" in the
accompanying Prospectus.
Holders of the Series A Preferred Securities will be entitled
to receive cumulative preferential cash Dividends at an annual rate
of 9% of the liquidation preference of $25 per Series A Preferred
Security, accruing from the date of original issuance and payable
monthly in arrears on the last day of each calendar month of each
year, commencing August 31, 1994. The payment of Dividends, to the
extent that Met-Ed Capital has sufficient cash on hand to permit
such payments and funds legally available therefor, and payments on
liquidation or redemption with respect to the Series A Preferred
Securities are guaranteed on a limited basis by the Company to the
extent set forth herein and in the accompanying Prospectus (the
"Limited Guarantee"). See "Description of the Limited Guarantee"
in the accompanying Prospectus. If the Company fails to make
interest payments on the 9% Deferrable Interest Subordinated
Debentures, Series A ("Series A Deferrable Interest Subordinated
Debentures") purchased by Met-Ed Capital with the proceeds of this
offering, Met-Ed Capital will have insufficient funds to pay
Dividends on the Series A Preferred Securities, and, since the
Limited Guarantee does not cover the payment of Dividends for which
Met-Ed Capital does not have sufficient funds available, the
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Company would not be obligated under the Limited Guarantee to make
such undeclared Dividend payments. In such event, the remedy of a
holder of Series A Preferred Securities is to enforce Met-Ed
Capital's rights under the Series A Deferrable Interest
Subordinated Debentures. See "Description of the Deferrable
Interest Subordinated Debentures - Enforcement of Certain Rights by
Holders of Preferred Securities".
The Company's obligations under the Limited Guarantee and the
Series A Deferrable Interest Subordinated Debentures are
subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company (which aggregated
approximately $673,000,000 at June 30, 1994). In addition, the
Company may defer interest payments on the Series A Deferrable
Interest Subordinated Debentures for up to 60 consecutive months.
However, during any deferral period (which the Company considers
remote), the Company may not declare or pay any dividends on, or
redeem or acquire, any of its preferred or common stock.
The Series A Preferred Securities are redeemable at the option
of Met-Ed Capital, in whole or in part, from time to time, on or
after August 23, 1999, at $25 per Series A Preferred Security plus
any accumulated, unpaid and additional Dividends accrued thereon to
the date fixed for redemption (the "Redemption Price"), and will be
redeemed at such price from the proceeds of any repayment or
redemption of the Series A Deferrable Interest Subordinated
Debentures. See "Description of Preferred Securities-Mandatory
Redemption; Optional Redemption".
If at any time Met-Ed Capital or the Company, due to a change
in law or a pronouncement or decision interpreting or applying any
applicable law, is or would be required to pay certain additional
amounts or to withhold or deduct certain amounts, the Series A
Preferred Securities are redeemable in whole or in part at the
Redemption Price at the option of Met-Ed Capital. In addition,
upon the occurrence of certain special events arising from a change
in law or a pronouncement or decision interpreting or applying such
law, the Series A Preferred Securities are redeemable in whole at
the Redemption Price at the option of Met-Ed Capital. Upon the
occurrence of such a special event, Met-Ed Capital may dissolve and
cause Series A Deferrable Interest Subordinated Debentures to be
distributed to the holders of the Series A Preferred Securities in
liquidation of their interests in Met-Ed Capital. See "Description
of Preferred Securities-Optional Redemption; Special Event
Redemption or Distribution" and "Description of the Deferrable
Interest Subordinated Debentures" in the accompanying Prospectus.
If the Series A Deferrable Interest Subordinated Debentures are so
distributed, the Company will use its best efforts to have them
listed on the same exchange on which the Series A Preferred
Securities are then listed.
In the event of the dissolution of Met-Ed Capital, the holders
of Series A Preferred Securities will be entitled to a liquidation
preference for each Series A Preferred Security of $25 plus any
accumulated, unpaid and additional Dividends accrued thereon to the
date of payment, unless, in connection with such dissolution,
Series A Deferrable Interest Subordinated Debentures are
distributed to the holders of the Series A Preferred Securities.
See "Description of Preferred Securities-Liquidation Distribution"
in the accompanying Prospectus.
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___________________
See "Certain Investment Considerations" for certain
considerations relevant to an investment in the Series A Preferred
Securities, including circumstances under which payment of
Dividends on the Series A Preferred Securities may be deferred and
optional redemption events.
___________________
The Series A Preferred Securities have been approved for listing
on the New York Stock Exchange, subject to official
notice of issuance.
___________________
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.
____________________
Proceeds to
Initial Public Underwriting Met-Ed
Offering Price Commission(1) Capital (2)(3)
Per Series A
Preferred
Security.......... $ 25.00 (2) $ 25.00
Total.............. $100,000,000 (2) $100,000,000
________
(1) Met-Ed Capital and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting".
(2) In view of the fact that the proceeds of the sale of the
Series A Preferred Securities will be used to purchase the
Company's Series A Deferrable Interest Subordinated Debentures, the
Company will pay the Underwriters, as compensation for their
services, the amount of $.7875 per Series A Preferred Security (or
$3,150,000 in the aggregate). See "Underwriting".
(3) Expenses of the offering which are payable by the Company are
estimated to be $480,000.
The Series A Preferred Securities offered hereby are offered
severally by the Underwriters, as specified herein, subject to
receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of
certificates for the Series A Preferred Securities will be made
only in book-entry form through the facilities of The Depository
Trust Company on or about August 23, 1994.
________
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* An application has been filed by Goldman, Sachs & Co. with the
United States Patent and Trademark Office for the registration of
the MIPS servicemark.
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
Morgan Stanley & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
The date of this Prospectus Supplement is August 16, 1994.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY
BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
___________________
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The following information concerning the Series A Preferred
Securities, the Limited Guarantee and the Series A Deferrable
Interest Subordinated Debentures supplements and should be read in
conjunction with the information contained in the accompanying
Prospectus. Capitalized terms used in this Prospectus Supplement
have the same meanings as in the accompanying Prospectus.
MET-ED CAPITAL
Met-Ed Capital is a limited partnership formed under the laws
of the State of Delaware, all of the general partner interests in
which are owned by the General Partner, a wholly owned special
purpose subsidiary of the Company. Met-Ed Capital exists solely
for the purpose of issuing its partner interests and utilizing the
proceeds thereof to acquire the Company's Deferrable Interest
Subordinated Debentures. All of the business and affairs of Met-Ed
Capital will be managed by the General Partner, subject to Met-Ed
Capital's Amended and Restated Limited Partnership Agreement, which
will be substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part.
METROPOLITAN EDISON COMPANY
The Company, a public utility furnishing electric service
wholly within the Commonwealth of Pennsylvania, is a subsidiary of
General Public Utilities Corporation ("GPU"), a holding company
registered under the Public Utility Holding Company Act of 1935.
In 1993, the Company provided retail service to approximately
445,000 customers in an area in eastern and south central
Pennsylvania having an estimated population of 950,000. The
Company also sells electricity at wholesale to four municipalities
having an estimated population of over 11,000. The Company is
affiliated with Jersey Central Power & Light Company and
Pennsylvania Electric Company, which are also wholly owned
subsidiaries of GPU.
CERTAIN INVESTMENT CONSIDERATIONS
Prospective purchasers of the Series A Preferred Securities
should carefully review the information contained elsewhere in this
Prospectus Supplement and in the accompanying Prospectus and should
particularly consider the following matters:
Subordinate Obligations Under the Limited Guarantee and
the Series A Deferrable Interest Subordinated Debentures. The
Company's obligations under the Limited Guarantee and the
Series A Deferrable Interest Subordinated Debentures are
subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company. At June 30, 1994,
Senior Indebtedness of the Company aggregated approximately
$673,000,000. There are no terms in the Series A Preferred
Securities, the Series A Deferrable Interest Subordinated
Debentures or the Limited Guarantee that limit the Company's
ability to incur additional indebtedness, including
indebtedness that ranks senior to the Series A Deferrable
Interest Subordinated Debentures and the Limited Guarantee.
See "Description of the Limited Guarantee-Status of the
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Limited Guarantee" and "Description of the Deferrable Interest
Subordinated Debentures- Subordination" in the accompanying
Prospectus.
Option to Extend Interest Payment Period. The Company
has the right under the Indenture to extend the interest
payment period on the Series A Deferrable Interest
Subordinated Debentures at any time and from time to time to
up to 60 consecutive months, and, as a consequence, monthly
Dividends on the Series A Preferred Securities can be deferred
by Met-Ed Capital during any such extended interest payment
period (but will continue to accumulate, with Dividends
accruing thereon at the rate applicable to the Series A
Preferred Securities). In the event that the Company
exercises its right to extend, the Company may not declare or
pay dividends on any shares of its preferred or common stock
until deferred interest on the Series A Deferrable Interest
Subordinated Debentures is paid in full. Met-Ed Capital and
the Company currently believe that the extension of an
interest payment period on the Series A Deferrable Interest
Subordinated Debentures is remote. See "Description of
Preferred Securities-Dividends" and "Description of the
Deferrable Interest Subordinated Debentures-Option to Extend
Interest Payment Period" in the accompanying Prospectus.
Should an extended interest payment period occur, Met-Ed
Capital will continue to accrue income for United States
federal income tax purposes with respect to such deferred
interest which income will be allocated, but not distributed,
to holders of Series A Preferred Securities. As a result,
such a holder will include such interest in gross income for
United States federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such
income from Met-Ed Capital if such a holder disposes of the
Series A Preferred Securities prior to the record date for
payment of Dividends. See "United States Taxation-Potential
Extension of Interest Payment Period" in the accompanying
Prospectus.
Special Event Redemption or Distribution. Upon the
occurrence and continuation of a Tax Event arising from a
change in law or a pronouncement or decision interpreting or
applying any applicable law (see "Description of Preferred
Securities - Special Event Redemption or Distribution" in the
accompanying Prospectus), the General Partner may elect to
either: (i) redeem the Series A Preferred Securities in whole
(and not in part); or (ii) dissolve Met-Ed Capital and cause
the Series A Deferrable Interest Subordinated Debentures to be
distributed to the holders of the Series A Preferred
Securities in liquidation of such holders' interests in Met-Ed
Capital, provided that Met-Ed Capital shall have received an
opinion of counsel (which may be regular tax counsel to the
Company or an affiliate but not an employee thereof) to the
effect that the holders of the Series A Preferred Securities
will not recognize any gain or loss for federal income tax
purposes as a result of such dissolution and distribution.
Alternatively, Met-Ed Capital may elect to cause the Series A
Preferred Securities to remain outstanding. If an Investment
4
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Company Act Event (see "Description of Preferred Securities -
Special Event Redemption or Distribution" in the accompanying
Prospectus) shall occur and be continuing, Met-Ed Capital must
elect either option (i) or (ii) above.
In April 1994, the Internal Revenue Service issued
certain notices generally addressing the characteristics which
distinguish debt from equity for various purposes under the
federal income tax laws. In these notices, the IRS indicated
that transactions involving securities that, like the
securities offered hereunder, have both debt and equity
characteristics would be reviewed with scrutiny to determine
how they would be treated for tax purposes. Based upon advice
from Carter, Ledyard & Milburn, the Company's special tax
counsel, the Company believes that interest on the Series A
Deferrable Interest Subordinated Debentures will be deductible
under the tests referred to in these notices. If, as a result
of a change in law or a pronouncement or decision interpreting
or applying any applicable law, Met-Ed Capital receives an
opinion of counsel to the effect that interest on the Series A
Deferrable Interest Subordinated Debentures would not be
deductible, Met-Ed Capital would have the option to redeem the
Series A Preferred Securities or to dissolve and cause Series
A Deferrable Interest Subordinated Debentures to be
distributed to the holders of the Series A Preferred
Securities, as described under "Description of Preferred
Securities-Special Event Redemption or Distribution" in the
accompanying Prospectus.
USE OF PROCEEDS
The proceeds to be received by Met-Ed Capital from the sale of
the Series A Preferred Securities will be used to purchase Series A
Deferrable Interest Subordinated Debentures of the Company and will
be applied by the Company to the repayment of outstanding short-
term debt, for construction purposes and for other general
corporate purposes, including the redemption of outstanding senior
securities pursuant to the optional redemption provisions thereof,
if economical.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
The following information should be read in conjunction with
the statements under "Description of Preferred Securities" in the
accompanying Prospectus.
Amount, Dividends, Redemption
An aggregate of 4,000,000 Series A Preferred Securities,
having an aggregate stated liquidation preference of $100,000,000
($25 per Series A Preferred Security), are being offered hereby.
Dividends on the Series A Preferred Securities will be cumulative,
will accrue from the date of original issuance and will be payable
monthly in arrears on the last day of each calendar month of each
year, commencing August 31, 1994, except as otherwise described in
the accompanying Prospectus.
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The Dividends payable on each Series A Preferred Security will
be fixed at a rate per annum of 9% of the $25 stated liquidation
preference thereof.
The Series A Preferred Securities will be redeemable at the
option of Met-Ed Capital, in whole or in part from time to time, on
or after August 23, 1999 at the Redemption Price. In addition, the
Series A Preferred Securities are subject to redemption at the
Redemption Price under circumstances described under "Description
of Preferred Securities-Mandatory Redemption;Optional Redemption;
Special Event Redemption or Distribution" in the accompanying
Prospectus.
CERTAIN TERMS OF THE SERIES A DEFERRABLE INTEREST SUBORDINATED
DEBENTURES
The following information should be read in conjunction with
the statements under "Description of the Deferrable Interest
Subordinated Debentures" in the accompanying Prospectus.
General
The Series A Deferrable Interest Subordinated Debentures will
be issued under the Indenture dated as of August 1, 1994 between
the Company and United States Trust Company of New York, as
Trustee, and may be distributed to the holders of Series A
Preferred Securities upon a dissolution of Met-Ed Capital under
circumstances described under "Description of Preferred Securities-
Special Event Redemption or Distribution" in the accompanying
Prospectus.
Principal Amount, Interest, Maturity, Redemption
An aggregate of $103,092,800 principal amount of Series A
Deferrable Interest Subordinated Debentures will be issued, such
amount being the sum of the aggregate stated liquidation preference
of the Series A Preferred Securities and the General Partner's
related capital contribution.
Each Series A Deferrable Interest Subordinated Debenture will
bear interest at the rate of 9% per annum from the original date of
issuance, payable monthly in arrears on the last day of each
calendar month of each year, except as otherwise provided in the
accompanying Prospectus.
The Series A Deferrable Interest Subordinated Debentures will
mature on August 23, 2043 and will be redeemable at the option of
the Company at any time on or after August 23, 1999 at a Debenture
Redemption Price equal to 100% of their principal amount plus
accrued and unpaid interest to the Redemption Date, together with
any additional interest accrued thereon. The Series A Deferrable
Interest Subordinated Debentures are also redeemable upon the
occurrence of certain events which cause the Series A Preferred
Securities to become redeemable. Proceeds from the repayment or
redemption of Series A Deferrable Interest Subordinated Debentures
will be applied to redeem the Series A Preferred Securities.
6
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UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, Met-Ed Capital has agreed to sell to each of the several
Underwriters named below, and each of the Underwriters, for whom
Goldman, Sachs & Co., Dean Witter Reynolds Inc., A.G. Edwards &
Sons, Inc., Kidder, Peabody & Co. Incorporated, Morgan Stanley &
Co. Incorporated, PaineWebber Incorporated and Prudential
Securities Incorporated are acting as Representatives, has
severally agreed to purchase from Met-Ed Capital the respective
number of Series A Preferred Securities set forth opposite its name
below:
Number of
Series A
Preferred
Underwriter Securities
Goldman, Sachs & Co. . . . . . . . . . . . 375,000
Dean Witter Reynolds Inc. . . . . . . . . . 375,000
A.G. Edwards & Sons, Inc. . . . . . . . . . 375,000
Kidder, Peabody & Co. Incorporated . . . . 375,000
Morgan Stanley & Co. Incorporated . . . . . 375,000
PaineWebber Incorporated . . . . . . . . . 375,000
Prudential Securities Incorporated . . . . 375,000
Advest, Inc. . . . . . . . . . . . . . . . 25,000
Arthurs, Lestrange & Company Incorporated . 25,000
Bear, Stearns & Co. Inc. . . . . . . . . . 50,000
J.C. Bradford & Co. . . . . . . . . . . . . 25,000
Alex. Brown & Sons Incorporated . . . . . . 50,000
CS First Boston Corporation . . . . . . . . 50,000
JW Charles Securities, Inc. . . . . . . . . 25,000
Commerzbank Capital Markets Corporation . . 25,000
Cowen & Company . . . . . . . . . . . . . . 25,000
Credit Lyonnais Securities (USA) Inc. . . . 25,000
Crowell, Weedon & Co. . . . . . . . . . . . 25,000
Dain Bosworth Incorporated . . . . . . . . 25,000
Davenport & Co. of Virginia, Inc. . . . . . 25,000
Dillon, Reed & Co. Inc. . . . . . . . . . . 50,000
Doft & Co., Inc. . . . . . . . . . . . . . 25,000
Donaldson, Lufkin & Jenrette Securities
Corporation . . . . . . . . . . . . . . . 50,000
Fahnestock & Co. Inc. . . . . . . . . . . . 25,000
Furman Selz Incorporated . . . . . . . . . 25,000
Gruntal & Co. Incorporated . . . . . . . . 25,000
J.J.B. Hilliard, W.L. Lyons, Inc. . . . . . 25,000
Interstate/Johnson Lane Corporation . . . . 25,000
Janney Montgomery Scott Inc. . . . . . . . 25,000
Josephthal Lyon & Ross Incorporated . . . . 25,000
Kemper Securities, Inc. . . . . . . . . . . 50,000
Legg Mason Wood Walker Incorporated . . . . 25,000
McDonald & Company Securities, Inc. . . . . 25,000
McGinn, Smith & Co., Inc. . . . . . . . . . 25,000
Morgan Keegan & Company, Inc. . . . . . . . 25,000
The Ohio Company . . . . . . . . . . . . . 25,000
Olde Discount Corporation . . . . . . . . . 25,000
Oppenheimer & Co, Inc. . . . . . . . . . . 50,000
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Parker/Hunter Incorporated . . . . . . . . 25,000
Pennsylvania Merchant Group Ltd. . . . . . 25,000
Piper Jaffray Inc. . . . . . . . . . . . . 25,000
Principal Financial Securities, Inc. . . . 25,000
Pryor, McClendon, Counts & Co., Inc. . . . 25,000
Rauscher Pierce Refsnes, Inc. . . . . . . . 25,000
Raymond James & Associates, Inc. . . . . . 25,000
The Robinson-Humphrey Company, Inc. . . . . 25,000
Rodman & Renshaw, Inc. . . . . . . . . . . 25,000
SBCI Swiss Bank Corporation Investment
Banking Inc. . . . . . . . . . . . . . 50,000
Salomon Brothers Inc. . . . . . . . . . . . 50,000
Stifel, Nicolaus & Company, Incorporated . 25,000
Sturdivant & Co., Inc. . . . . . . . . . . 25,000
Tucker Anthony Incorporated . . . . . . . . 25,000
Wheat, First Securities, Inc. . . . . . . . 25,000
Total . . . . . . . . . . . 4,000,000
Under the terms and conditions of the Underwriting Agreement,
the Underwriters are committed to take and pay for all such Series
A Preferred Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred
Securities in part directly to the public at the initial public
offering price set forth on the cover page of this Prospectus
Supplement, and in part to certain securities dealers at such price
less a concession of $.50 per Series A Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession
not in excess of $.25 per Series A Preferred Security to certain
brokers and dealers. After the Series A Preferred Securities are
released for sale to the public, the offering price and other
selling terms may from time to time be varied by the
Representatives.
In view of the fact that the proceeds of the sale of the
Series A Preferred Securities will be used to purchase the
Company's Series A Deferrable Interest Subordinated Debentures, the
Company will pay to the Underwriters, as compensation for their
services, the amount of $.7875 per Series A Preferred Security for
the accounts of the several Underwriters.
The Company and Met-Ed Capital have agreed, during the period
beginning from the date of the Underwriting Agreement and
continuing to and including the earlier of (i) the date, after the
closing date, on which the distribution of the Series A Preferred
Securities and the Limited Guarantee ceases, as determined by the
Underwriters, or (ii) 90 days after the closing date, not to offer,
sell, contract to sell, or otherwise dispose of any Series A
Preferred Securities, any limited partner interests of Met-Ed
Capital, or any preferred stock or any other securities of Met-Ed
Capital or the Company which are substantially similar to the
Series A Preferred Securities or the Limited Guarantee, or any
securities convertible into or exchangeable for Series A Preferred
Securities, limited partner interests, preferred stock or such
substantially similar securities of either Met-Ed Capital or the
Company without the prior written consent of the Underwriters.
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Prior to this offering, there has been no public market for
the Series A Preferred Securities. In order to meet one of the
requirements for listing the Series A Preferred Securities on the
New York Stock Exchange, the Underwriters will undertake to sell
lots of 100 or more Series A Preferred Securities to a minimum of
400 beneficial holders.
Met-Ed Capital and the Company have agreed to indemnify the
Underwriters against certain liabilities, including liabilities
under the Securities Act.
Certain of the Underwriters engage in transactions with, and
from time to time have performed services for, the Company and its
affiliates in the ordinary course of business.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Company and
Met-Ed Capital by Berlack, Israels & Liberman, New York, New York,
and Ryan, Russell, Ogden & Seltzer, Reading, Pennsylvania, and for
the Underwriters by Reid & Priest, New York, New York. Certain
matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to Met-Ed Capital.
Berlack, Israels & Liberman and Reid & Priest may rely on the
opinion of Ryan, Russell, Ogden & Seltzer as to matters of
Pennsylvania law, and Berlack, Israels & Liberman, Ryan, Russell,
Ogden & Seltzer and Reid & Priest may rely on the opinion of
Richards, Layton & Finger, P.A., as to matters of Delaware law.
Members and attorneys of Berlack, Israels & Liberman own an
aggregate of 12,091 shares of the Common Stock of the Company's
parent, GPU. In addition, one such member holds 986 such shares as
custodian for his children. Members and attorneys of Ryan,
Russell, Ogden & Seltzer own an aggregate of 2,000 shares of the
Common Stock of GPU.
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PROSPECTUS
$125,000,000
MET-ED CAPITAL
Preferred Securities
guaranteed to the extent the issuer has funds as
set forth herein by
METROPOLITAN EDISON COMPANY
Met-Ed Capital, L.P. ("Met-Ed Capital"), a Delaware limited
partnership, all of the general partner interests in which are
owned by a wholly owned subsidiary of Metropolitan Edison Company
(the "Company"), may offer, from time to time, its preferred
securities, representing limited partner interests ("Preferred
Securities"), in one or more series. The payment of periodic cash
distributions (hereinafter called "Dividends") with respect to
Preferred Securities of any series, out of funds held by Met-Ed
Capital and legally available therefor, and payments on liquidation
or redemption with respect to the Preferred Securities are
guaranteed on a limited basis by the Company to the extent
described herein (the "Limited Guarantee"). The Company's
obligations under the Limited Guarantee are subordinate and junior
in right of payment to all present and future Senior Indebtedness
(as defined herein) of the Company but senior in right of payment
to the Company's preferred and common stock. Deferrable Interest
Subordinated Debentures of the Company ("Deferrable Interest
Subordinated Debentures") will also be issued and sold from time to
time in one or more series by the Company to Met-Ed Capital in
connection with the investment of the proceeds from the offering of
Preferred Securities. Deferrable Interest Subordinated Debentures
subsequently may be distributed to holders of Preferred Securities
in connection with a dissolution of Met-Ed Capital upon the
occurrence of certain events as described under "Description of
Preferred Securities - Special Event Redemption or Distribution".
The Deferrable Interest Subordinated Debentures will be unsecured
and subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company. The Preferred
Securities may be offered in amounts, at prices and on terms to be
determined at the time of offering; provided, however, that the
aggregate initial public offering price of all Preferred Securities
offered hereby shall not exceed $125,000,000.
The specific designation, Dividend rate (or method of
determination thereof), and any other rights, preferences,
privileges, limitations and restrictions relating to the Preferred
Securities of the particular series in respect of which this
Prospectus is being delivered will be set forth in a Prospectus
Supplement pertaining to such series (a "Prospectus Supplement").
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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 PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_________________________
The Preferred Securities may be sold to or through
underwriters or dealers as designated from time to time. See "Plan
of Distribution". The names of any such underwriters or dealers
involved in the sale of the Preferred Securities of the particular
series in respect of which this Prospectus is being delivered, the
number of Preferred Securities to be purchased by any such
underwriters or dealers and any applicable commissions or discounts
will be set forth in a Prospectus Supplement. The net proceeds to
the Company will also be set forth in a Prospectus Supplement.
The date of this Prospectus is August 10, 1994.
<PAGE>
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 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 the following Regional Offices of
the Commission: Seven World Trade Center, New York, New York
10048; and 500 West Madison Street, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain of the
Company's securities are listed on, and reports and other
information concerning the Company may also be inspected at the
offices of, the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
This Prospectus does not contain all the information set forth
in the Registration Statement on Form S-3 (herein, together with
all amendments and exhibits thereto, referred to as the
"Registration Statement"), which the Company and Met-Ed Capital
have filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). Statements contained or
incorporated by reference herein concerning the provisions of
documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the
Registration Statement.
No separate financial statements of Met-Ed Capital have been
included herein. The Company and Met-Ed Capital do not consider
that such financial statements would be material to holders of
Preferred Securities because Met-Ed Capital is a newly formed
special purpose entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage
in, any activity other than as set forth below. See "Met-Ed
Capital".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with
the Commission pursuant to the Exchange Act are incorporated herein
by reference:
1. The Company's Annual Report on Form 10-K for
the year ended December 31, 1993;
2. The Company's Current Reports on Form 8-K dated
February 16, 1994, February 28, 1994, June 10,1994, July 12, 1994
and August 9, 1994; and
3. The Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1994 and June 30, 1994.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of the securities offered hereby shall
be deemed to be incorporated by reference herein and to be a part
<PAGE>
hereof from the date of filing of such documents. Any statement
contained herein or in a document all or a portion of which is
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 contained herein or in
any other subsequently filed document which also is or is deemed to
be incorporated by reference herein or in a Prospectus Supplement
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.
Any person receiving a copy of this Prospectus or any
Prospectus Supplement may obtain, without charge, upon written or
oral request, a copy of any or all of the documents incorporated
herein or therein by reference (not including the exhibits to such
documents, unless such exhibits are specifically incorporated by
reference in such documents). Requests for such copies should be
directed to Metropolitan Edison Company, P.O. Box 16001, Reading,
Pennsylvania 19640, Attention: Secretary. The Company's telephone
number is (610) 929-3601.
METROPOLITAN EDISON COMPANY
The Company, a public utility furnishing electric service
wholly within the Commonwealth of Pennsylvania, is a subsidiary of
General Public Utilities Corporation ("GPU"), a holding company
registered under the Public Utility Holding Company Act of 1935.
In 1993, the Company provided retail service to approximately
445,000 customers in an area in eastern and south central
Pennsylvania having an estimated population of 950,000. The
Company also sells electricity at wholesale to four municipalities
having an estimated population of over 11,000. The Company's
subsidiary, York Haven Power Company, is the owner and licensee of
the York Haven Hydroelectric Project. The Company's principal
executive offices are located at 2800 Pottsville Pike, Reading,
Pennsylvania 19605, and its telephone number is (610) 929-3601.
For the year 1993, electric sales to residential customers
accounted for about 43% of operating revenues from customers and
36% of kilowatt-hour ("kwh") sales to customers; sales to
commercial customers accounted for about 28% of operating revenues
from customers and 26% of kwh sales to customers; sales to
industrial customers accounted for about 27% of operating revenues
from customers and 35% of kwh sales to customers; and sales to
rural electric cooperatives, municipalities (primarily for street
and highway lighting) and others accounted for about 2% of
operating revenues from customers and 3% of kwh sales to customers.
The Company also makes interchange and spot market sales of
electricity to other utilities. The revenues derived from the
largest single industrial customer accounted for approximately 2%
of operating revenues from customers for the year 1993 and the 25
largest industrial customers in the aggregate accounted for
approximately 11% of such revenues.
The electric generating and transmission facilities of the
Company and its affiliates, Jersey Central Power & Light Company
and Pennsylvania Electric Company (collectively, the "GPU System"),
are physically interconnected and are operated as a single
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integrated and coordinated system. The transmission facilities of
the integrated system are physically interconnected with
neighboring nonaffiliated utilities in Pennsylvania, New Jersey,
Maryland, New York and Ohio. The Company is a member of the
Pennsylvania-New Jersey-Maryland Interconnection ("PJM") and the
Mid-Atlantic Area Council, an organization providing coordinated
review of the planning by utilities in the PJM area. The
interconnection facilities are used for substantial capacity and
energy interchange and purchased power transactions as well as
emergency assistance.
The Company owns 50% undivided interests in Unit 1 and the
inactive Unit 2 of the Three Mile Island nuclear generating station
near Middletown, Pennsylvania. The Company's nuclear generating
facilities are operated and maintained by GPU Nuclear Corporation,
a subsidiary of GPU. The Company and its affiliates are seeking
regulatory approvals for GPU Generation Corporation, a newly formed
subsidiary of GPU, to operate and maintain their fossil-fueled and
hydroelectric generating facilities.
RECENT DEVELOPMENTS
On July 11, 1994, the Pennsylvania Commonwealth Court
reversed a March 1993 rate order issued by the Pennsylvania Public
Utility Commission ("PaPUC") allowing the Company to recover from
customers certain future Three Mile Island Unit No. 2 ("TMI-2")
retirement costs. As a result of this decision, the Company
recorded a pre-tax charge to income totalling $127.6 million in the
quarter ended June 30, 1994. The Company plans to begin making
non-recoverable contributions to an external trust to fund its TMI-
2 retirement costs in late 1995. The Company will also be required
to charge to expense its share of any future increases in the
estimates of these costs. The Company intends to file a petition
with the Pennsylvania Supreme Court seeking review of the
Commonwealth Court decision.
Also during the quarter ended June 30, 1994, the Company
recorded a pre-tax charge to income of $35 million for costs
related to acceptance by Company employees of a voluntary enhanced
retirement program offered in April 1994. Approximately 11% of the
GPU System's workforce accepted the program, which is part of the
GPU System's corporate realignment program designed to reduce
overall costs and enhance the System's competitive position.
As a result of these pre-tax charges to income, the
interest and dividend coverage requirements in the Company's
indenture and charter will prevent the Company from issuing any
additional first mortgage bonds or cumulative preferred stock
(other than $65 million of additional first mortgage bonds issuable
on the basis of previously retired bonds) for approximately one
year. The issuance of Preferred Securities is not subject to such
coverage requirements; the Company's ability to issue Deferrable
Interest Subordinated Debentures is, however, subject to the
restrictions in the Company's charter that outstanding unsecured
indebtedness may not, in general, exceed 20% of the Company's
outstanding secured indebtedness and capital stock, premium and
surplus thereon.
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<PAGE>
(For further information, reference is made to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994 which is incorporated herein by reference).
FINANCING PROGRAM
Depending upon market conditions, during 1994 and 1995 Met-Ed
Capital expects to offer up to $125,000,000 stated liquidation
preference of Preferred Securities, the proceeds of which would be
used to purchase the Company's Deferrable Interest Subordinated
Debentures. The Company may also offer during such period
additional first mortgage bonds, which may be in the form of
secured medium-term notes, although the Company will be able to
issue only $65 million of such additional securities until mid 1995
due to interest coverage restrictions in the Company's indenture.
See "Recent Developments". The Company also expects to have short-
term borrowings outstanding from time to time during such period.
CERTAIN COMPANY CONSOLIDATED FINANCIAL INFORMATION (1)
(Dollars In Thousands)
Twelve
Months Ended
June 30, 1994
Years Ended December 31, (unaudited)
1991 1992 1993
Income Summary:
Operating
Revenues $788,462 $821,823 $801,487 $807,148
Net Income 62,341 73,077 77,875 (3,875)
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June 30, 1994
(unaudited)
Actual Pro Forma (2)
Amount % Amount %
Capital Structure:
Long-term debt
(including unamortized
net discount)(3) $ 570,315 46.3% $ 570,315 42.1%
Preferred Stock
(including premium) 58,659 4.8 58,659 4.3
Preferred Securities of
Subsidiary - - 125,000 9.2
Common Equity 601,876 48.9 601,876 44.4
Total $1,230,850 100.0 $1,355,850 100.0
____________________
(1) This information should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
(2) Gives effect to the issuance of $125,000 aggregate stated
liquidation preference of Preferred Securities and the use
of the proceeds thereof to purchase the Company's Deferrable
Interest Subordinated Debentures.
(3) Includes obligations due within one year.
COMPANY COVERAGE RATIOS
(Dollars in Thousands)
The Company's Ratio of Earnings to Fixed Charges for each of
the periods indicated was as follows:
Twelve
Months Ended
June 30, 1994
Years Ended December 31, (unaudited)
1989 1990 1991 1992 1993 Actual ProForma(1)
3.88 3.66 2.44 3.41 3.28 .75(2) .64(2)
The Ratio of Earnings to Fixed Charges represents, on a pre-
tax basis, the number of times earnings cover fixed charges.
Earnings consist of Income Before Cumulative Effect of Accounting
Change, to which has been added fixed charges and taxes based on
income. Fixed charges consist of interest on funded
indebtedness, other interest, amortization of net discount on
debt and the interest portion of all rentals charged to income.
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<PAGE>
The Company's Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends for each of the periods indicated was as
follows:
Twelve
Months Ended
June 30, 1994
Years Ended December 31, (unaudited)
1989 1990 1991 1992 1993 Actual Pro Forma(1)
2.92 2.83 1.86 2.55 2.72 .61(2) .56(2)
________________________
(1) Gives effect to the issuance of $125,000 aggregate principal
amount of Deferrable Interest Subordinated Debentures at an
assumed interest rate of 9% per annum.
(2) Pre-tax earnings for the twelve months ended June 30, 1994 are
inadequate to cover both fixed charges and combined fixed
charges and preferred stock dividends. The deficiency in pre-
tax earnings for the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred
stock dividends is $15,108 and $29,269, respectively, on an
actual basis, and $26,358 and $35,660, respectively, on a pro
forma basis. Such amounts represent additional pre-tax
earnings needed to reach a one-to-one ratio.
The Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends represents, on a pre-tax basis, the number of times
earnings cover fixed charges and preferred stock dividends.
Earnings consist of Income Before Cumulative Effect of Accounting
Change, to which has been added fixed charges and taxes based on
income of the Company. Combined fixed charges and preferred stock
dividends consist of interest on funded indebtedness, other
interest, amortization of net discount on debt, preferred stock
dividends (increased to reflect the pre-tax earnings required to
cover such dividend requirements) and the interest portion of all
rentals charged to income.
USE OF PROCEEDS
The proceeds to be received by Met-Ed Capital from the sale of
the Preferred Securities will be used to purchase Deferrable
Interest Subordinated Debentures of the Company and, unless
otherwise specified in any Prospectus Supplement, will be applied
by the Company to the repayment of outstanding short-term debt, for
construction purposes and for other general corporate purposes,
including the redemption of outstanding senior securities pursuant
to the optional redemption provisions thereof, if economical.
MET-ED CAPITAL
Met-Ed Capital is a limited partnership formed under the laws
of the State of Delaware. All of its general partner interests,
which are non-transferable, are owned by Met-Ed Preferred Capital,
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<PAGE>
Inc. (the "General Partner"), a Delaware corporation and a wholly
owned special purpose subsidiary of the Company, which will be the
sole general partner of Met-Ed Capital. Met-Ed Capital's principal
executive offices are located at Mellon Bank Center, Tenth and
Market Streets, Wilmington, Delaware 19801, and its telephone
number is (302) 654-5893. As a limited partnership, all of the
business and affairs of Met-Ed Capital will be managed by the
General Partner. Met-Ed Capital exists solely for the purpose of
issuing its partner interests and utilizing the proceeds thereof to
acquire the Company's Deferrable Interest Subordinated Debentures,
which will be issued under and pursuant to the Indenture (the
"Indenture") dated as of August 1, 1994 between the Company and
United States Trust Company of New York, as Trustee (the
"Trustee").
Met-Ed Capital has been advised by its special Delaware
counsel that, assuming that a holder of Preferred Securities acts
in conformity with the provisions of Met-Ed Capital's Amended and
Restated Limited Partnership Agreement, which will be substantially
in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part (the "Limited Partnership
Agreement"), a holder of Preferred Securities (other than the
General Partner) will not be liable for the debts, obligations and
liabilities of Met-Ed Capital, whether arising in contract, tort or
otherwise, solely by reason of being a limited partner of Met-Ed
Capital (subject to the obligation of a limited partner to repay
any funds wrongfully distributed to it).
Pursuant to the Limited Partnership Agreement, each holder of
Preferred Securities, upon acquisition thereof, will be deemed to
have appointed the General Partner as such holder's attorney-in-
fact to execute, in the name, place and stead of such holder,
certain instruments, documents and certificates as may be required
from time to time for the purposes contemplated in the Limited
Partnership Agreement.
DESCRIPTION OF PREFERRED SECURITIES
General
All of the general partner interests of Met-Ed Capital will be
owned by the General Partner. The Limited Partnership Agreement
will authorize the General Partner to establish series of Preferred
Securities having such designations, rights, privileges,
restrictions, and other terms and provisions, whether in regard to
distributions, return of capital or otherwise, as the General
Partner may determine. Met-Ed Capital will therefore be authorized
to issue and sell additional Preferred Securities from time to
time, pursuant to the Registration Statement of which this
Prospectus forms a part or otherwise; provided, however, that all
Preferred Securities shall be of equal rank with regard to
participation in the profits and the assets of Met-Ed Capital. The
summary of certain terms and provisions of the Preferred Securities
set forth below does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Limited
Partnership Agreement.
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<PAGE>
Dividends
Dividends on each series of Preferred Securities will be
cumulative, will accrue from the date of issuance thereof and will
be payable monthly in arrears on the last day of each calendar
month of each year, except as otherwise described below.
The Dividend rate applicable to a series of Preferred
Securities shall be specified in a Prospectus Supplement.
The Company has the right under the Indenture to extend the
interest payment period on the Deferrable Interest Subordinated
Debentures at any time and from time to time to up to 60
consecutive months and, as a consequence, monthly Dividends on the
Preferred Securities can be deferred (but will continue to
accumulate) by Met-Ed Capital during any such extended interest
payment period. Accrued and unpaid Dividends on the Preferred
Securities will accrue additional Dividends in respect thereof at
the Dividend rate per annum applicable to the Preferred Securities.
In the event that the Company exercises its right to extend the
interest payment period, the Company may not declare or pay
dividends on, or redeem, purchase or acquire, any of its preferred
or common stock. Met-Ed Capital and the Company currently believe
that an extension of an interest payment period on the Deferrable
Interest Subordinated Debentures and thus on the Preferred
Securities is remote. See "Voting Rights" and "Description of the
Deferrable Interest Subordinated Debentures-Option to Extend
Interest Payment Period".
The amount of the Dividends payable for any period will be
computed on the basis of twelve 30-day months and a 360-day year
and, for any period shorter than a full monthly Dividend period,
will be computed on the basis of the actual number of days elapsed
in such period.
Met-Ed Capital may not pay a Dividend or make a distribution
to a partner to the extent that at the time of the Dividend or
distribution, after giving effect thereto, all liabilities of Met-
Ed Capital, other than liabilities to partners on account of their
partner interests and liabilities for which the recourse of
creditors is limited to specified property of Met-Ed Capital,
exceed the fair value of the assets of Met-Ed Capital, except that
the fair value of property that is subject to a liability for which
the recourse of creditors is limited shall be included in the
assets of Met-Ed Capital only to the extent that the fair value of
that property exceeds that liability.
Dividends on the Preferred Securities must be paid by Met-Ed
Capital in any calendar year or portion thereof to the extent that
Met-Ed Capital has cash on hand sufficient to permit such payments
and funds legally available therefor. It is anticipated that Met-
Ed Capital's earnings will consist only of interest payable by the
Company under the Deferrable Interest Subordinated Debentures. See
"Description of the Deferrable Interest Subordinated Debentures-
Interest".
Dividends on the Preferred Securities will be payable to the
holders thereof as they appear on the books and records of Met-Ed
8
<PAGE>
Capital on the relevant record dates, which, so long as the
Preferred Securities remain in book-entry-only form, will be one
Business Day prior to the relevant payment dates. Subject to any
applicable laws and regulations and the provisions of the Limited
Partnership Agreement, each such payment will be made as described
under "Book-Entry-Only Issuance-The Depository Trust Company". In
the event that the Preferred Securities do not remain in book-
entry-only form, the record dates will be the fifteenth day of each
month. In the event that any date on which Dividends are payable
on the Preferred Securities is not a Business Day, then payment of
the Dividend payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. A
"Business Day" shall mean any day other than a day on which banking
institutions in The City of New York are authorized or required by
law to close.
Certain Restrictions on Met-Ed Capital
If Dividends have not been paid in full on any series of
Preferred Securities, Met-Ed Capital may not:
(i) pay or declare any Dividends on any other series
of Preferred Securities unless the amount of any
Dividends paid or declared on any Preferred Securities is
paid or declared on all Preferred Securities then
outstanding on a pro rata basis on the date such
Dividends are paid or declared, so that
(x) (a) the aggregate amount of Dividends paid
or declared on such series of Preferred Securities
bears to (b) the aggregate amount of Dividends paid
or declared on all such Preferred Securities
outstanding the same ratio as
(y) (a) the aggregate of all accumulated
arrears of unpaid Dividends in respect of such
series of Preferred Securities bears to (b) the
aggregate of all accumulated arrears of unpaid
Dividends in respect of all such Preferred
Securities outstanding;
(ii) pay or declare any distributions on any of its
general partner interests; or
(iii) redeem, purchase or otherwise acquire any
Preferred Securities or its general partner interests;
until, in each case, such time as all accumulated and unpaid
Dividends on all series of Preferred Securities shall have been
paid in full for all prior Dividend periods. As of the date of
this Prospectus, there are no Preferred Securities outstanding.
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Mandatory Redemption
If the Company pays when due the Deferrable Interest
Subordinated Debentures purchased by Met-Ed Capital with the
proceeds of the sale of a series of Preferred Securities or redeems
such Deferrable Interest Subordinated Debentures at any time as
described under "Description of the Deferrable Interest
Subordinated Debentures-Optional Redemption", the proceeds will be
applied to redeem the related series of Preferred Securities at a
redemption price equal to the stated liquidation preference
thereof, plus any accumulated, unpaid and additional Dividends
accrued thereon to the date fixed for redemption (the "Redemption
Price").
Optional Redemption
The Preferred Securities of each series will be redeemable, at
the option of Met-Ed Capital, in whole or in part, at such time or
times as shall be specified in a Prospectus Supplement, at the
Redemption Price.
If at any time after the issuance of any Preferred Securities,
Met-Ed Capital is or would be required to pay Additional Amounts or
the Company is or would be required to withhold or deduct certain
amounts as described under "Additional Amounts" and "Description of
the Limited Guarantee-Additional Amounts", then Met-Ed Capital may,
at its option, redeem the Preferred Securities in whole or, if such
requirement relates only to certain of the Preferred Securities,
the Preferred Securities subject to such requirement, in each case
at the Redemption Price.
Special Event Redemption or Distribution
If a Tax Event (as defined below) shall occur and be
continuing, Met-Ed Capital may either: (i) redeem the Preferred
Securities in whole (but not in part) at the Redemption Price
within 90 days following the occurrence of such Special Event (as
defined below); provided that, if at the time there is available to
the General Partner the opportunity to eliminate, within such 90
day period, the Special Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other
similar reasonable measure which would not involve unreasonable
cost or expense, which has no adverse effect on Met-Ed Capital or
the Company, the General Partner will pursue such measure in lieu
of redemption; or (ii) dissolve Met-Ed Capital and cause Deferrable
Interest Subordinated Debentures with an aggregate principal amount
equal to the aggregate stated liquidation preference of, and with
an interest rate identical to, the Preferred Securities, to be
distributed to the holders of the Preferred Securities in
liquidation of such holders' interests in Met-Ed Capital, within 90
days following the occurrence of such Special Event, provided,
however, that Met-Ed Capital shall have received an opinion of
counsel (which may be regular tax counsel to the Company or an
affiliate but not an employee thereof) to the effect that the
holders of the Preferred Securities will not recognize any gain or
loss for federal income tax purposes as a result of such
dissolution and distribution. Alternatively, Met-Ed Capital may
elect to have the Preferred Securities remain outstanding. If an
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<PAGE>
Investment Company Act Event (as defined below) shall occur and be
continuing, Met-Ed Capital must elect either option (i) or (ii)
above. Either a Tax Event or an Investment Company Act Event shall
be deemed a "Special Event".
"Tax Event" means that Met-Ed Capital shall have received an
opinion of counsel (which may be regular tax counsel to the Company
or an affiliate but not an employee thereof) to the effect that, as
a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority
thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision
interpreting or applying any applicable laws or regulations, which
amendment or change is effective, or which pronouncement or
decision has been issued or rendered, on or after the date of
issuance of any series of Preferred Securities, there is more than
an insubstantial risk that (i) Met-Ed Capital will be subject to
federal income tax with respect to interest received on the
Deferrable Interest Subordinated Debentures or Met-Ed Capital will
otherwise not be taxed as a partnership, (ii) interest payable on
the Deferrable Interest Subordinated Debentures will not be
deductible for federal income tax purposes or (iii) Met-Ed Capital
is subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Act Event" means the occurrence of a
change in law or regulation or a change in an official
interpretation of law or regulation by any legislative body, court,
governmental agency or regulatory authority (a "Change in 40 Act
Law") to the effect that Met-Ed Capital is or will be considered an
"investment company" required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in
40 Act Law becomes effective on or after the date of issuance of
any series of Preferred Securities; provided that no Investment
Company Act Event shall be deemed to have occurred if Met-Ed
Capital shall have received an opinion of counsel (which may be
regular counsel to the Company or an affiliate but not an employee
thereof) to the effect that the Company and/or Met-Ed Capital have
taken reasonable measures, in their discretion, to avoid such
Change in 40 Act Law so that in the opinion of such counsel,
notwithstanding such Change in 40 Act Law, Met-Ed Capital is not
required to be registered as an "investment company" within the
meaning of the 1940 Act.
After the date fixed for any such dissolution of Met-Ed
Capital and distribution of Deferrable Interest Subordinated
Debentures, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) The Depository Trust Company or its
nominee, as the record holder of the Preferred Securities, will
exchange the global certificate or certificates representing the
Preferred Securities for a registered global certificate or
certificates representing the Deferrable Interest Subordinated
Debentures to be so delivered and (iii) any certificates
representing Preferred Securities not held by The Depository Trust
Company or its nominee will be deemed to represent Deferrable
Interest Subordinated Debentures having a principal amount equal to
the stated liquidation preference of such Preferred Securities
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<PAGE>
until such certificates are presented to the Company or its agent
for replacement.
Redemption Procedures
Met-Ed Capital may not redeem any outstanding Preferred
Securities unless all accumulated and unpaid Dividends have been
paid on all Preferred Securities for all monthly Dividend periods
terminating on or prior to the date of redemption.
If Met-Ed Capital gives a notice of redemption in respect of a
series of Preferred Securities (which notice will be given not less
than 30 nor more than 90 days prior to the redemption date and will
be irrevocable), then, on the redemption date, Met-Ed Capital will
irrevocably deposit with The Depository Trust Company or its
successor securities depository funds sufficient to pay the
applicable Redemption Price and will give The Depository Trust
Company or its successor securities depository irrevocable
instructions and authority to pay the Redemption Price to the
Beneficial Owners (as defined under "Book-Entry-Only Issuance-The
Depository Trust Company"). If notice of redemption shall have
been given and funds deposited as required, then on the date of
such deposit, all rights of holders of such series of Preferred
Securities so called for redemption will cease, except the right of
the holders of such series of Preferred Securities to receive the
Redemption Price, but without interest. In the event that any date
fixed for redemption of such series of Preferred Securities is not
a Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect
of any such delay), except that if such Business Day falls in the
next succeeding calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of
the Redemption Price in respect of any Preferred Securities is not
made either by Met-Ed Capital or by the Company pursuant to the
Limited Guarantee described under "Description of the Limited
Guarantee", Dividends on such Preferred Securities will continue to
accrue at the then applicable rate, from the original redemption
date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that less than all of a series of outstanding
Preferred Securities are to be so redeemed, the Preferred
Securities to be redeemed will be selected as described under
"Book-Entry-Only Issuance-The Depository Trust Company". In the
case of a partial redemption of a series of Preferred Securities
resulting from a requirement that Met-Ed Capital pay Additional
Amounts or the Company withhold or deduct certain amounts (see
"Optional Redemption"), Met-Ed Capital will (i) cause the global
certificates representing all of such series of Preferred
Securities to be withdrawn from The Depository Trust Company or its
successor securities depository (see "Book-Entry-Only Issuance-The
Depository Trust Company"), (ii) issue certificates in definitive
form representing such series of Preferred Securities, and (iii)
redeem the Preferred Securities subject to such requirement to
withhold or deduct Additional Amounts.
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Subject to applicable law, the Company or its subsidiaries may
at any time and from time to time purchase outstanding Preferred
Securities by tender, in the open market or by private agreement.
If a partial redemption or a purchase of outstanding Preferred
Securities by tender, in the open market or by private agreement
would result in a delisting of such series of Preferred Securities
from any national securities exchange on which such series of
Preferred Securities is then listed, Met-Ed Capital may then only
redeem or purchase such series of Preferred Securities in whole.
Liquidation Distribution
In the event of any voluntary or involuntary dissolution and
winding up of Met-Ed Capital, other than in connection with the
distribution of Deferrable Interest Subordinated Debentures in
liquidation of all of the interests of the holders of Preferred
Securities, as described under "Special Event Redemption or
Distribution" ("Distribution Event"), the holders of a series of
Preferred Securities at the time outstanding will be entitled to
receive out of the assets of Met-Ed Capital, after satisfaction of
liabilities to creditors as required by Delaware law, before any
distribution of assets is made to holders of its general partner
interests, but together with the holders of every other series of
Preferred Securities outstanding, an amount equal to the aggregate
of the stated liquidation preference thereof and any accumulated,
unpaid and additional Dividends accrued thereon to the date of
payment and any accrued and unpaid Additional Amounts (the
"Liquidation Distribution").
If, upon such liquidation, the Liquidation Distribution can be
paid only in part because Met-Ed Capital has insufficient assets
available to pay in full the aggregate Liquidation Distribution and
the aggregate liquidation distributions on all other Preferred
Securities then outstanding, then the amounts payable directly by
Met-Ed Capital on such series of Preferred Securities and on all
other Preferred Securities then outstanding shall be paid on a pro
rata basis, so that
(i) (x) the aggregate amount paid in respect of the
Liquidation Distribution bears to (y) the aggregate
amount paid as liquidation distributions on all other
Preferred Securities then outstanding the same ratio as
(ii) (x) the aggregate Liquidation Distribution
bears to (y) the aggregate liquidation distributions on
all other Preferred Securities then outstanding.
Pursuant to the Limited Partnership Agreement, Met-Ed Capital shall
be dissolved and its affairs shall be wound up: (i) upon the
expiration of the term of Met-Ed Capital on June 30, 2060, (ii)
upon the bankruptcy, liquidation, dissolution or winding up of the
Company, (iii) upon the occurrence of an event that causes the
General Partner to cease being the general partner of Met-Ed
Capital (provided that Met-Ed Capital will not be so dissolved
under certain circumstances, including, without limitation, a
transfer of the general partner interest to a permitted successor
of the General Partner as set forth in the Limited Partnership
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Agreement), (iv) upon the entry of a decree of judicial
dissolution, (v) in connection with a Distribution Event, or (vi)
upon the written consent of the General Partner and all of the
holders of the Preferred Securities.
Merger, Consolidation, Amalgamation, etc. of Met-Ed Capital
Met-Ed Capital may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any corpor-
ation or other entity, except with the prior approval of the
holders of not less than 66-2/3% of the aggregate stated liquida-
tion preference of the outstanding Preferred Securities or except
as described below. The General Partner may, without the consent
of the holders of the Preferred Securities, cause Met-Ed Capital to
consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially
as an entirety to, a corporation, a limited liability company, a
limited partnership, a trust or other entity organized as such
under the laws of the United States or any state thereof or the
District of Columbia, provided that (i) such successor entity
either (x) expressly assumes all of the terms and provisions of the
Preferred Securities by which Met-Ed Capital is bound and the other
obligations of Met-Ed Capital or (y) substitutes for the Preferred
Securities other securities having substantially the same terms as
the Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank, with regard to participation in the
profits and the assets of the successor entity, at least as high as
the Preferred Securities rank, with regard to participation in the
profits and the assets of Met-Ed Capital, (ii) the Company confirms
its obligation under the Limited Guarantee with regard to the
Preferred Securities or Successor Securities, if any, (iii) such
consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease does not cause any series of Preferred Securities
or Successor Securities, if any, to be delisted by any national
securities exchange on which such series of Preferred Securities or
Successor Securities, if any, is then listed, (iv) such
consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease does not cause the Preferred Securities or
Successor Securities, if any, to be downgraded by any "nationally
recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, (v) such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease does not adversely
affect the powers, preferences and other special rights of holders
of Preferred Securities or Successor Securities, if any, in any
material respect, (vi) such successor entity has a purpose
substantially identical to that of Met-Ed Capital and (vii) prior
to such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease, Met-Ed Capital shall have received
an opinion of counsel (which may be regular tax or other counsel to
the Company or an affiliate but not an employee thereof) to the
effect that (w) the holders of outstanding Preferred Securities
will not recognize any gain or loss for federal income tax purposes
as a result of the consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease, (x) such successor
entity will be treated as a partnership for federal income tax
purposes, (y) following such consolidation, amalgamation, merger,
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replacement, conveyance, transfer or lease, the Company and such
successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (z) such
consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease will not adversely affect the limited liability
of the holders of Preferred Securities.
Voting Rights
Except as provided below and under "Merger, Consolidation,
Amalgamation, etc. of Met-Ed Capital", "Description of the Limited
Guarantee-Amendments and Assignment" and "Description of the
Deferrable Interest Subordinated Debentures-Amendment of the
Indenture" and as otherwise required by law and the Limited
Partnership Agreement, the holders of the Preferred Securities will
have no voting rights.
If (i) Met-Ed Capital fails to pay Dividends in full on the
Preferred Securities for 18 consecutive monthly Dividend periods,
or (ii) an Event of Default (as defined in the Indenture) occurs
and is continuing, or (iii) the Company is in default on any of its
payment or other obligations under the Limited Guarantee (as
described under "Description of the Limited Guarantee-Certain
Covenants of the Company"), then the holders of all Preferred
Securities, acting as a single class, will be entitled, by a vote
of the holders of a majority of the aggregate stated liquidation
preference thereof, to appoint and authorize a special
representative of Met-Ed Capital and the holders of Preferred
Securities (a "Special Representative") to enforce Met-Ed Capital's
rights under the Indenture, including, after failure to pay
interest for 60 consecutive monthly interest periods, the payment
of interest on the Deferrable Interest Subordinated Debentures, and
to enforce the obligations of the Company under the Limited
Guarantee. The Special Representative shall not be admitted as a
partner in Met-Ed Capital or otherwise be deemed to be a partner in
Met-Ed Capital and shall have no liability for the debts,
obligations or liabilities of Met-Ed Capital.
For purposes of determining whether Met-Ed Capital has failed
to pay Dividends in full for 18 consecutive monthly Dividend
periods, Dividends shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full
cumulative Dividends have been or contemporaneously are paid with
respect to all monthly Dividend periods terminating on or prior to
the date of payment of such full cumulative Dividends. Subject to
requirements of applicable law, not later than 30 days after such
right to appoint a Special Representative arises, the General
Partner will convene a general meeting for the above purpose. If
the General Partner fails to convene such meeting within such 30-
day period, the holders of 10% of the aggregate stated liquidation
preference of the Preferred Securities will be entitled to convene
such meeting. The provisions of the Limited Partnership Agreement
relating to the convening and conduct of the general meetings of
partners will apply with respect to any such meeting. Any Special
Representative so appointed shall cease to act in such capacity
immediately if Met-Ed Capital (or the Company pursuant to the
Limited Guarantee) shall have paid in full all accumulated and
unpaid Dividends on the Preferred Securities or such default or
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<PAGE>
breach, as the case may be, shall have been cured. Notwithstanding
the appointment of any such Special Representative, the Company
shall retain all rights under the Indenture, including the right to
extend the interest payment period on the Deferrable Interest
Subordinated Debentures as provided under "Description of the
Deferrable Interest Subordinated Debentures-Option to Extend
Interest Payment Period".
If any proposed amendment to the Limited Partnership Agreement
provides for, or the General Partner otherwise proposes to effect,
any action which would materially adversely affect the powers,
preferences or special rights of any series of Preferred
Securities, then the holders of such series of Preferred Securities
will be entitled to vote on such amendment or action of the General
Partner (but not on any other amendment or action) and, in the case
of an amendment or action which would equally materially adversely
affect the powers, preferences or special rights of any other
series of Preferred Securities outstanding, all such series of
Preferred Securities will be entitled to vote together as a single
class on such amendment or action of the General Partner (but not
on any other amendment or action), and such amendment or action
shall not be effective except with the approval of the holders of
not less than 66-2/3% of the aggregate stated liquidation
preference of such Preferred Securities. Except in certain
circumstances described under "Liquidation Distribution", which
include a dissolution in connection with a Distribution Event, Met-
Ed Capital will be dissolved and wound up only with the consent of
the holders of all Preferred Securities then outstanding.
The rights attached to any Preferred Securities will be deemed
not to be adversely affected by the creation or issue of, and no
vote will be required for the creation or issue of, any further
series of Preferred Securities, any other securities which are pari
passu with the Preferred Securities or any general partner
interests of Met-Ed Capital. Holders of Preferred Securities have
no preemptive rights.
The Limited Partnership Agreement provides that the General
Partner will not permit or cause Met-Ed Capital to file a voluntary
petition in bankruptcy without the approval of the holders of not
less than 66-2/3% of the aggregate stated liquidation preference of
the outstanding Preferred Securities.
So long as any Deferrable Interest Subordinated Debentures are
held by Met-Ed Capital, the General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or executing any trust or power
conferred on the Trustee with respect to such series, (ii) waive
any past default which is available under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the
principal of all the Deferrable Interest Subordinated Debentures
shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Indenture, where such consent
shall be required, without, in each case, obtaining the prior
approval of the holders of not less than 66-2/3% of the aggregate
stated liquidation preference of all Preferred Securities affected
thereby, acting as a single class; provided, however, that where a
consent under the Indenture would require the consent of each
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<PAGE>
holder affected thereby, no such consent shall be given by the
General Partner without the prior consent of each holder of
Preferred Securities affected thereby. The General Partner shall
not revoke any action previously authorized or approved by a vote
of any holders of Preferred Securities. The General Partner shall
notify all holders of Preferred Securities of any notice of default
received from the Trustee with respect to the Deferrable Interest
Subordinated Debentures.
Any required approval of holders of Preferred Securities may
be given at a separate meeting of such holders convened for such
purposes, at a general meeting of holders of Met-Ed Capital's
partner interests or pursuant to written consent. Met-Ed Capital
will cause a notice of any meeting at which holders of any series
of Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to
be mailed to each holder of record of such series of Preferred
Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action
is to be taken, (ii) a description of any matter to be voted on at
such meeting or upon which written consent is sought, and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the holders of the Preferred Securities
will be required for Met-Ed Capital to redeem and cancel Preferred
Securities in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Preferred Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Preferred Securities that are owned by
the Company or any entity owned more than 50% by the Company,
either directly or indirectly, shall not be entitled to vote or
consent and shall, for the purposes of such vote or consent, be
treated as if they were not outstanding.
Holders of Preferred Securities will have no rights to remove
or replace the General Partner.
Additional Amounts
All payments in respect of the Preferred Securities by Met-Ed
Capital will be made without withholding or deduction for or on
account of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed or levied upon or
as a result of such payment by or on behalf of the United States,
any state thereof or any other jurisdiction through which or from
which such payment is made, or any authority therein or thereof
having power to tax, unless the withholding or deduction of such
taxes, duties, assessments or governmental charges is required by
law. In the event that any such withholding or deduction is
required as a consequence of (i) the Deferrable Interest
Subordinated Debentures not being treated as indebtedness for
United States federal income tax purposes or (ii) Met-Ed Capital
not being treated as a partnership for United States federal income
tax purposes, Met-Ed Capital will pay as a Dividend such additional
amounts as may be necessary in order that the net amounts received
by the holders of the Preferred Securities after such withholding
or deduction will equal the amounts which would have been
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receivable in respect of such Preferred Securities in the absence
of such withholding or deduction ("Additional Amounts"), except
that no such Additional Amounts will be payable to a holder of
Preferred Securities (or a third party on such holder's behalf)
with respect to Preferred Securities if:
(a) such holder is liable for such taxes, duties,
assessments or governmental charges in respect of such
Preferred Securities by reason of such holder's having a
connection with the United States, any state thereof or
any other jurisdiction through which or from which such
payment is made, or in which such holder resides,
conducts business or has other contacts, other than being
a holder of Preferred Securities, or
(b) Met-Ed Capital has notified such holder of the
obligation to withhold or deduct taxes and requested but
not received from such holder a declaration of non-
residence, a valid taxpayer identification number or
other claim for exemption, and such withholding or
deduction would not have been required had such
declaration, taxpayer identification number or claim been
received.
Book-Entry-Only Issuance-The Depository Trust Company
The Depository Trust Company ("DTC") will act as securities
depository for the Preferred Securities. Each series of Preferred
Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Preferred Security certificates will be
issued, representing in the aggregate the total number of Preferred
Securities of each series, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies
that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
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Purchases of Preferred Securities under the DTC system must be
made by or through Direct Participants, which will receive a credit
for the Preferred Securities on DTC's records. The ownership
interest of each actual purchaser of each Preferred Security
("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of
their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to
be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred
Securities, except in the event that use of the book-entry system
for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the
Preferred Securities; DTC's records reflect only the identity of
the Direct Participants to whose accounts such Preferred Securities
are credited, which may or may not be the Beneficial Owners.
Direct and Indirect Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to Cede & Co. If less than
all of a series of Preferred Securities are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each
Direct Participant in such series to be redeemed.
Although voting with respect to the Preferred Securities
is limited, in those cases where a vote is required, neither DTC
nor Cede & Co. will consent or vote with respect to Preferred
Securities. Under its usual procedure, DTC would mail an Omnibus
Proxy to Met-Ed Capital as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights
to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Dividend payments on the Preferred Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on
the relevant payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payable date. Payments
by Participants to Beneficial Owners will be governed by standing
instructions and customer practices and will be the responsibility
of such Participants and not of DTC, Met-Ed Capital, the General
Partner or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of
Dividends to DTC is the responsibility of Met-Ed Capital,
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disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect
Participants.
The information in this section concerning DTC and DTC's book-
entry system has been obtained from sources that Met-Ed Capital and
the Company believe to be reliable, but neither Met-Ed Capital nor
the Company takes any responsibility for the accuracy thereof.
DTC may discontinue providing its services as securities
depository with respect to the Preferred Securities at any time by
giving reasonable notice to Met-Ed Capital. Under such
circumstances, in the event that a successor securities depository
is not obtained, Preferred Security certificates are required to be
printed and delivered. Additionally, Met-Ed Capital (with the
consent of the General Partner) may decide to discontinue use of
the system of book-entry transfers through DTC (or a successor
depository). In that event, certificates for the Preferred
Securities will be printed and delivered. Additionally, in the
event that Met-Ed Capital exercises its option to redeem only a
portion of a series of Preferred Securities because Met-Ed Capital
or the Company is or would be required to withhold or deduct
Additional Amounts in regard to such Preferred Securities to be
redeemed, Met-Ed Capital will cause the global certificates
representing all of such series of Preferred Securities to be
withdrawn from DTC (or a successor depository) and will issue
certificates in definitive form representing such series of
Preferred Securities. Thereafter, the Preferred Securities subject
to such requirement to withhold or deduct Additional Amounts will
be redeemed.
Registrar, Transfer Agent and Paying Agent
In the event that the Preferred Securities do not remain in
book-entry-only form, the following provisions would apply:
Mellon Bank, N.A. will act as registrar, transfer agent and
paying agent for the Preferred Securities, but the Company may
designate an additional or substitute registrar, transfer agent and
paying agent at any time.
Registration of transfers of Preferred Securities will be
effected without charge by or on behalf of Met-Ed Capital, but upon
payment (with the giving of such indemnity as Met-Ed Capital or the
transfer agent may require) in respect of any tax or other
governmental charges which may be imposed in relation to it.
Met-Ed Capital will not be required to register or cause to be
registered the transfer of Preferred Securities after such
Preferred Securities have been called for redemption.
Miscellaneous
The General Partner is authorized and directed to use its best
efforts to conduct the affairs of, and to operate, Met-Ed Capital
in such a way that Met-Ed Capital would not be deemed to be an
"investment company" required to be registered under the 1940 Act
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or taxed as a corporation for federal income tax purposes and so
that the Deferrable Interest Subordinated Debentures will be
treated as indebtedness of the Company for federal income tax
purposes. In this connection, the General Partner is authorized to
take any action not inconsistent with applicable law, the
Certificate of Limited Partnership of Met-Ed Capital or the Limited
Partnership Agreement, that does not materially adversely affect
the interests of holders of Preferred Securities, that the General
Partner determines in its discretion to be necessary or desirable
for such purposes.
DESCRIPTION OF THE LIMITED GUARANTEE
Set forth below is a summary of information concerning the
Limited Guarantee which will be executed and delivered by the
Company in connection with each series of Preferred Securities for
the benefit of the holders from time to time of the series of
Preferred Securities to which it relates. This summary describes
certain terms and provisions of the Limited Guarantee, but does not
purport to be complete. References to provisions of the Limited
Guarantee are qualified in their entirety by reference to the text
of the Limited Guarantee, which will be substantially in the form
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
General
The Company will agree, on a limited basis as set forth
therein, to pay in full, to the holders of the Preferred
Securities, the Limited Guarantee Payments (as defined below)
(except to the extent paid by Met-Ed Capital), as and when due,
regardless of any defense, right of set-off or counterclaim which
the Company or Met-Ed Capital may have or assert. The following
payments to the extent not paid by Met-Ed Capital (the "Limited
Guarantee Payments") will be subject to the Limited Guarantee
(without duplication): (i) any accumulated and unpaid monthly
Dividends on the Preferred Securities (except for monthly Dividends
which are not paid during an Extension Period (as defined under
"Description of the Deferrable Interest Subordinated Debentures-
Option to Extend Interest Payment Period")) to the extent that Met-
Ed Capital has sufficient cash on hand to permit such payments and
funds legally available therefor, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption by Met-Ed
Capital to the extent that Met-Ed Capital has sufficient cash on
hand to permit such payments and funds legally available therefor,
(iii) upon a liquidation of Met-Ed Capital other than in connection
with a Distribution Event, the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of Met-Ed Capital
available for distribution to holders of Preferred Securities in
liquidation of Met-Ed Capital, and (iv) any Additional Amounts
payable by Met-Ed Capital in respect of the Preferred Securities.
The Limited Guarantee further provides that the Company shall (a)
cause the General Partner to declare and pay Dividends to the
extent that Met-Ed Capital has legally available funds and
sufficient cash and (b) so long as any of the Preferred Securities
are outstanding, cause the General Partner to remain the general
partner of Met-Ed Capital and timely perform all its duties as such
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(including the duty to pay Dividends on the Preferred Securities)
in all material respects, which include, among other things, the
General Partner's duties under the Limited Partnership Agreement to
directly pay all costs and expenses of Met-Ed Capital (thereby
insuring that the full amount of the Company's payments on its
Deferrable Interest Subordinated Debentures will be available to
allow payment to the holders of the Preferred Securities) and the
covenant of the General Partner in the Limited Partnership
Agreement to at all times maintain a "fair market value net worth"
of, initially, at least 10% of the total contributions (less
redemptions) to Met-Ed Capital. Accordingly, the Limited
Guarantee, together with the related covenants contained in the
Limited Partnership Agreement and the Company's obligations under
the Deferrable Interest Subordinated Debentures, provides for the
Company's full and unconditional guarantee of the Preferred
Securities as set forth above.
The Company's obligation to make a Limited Guarantee Payment
may be satisfied by direct payment of the required amounts by the
Company to the holders of Preferred Securities or by payment of
such amounts by Met-Ed Capital to such holders, and may be enforced
directly by or for the benefit of the holders of Preferred
Securities.
Certain Covenants of the Company
So long as any Preferred Securities remain outstanding,
neither the Company, nor any majority owned subsidiary of the
Company, will declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its
preferred or common stock (other than dividends to the Company by a
wholly owned subsidiary of the Company) (i) during an Extension
Period (as defined under "Description of the Deferrable Interest
Subordinated Debentures-Option to Extend Interest Payment Period")
or (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Limited
Guarantee or there shall have occurred any event that, with the
giving of notice or the lapse of time or both, would constitute an
Event of Default under the Indenture.
In addition, so long as any Preferred Securities remain
outstanding, the Company will (i) maintain direct or indirect 100%
ownership of the general partner interests in Met-Ed Capital; (ii)
cause at least 3% of the total value of Met-Ed Capital and at least
3% of all interests in the capital, income, gain, loss, deduction
and credit of Met-Ed Capital to be represented by general partner
interests; (iii) not cause Met-Ed Capital to be voluntarily
dissolved and wound-up except upon the entry of a decree of
judicial dissolution, in connection with a Distribution Event or
certain mergers, consolidations or similar transactions permitted
by the Limited Partnership Agreement or as otherwise described
under "Description of Preferred Securities-Liquidation
Distribution"; (iv) except as otherwise provided in the Limited
Partnership Agreement, cause the General Partner to remain the
general partner of Met-Ed Capital and timely perform all of its
duties as general partner of Met-Ed Capital (including the duty to
pay Dividends on the Preferred Securities out of cash on hand and
funds legally available therefor) in all material respects,
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provided that any permitted successor of the Company under the
Indenture may directly or indirectly succeed to the duties as
general partner of Met-Ed Capital; and (v) use its reasonable
efforts to cause Met-Ed Capital to remain a limited partnership and
otherwise continue to be treated as a partnership for United States
federal income tax purposes.
Additional Amounts
All Limited Guarantee Payments will be made without
withholding or deduction for or on account of any present or future
taxes, duties, assessments or governmental charges of whatever
nature imposed or levied upon or as a result of such payment by or
on behalf of the United States, any state thereof or any other
jurisdiction through which or from which such payment is made, or
any authority therein or thereof having power to tax, unless the
withholding or deduction of such taxes, duties, assessments or
governmental charges is required by law. In the event that any
such withholding or deduction is required as a consequence of (i)
the Deferrable Interest Subordinated Debentures not being treated
as indebtedness for United States federal income tax purposes or
(ii) Met-Ed Capital not being treated as a partnership for United
States federal income tax purposes, the Company will pay such
additional amounts as may be necessary in order that the net
amounts received by the holders of the Preferred Securities after
such withholding or deduction will equal the amount which would
have been receivable in respect of the Preferred Securities in the
absence of such withholding or deduction, except that no such
additional amounts will be payable to a holder of Preferred
Securities (or a third party on such holder's behalf) if:
(a) such holder is liable for such taxes, duties,
assessments or governmental charges in respect of the
Preferred Securities by reason of such holder's having a
connection with the United States, any state thereof or
any other jurisdiction through which or from which such
payment is made, or in which such holder resides,
conducts business or has other contacts, other than being
a holder of Preferred Securities, or
(b) Met-Ed Capital or the Company has notified such
holder of the obligation to withhold or deduct taxes and
requested but not received from such holder a declaration
of non-residence, a valid taxpayer identification number
or other claim for exemption, and such withholding or
deduction would not have been required had such
declaration, taxpayer identification number or claim been
received.
Amendments and Assignment
The Limited Guarantee may only be amended by a written
instrument executed by the Company; provided that, so long as any
of the Preferred Securities remain outstanding, any such amendment
that materially adversely affects the holders of the related series
of Preferred Securities, any termination of the Limited Guarantee
and any waiver of compliance with any covenant thereunder shall be
effected only with the prior approval of the holders of not less
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<PAGE>
than 66-2/3% of the aggregate stated liquidation preference of the
affected series of Preferred Securities. Except in connection with
a merger, sale, transfer or lease involving the Company as may be
permitted under the Indenture (see "Description of the Deferrable
Interest Subordinated Debentures-Consolidation, Merger, Sale or
Conveyance"), the Company may not assign its obligations under the
Limited Guarantee without the approval of the holders of not less
than 66-2/3% of the aggregate stated liquidation preference of the
related series of Preferred Securities. See "Description of
Preferred Securities-Voting Rights". All guarantees and agreements
contained in the Limited Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred
Securities.
Termination of the Limited Guarantee
The Limited Guarantee will terminate and be of no further
force and effect upon full payment of the Redemption Price of all
of the related series of Preferred Securities or upon full payment
of the amounts payable upon liquidation of Met-Ed Capital or upon
consummation of a Distribution Event. The Limited Guarantee will
continue to be effective or will be reinstated, as the case may be,
if at any time any holder of such series of Preferred Securities
must restore payment of any sums paid under such Preferred
Securities or the Limited Guarantee.
Status of the Limited Guarantee
The Limited Guarantee will constitute an unsecured obligation
of the Company and will rank (i) subordinate and junior in right of
payment to all present and future Senior Indebtedness of the
Company, and (ii) senior in right of payment to the Company's
preferred and common stock. The Limited Partnership Agreement
provides that each holder of Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of
the Limited Guarantee.
The Limited Guarantee will constitute a limited guarantee of
payment and not of collection. The Limited Guarantee will be held
for the benefit of the holders of the related series of Preferred
Securities. If appointed, a Special Representative may enforce the
Limited Guarantee. If no Special Representative has been appointed
to enforce the Limited Guarantee, the General Partner has the right
to enforce the Limited Guarantee on behalf of the holders of the
Preferred Securities. If the General Partner or the Special
Representative fails to enforce the Limited Guarantee, any holder
of Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Limited
Guarantee, without first instituting a legal proceeding against
Met-Ed Capital or any other person or entity.
DESCRIPTION OF THE DEFERRABLE INTEREST SUBORDINATED DEBENTURES
Set forth below is a description of the Deferrable Interest
Subordinated Debentures which will be purchased by Met-Ed Capital
with the proceeds of the sale of the Preferred Securities and the
General Partner's related capital contribution. This description
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<PAGE>
is a brief summary of certain provisions contained in the
Indenture, does not purport to be complete and is qualified in its
entirety by reference to the text of the Indenture, including the
definition therein of certain capitalized terms, a copy of which is
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
Under certain circumstances following the occurrence of a
Special Event, Met-Ed Capital may dissolve and cause Deferrable
Interest Subordinated Debentures to be distributed to the holders
of the Preferred Securities in liquidation of their interests in
Met-Ed Capital. See "Description of Preferred Securities-Special
Event Redemption or Distribution".
General
Deferrable Interest Subordinated Debentures will be issued in
series under the Indenture. Each series of Deferrable Interest
Subordinated Debentures will be limited in aggregate principal
amount to the amount of the aggregate stated liquidation preference
of the related series of Preferred Securities together with any
related capital contribution from the General Partner.
So long as any Preferred Securities remain outstanding, any
Special Representative appointed by the holders of Preferred
Securities, as described under "Description of Preferred
Securities-Voting Rights", will be entitled to enforce the
Company's obligations under the Indenture and the Deferrable
Interest Subordinated Debentures directly against the Company.
The Deferrable Interest Subordinated Debentures will become
due and payable, together with (i) all accrued and unpaid interest
to the date of payment, including Additional Interest (as defined
under "Additional Interest"), if any, and (ii) any accrued interest
thereon, on the 49th anniversary of the date of issuance thereof.
Mandatory Prepayment
If Met-Ed Capital redeems Preferred Securities in accordance
with their terms, the related Deferrable Interest Subordinated
Debentures will become due and payable in a principal amount equal
to the aggregate stated liquidation preference of the Preferred
Securities so redeemed, together with (i) all accrued and unpaid
interest to the date of payment, including Additional Interest, if
any, and (ii) any accrued interest thereon.
Optional Redemption
The Company will have the right to redeem the Deferrable
Interest Subordinated Debentures, without premium or penalty, at a
price equal to 100% of their principal amount, together with (i)
all accrued and unpaid interest on the Deferrable Interest
Subordinated Debentures being redeemed to the Redemption Date,
including Additional Interest, if any, and (ii) any accrued
interest thereon (collectively, the "Debenture Redemption Price"):
(x) in whole or in part at such time or times as
shall be specified in a Prospectus Supplement; and
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<PAGE>
(y) in whole at any time if the Company is or would
be required to pay Additional Interest on the Deferrable
Interest Subordinated Debentures or in part at any time
if the Company is or would be required to pay Additional
Interest with respect to only a portion of the Deferrable
Interest Subordinated Debentures, provided that if a
partial redemption would, through the corresponding
partial redemption required under the terms of the
related series of Preferred Securities, result in a
delisting of the related series of Preferred Securities
from any national securities exchange on which such
series of Preferred Securities is then listed, the
Company may only redeem the Deferrable Interest
Subordinated Debentures in whole. In no event, however,
shall the Company have the right to redeem the Deferrable
Interest Subordinated Debentures, or a portion thereof,
under this clause (y) based on a de minimis obligation to
pay Additional Interest. For purposes of the foregoing,
in the event that the Company is advised by counsel
(which may be regular tax counsel to the Company or an
affiliate but not an employee thereof) that more than an
insubstantial risk exists that Met-Ed Capital will incur
penalties, interest or tax under the Internal Revenue
Code of 1986, as amended, or other applicable law if it
does not withhold or deduct certain amounts as may be
required in connection with monthly Dividends or other
payments made by it with respect to the Preferred
Securities, or that the Company will incur such
penalties, interest or tax if it does not withhold or
deduct in connection with payments made by it under the
Deferrable Interest Subordinated Debentures, the Company
shall have the right to redeem the Deferrable Interest
Subordinated Debentures, or a portion thereof, under this
clause (y) unless the obligation to pay Additional
Interest, if Met-Ed Capital or the Company does so
withhold, is a de minimis obligation.
Redemption Procedures
If the Company gives a notice of redemption in respect of a
series of Deferrable Interest Subordinated Debentures (which notice
will be given not less than 30 nor more than 90 days prior to the
redemption date and will be irrevocable), then, on the redemption
date, the Company will irrevocably deposit with the Trustee funds
sufficient to pay the applicable Debenture Redemption Price. If
notice of redemption shall have been given and funds deposited as
required, then on the date of such deposit, all rights of holders
of such Deferrable Interest Subordinated Debentures so called for
redemption will cease, except the right of the holders of such
Deferrable Interest Subordinated Debentures to receive the
Debenture Redemption Price, but without interest. In the event
that any date fixed for redemption of Deferrable Interest
Subordinated Debentures is not a Business Day, then payment of the
Debenture Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next succeeding calendar
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<PAGE>
year, such payment shall be made on the immediately preceding
Business Day.
In the event that less than all of a series of outstanding
Deferrable Interest Subordinated Debentures are to be so redeemed
following a Distribution Event, the Deferrable Interest
Subordinated Debentures to be redeemed will be selected as
described under "Description of Preferred Securities-Book-Entry-
Only Issuance-The Depository Trust Company".
Subject to applicable law, after a Distribution Event the
Company or its subsidiaries may at any time and from time to time
purchase outstanding Deferrable Interest Subordinated Debentures by
tender, in the open market or by private agreement.
If a partial redemption or a purchase of outstanding
Deferrable Interest Subordinated Debentures by tender, in the open
market or by private agreement would result in a delisting of such
series of Deferrable Interest Subordinated Debentures from any
national securities exchange on which such series of Deferrable
Interest Subordinated Debentures is then listed, the Company may
then only redeem or purchase such series of Deferrable Interest
Subordinated Debentures in whole.
Interest
Each Deferrable Interest Subordinated Debenture will bear
interest at a rate per annum equal to the Dividend rate on the
related series of Preferred Securities, payable monthly in arrears
on the last day of each calendar month of each year (each an
"Interest Payment Date"), to the person in whose name such
Deferrable Interest Subordinated Debenture is registered, subject
to certain exceptions, at the close of business on the Business Day
next preceding such Interest Payment Date (the "Regular Record
Date"). In the event that the Deferrable Interest Subordinated
Debentures do not remain in book-entry-only form, the record dates
will be the fifteenth day of each month.
The amount of interest payable for any period will be computed
on the basis of twelve 30-day months and a 360-day year and, for
any period shorter than a full monthly interest period, on the
basis of the actual number of days elapsed. In the event that any
date on which interest is payable on the Deferrable Interest
Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
Option to Extend Interest Payment Period
The Company will have the right at any time and from time to
time during the term of the Deferrable Interest Subordinated
Debentures, so long as the Company is not in default in the payment
of interest on the Deferrable Interest Subordinated Debentures, to
extend the interest payment period on the Deferrable Interest
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<PAGE>
Subordinated Debentures to up to 60 consecutive months, provided
that at the end of each such period (an "Extension Period") the
Company shall pay all interest then accrued and unpaid (together
with interest thereon at the rate specified for the Deferrable
Interest Subordinated Debentures to the extent permitted by
applicable law). During any such Extension Period, neither the
Company, nor any majority owned subsidiary of the Company, may
declare or pay any dividends on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its capital
stock (other than dividends to the Company by a wholly owned
subsidiary of the Company). No interest shall be due and payable
during an Extension Period, except at the end thereof. If Met-Ed
Capital shall be the sole holder of the Deferrable Interest
Subordinated Debentures, the Company shall give Met-Ed Capital
notice of its selection of such extended interest payment period
one Business Day prior to the earlier of (i) the date the related
Dividend on the Preferred Securities is payable or (ii) the date
Met-Ed Capital is required to give notice to any national
securities exchange on which the Preferred Securities are listed or
other applicable self-regulatory organization or to the holders of
the Preferred Securities of the record date or the date such
Dividend is payable, but in any event not less than one Business
Day prior to such record date. The Company shall cause Met-Ed
Capital to give notice of the Company's selection of such extended
interest payment period to the holders of the Preferred Securities.
If Met-Ed Capital shall not be the sole holder of the Deferrable
Interest Subordinated Debentures, the Company will give the holders
of the Deferrable Interest Subordinated Debentures notice of its
selection of such extended interest payment period ten Business
Days prior to the earlier of (i) the Interest Payment Date or (ii)
the date the Company is required to give notice of the record or
payment date of such related interest payment to any national
securities exchange on which the Deferrable Interest Subordinated
Debentures are then listed or other applicable self-regulatory
organization or to holders of the Deferrable Interest Subordinated
Debentures, but in any event not less than two Business Days prior
to such record date.
Additional Interest
If at any time Met-Ed Capital is required to pay any
Additional Amounts in respect of the Preferred Securities pursuant
to the terms thereof, then the Company will pay as interest
("Additional Interest") on the Deferrable Interest Subordinated
Debentures an amount equal to such Additional Amounts. In
addition, if Met-Ed Capital would be required to pay any taxes,
duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any
other taxing authority, then, in any such case, the Company will
also pay as Additional Interest such amounts as shall be required
so that the net amounts received and retained by Met-Ed Capital
after paying any such taxes, duties, assessments or governmental
charges will be not less than the amounts Met-Ed Capital would have
received had no such taxes, duties, assessments or governmental
charges been imposed.
Credit
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Prior to a Distribution Event, the Company shall receive a
credit against any payment it is otherwise required to make under
the Deferrable Interest Subordinated Debentures to the extent it
has theretofore made, or is concurrently making, a payment under
the Limited Guarantee.
Subordination
All payments by the Company in respect of the Deferrable
Interest Subordinated Debentures shall be subordinated to the prior
payment in full of all amounts payable on Senior Indebtedness.
"Senior Indebtedness" consists of (i) the principal of and premium
(if any) in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities, debentures,
bonds or other similar instruments (including purchase money
obligations) for payment of which the Company is responsible or
liable; (ii) all capital lease obligations of the Company; (iii)
all obligations of the Company issued or assumed as the deferred
purchase price of property, all conditional sale obligations of the
Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising
in the ordinary course of business); (iv) certain obligations of
the Company for the reimbursement of any obligor on any letter of
credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in
clauses (i) through (iv) of other persons for the payment of which
the Company is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to in
clauses (i) through (v) of other persons secured by any lien on any
property or asset of the Company (whether or not such obligation is
assumed by the Company), except for any such indebtedness that is
by its terms subordinated to or pari passu with the Deferrable
Interest Subordinated Debentures.
Upon any payment or distribution of assets or securities of
the Company or upon any dissolution or winding up or total or
partial liquidation or reorganization of the Company, whether
voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts payable on Senior
Indebtedness (including any interest accruing on such Senior
Indebtedness subsequent to the commencement of a bankruptcy,
insolvency or similar proceeding) shall first be paid in full
before the Trustee or the holders of Preferred Securities or
Deferrable Interest Subordinated Debentures (or the Special
Representative) will be entitled to receive from the Company any
payment of principal of, or interest on, or any other amounts in
respect of, the Deferrable Interest Subordinated Debentures.
No direct or indirect payment by or on behalf of the Company
of principal of or interest on the Deferrable Interest Subordinated
Debentures whether pursuant to the terms of the Deferrable Interest
Subordinated Debentures or upon acceleration or otherwise may be
made if, at the time of such payment, there exists, (i) a default
in the payment of all or any portion of any Senior Indebtedness or
(ii) any other default (other than a default of the nature
described in clause (i) above) affecting Senior Indebtedness
permitting its acceleration, as the result of which the maturity of
Senior Indebtedness has been accelerated, and in either case
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<PAGE>
requisite notice has been given to the Company and the Trustee and
such default shall not have been cured or waived by or on behalf of
the holders of such Senior Indebtedness.
If the Trustee or any holder of Preferred Securities or
Deferrable Interest Subordinated Debentures (or the Special
Representative) has received any payment on account of the
principal of or interest on the Deferrable Interest Subordinated
Debentures when such payment is prohibited and before all amounts
payable on Senior Indebtedness are paid in full, then and in such
event such payment or distribution shall be received and held in
trust for the holders of Senior Indebtedness and shall be paid over
or delivered first to the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full.
Upon the payment in full of all Senior Indebtedness, the
Trustee and the holders of Preferred Securities or Deferrable
Interest Subordinated Debentures (and the Special Representative)
shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of the
Company made on such Senior Indebtedness until the Deferrable
Interest Subordinated Debentures are paid in full.
Certain Covenants of the Company
Neither the Company nor any majority owned subsidiary shall
declare or pay any dividend on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its preferred or
common stock (other than dividends to the Company by a wholly owned
subsidiary of the Company) (i) during an Extension Period, (ii) if
there shall have occurred and is continuing any event that, with
the giving of notice or the lapse of time or both, would constitute
an Event of Default under the Indenture or (iii) so long as any
Preferred Securities remain outstanding, if the Company shall be in
default with respect to its payment or other obligations under the
Limited Guarantee.
Book-Entry and Settlement
If Deferrable Interest Subordinated Debentures are distributed
to holders of Preferred Securities, the Deferrable Interest
Subordinated Debentures will be issued in book-entry-only form.
For a description of DTC and the specific terms of the depository
arrangements, see "Description of Preferred Securities-Book-Entry-
Only Issuance-The Depository Trust Company", which would also apply
to the Deferrable Interest Subordinated Debentures in book-entry-
only form.
Neither the Company, the Trustee, any paying agent nor any
other agent of the Company or 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 in
a global security for such Deferrable Interest Subordinated
Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
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<PAGE>
Discontinuance of the Depository's Services. A global
security will be exchangeable for Deferrable Interest Subordinated
Debentures registered in the names of persons other than the
depository or its nominee only if (i) the depository notifies the
Company that it is unwilling or unable to continue as depository
for such global security or if at any time the depository ceases to
be a clearing agency registered under the Exchange Act at a time
when the depository is required to be so registered to act as such
depository, (ii) the Company in its sole discretion determines that
such global security shall be so exchangeable or (iii) there shall
have occurred and be continuing a default in the payment of
principal of, or interest on, such Deferrable Interest Subordinated
Debentures or an Event of Default or an event which, with the
giving of notice or the lapse of time or both, would constitute an
Event of Default with respect to such Deferrable Interest
Subordinated Debentures. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for
Deferrable Interest Subordinated Debentures registered in such
names as the depository shall direct. It is expected that such
instructions will be based upon directions received by the
depository from its Participants with respect to ownership of
beneficial interests in such global security.
Payment; Registration and Transfer
In the event that the Deferrable Interest Subordinated
Debentures do not remain in book-entry-only form, the following
provisions would apply:
Payment of principal of any Deferrable Interest Subordinated
Debenture will be made only against surrender to the Trustee or the
Paying Agent appointed by the Company, if not the Trustee, of such
Deferrable Interest Subordinated Debenture. Principal of, and
interest on, Deferrable Interest Subordinated Debentures will be
payable, subject to any applicable laws and regulations, at the
office of the Trustee or such Paying Agent as the Company may
designate from time to time, except that at the option of the
Company payment of any interest may be made by check mailed to the
address of the person entitled thereto as such address shall appear
in the security Register with respect to such Deferrable Interest
Subordinated Debentures. Payment of interest on a Deferrable
Interest Subordinated Debenture on any Interest Payment Date will
be made to the person in whose name such Deferrable Interest
Subordinated Debenture is registered at the close of business on
the Regular Record Date for such interest, with certain exceptions.
The Corporate Trust Office of the Trustee in The City of New
York shall initially be designated as the Company's sole Paying
Agent for payments with respect to Deferrable Interest Subordinated
Debentures of each series. The Company may at any time designate
other or additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any
Paying Agent acts.
Deferrable Interest Subordinated Debentures may be presented
for registration of transfer (with the form of transfer endorsed
thereon duly executed), at the office of the Registrar appointed by
the Company without service charge and upon payment of any taxes
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and other governmental charges as described in the Indenture. The
Company has initially appointed the Trustee as Registrar with
respect to the Deferrable Interest Subordinated Debentures. The
Company shall not be required to make, and the Registrar need not
register, the transfer or exchange of (i) any Deferrable Interest
Subordinated Debenture during a period beginning at the opening of
business five days before the mailing of a notice of redemption of
Deferrable Interest Subordinated Debentures, and ending at the
close of business on the day of such mailing, or (ii) any
Deferrable Interest Subordinated Debenture selected, called or
being called for redemption, in whole or in part, except in the
case of any Deferrable Interest Subordinated Debenture to be
redeemed in part, the portion thereof not to be redeemed.
Amendment of the Indenture
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than a
majority in principal amount of the Deferrable Interest
Subordinated Debentures which are affected by the amendment or
waiver, to amend the Indenture or the Deferrable Interest
Subordinated Debentures or to waive compliance by the Company with
any provision of the Indenture or the Deferrable Interest
Subordinated Debentures; provided that no such amendment or waiver
may, without the consent of the holder of each outstanding
Deferrable Interest Subordinated Debenture affected thereby, (a)
reduce the principal amount of the Deferrable Interest Subordinated
Debentures, (b) reduce the percentage of principal amount of
outstanding Deferrable Interest Subordinated Debentures of any
series, the consent of holders of which is required for amendment
of the Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, (c)
change the stated maturity date of the principal of, or the
interest or the rate of interest on, the Deferrable Interest
Subordinated Debentures, (d) change the redemption provisions
applicable to the Deferrable Interest Subordinated Debentures
adversely to the holders thereof, (e) impair the right to institute
suit for the enforcement of any payment with respect to the
Deferrable Interest Subordinated Debentures, (f) change the
currency in which payments with respect to the Deferrable Interest
Subordinated Debentures are to be made, (g) change the
subordination provisions applicable to the Deferrable Interest
Subordinated Debentures adversely to the holders thereof, or (h)
waive a default in the payment of the principal of, or interest on,
any Deferrable Interest Subordinated Debenture. The Indenture or
the Deferrable Interest Subordinated Debentures may be amended,
without the consent of the holders of the Deferrable Interest
Subordinated Debentures, to cure any ambiguity, defect or
inconsistency or to make other changes that do not adversely affect
the rights of such holders.
Events of Default
The following are Events of Default under the Indenture: (i)
default for 15 days in payment of any interest (including
Additional Interest, if any) on Deferrable Interest Subordinated
Debentures (whether by virtue of the provisions described above
under "Subordination" or otherwise); provided that an extension of
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the interest payment period by the Company as described under
"Option to Extend Interest Payment Period" shall not constitute a
default in the payment of interest for this purpose; (ii) default
in payment of principal of Deferrable Interest Subordinated
Debentures when due (whether by virtue of the provisions described
above under "Subordination" or otherwise); (iii) default for 30
days after notice in the performance of any other covenant in the
Indenture; or (iv) certain events of bankruptcy, insolvency or
reorganization of the Company. If an Event of Default shall occur
and be continuing, the Trustee or the holders of not less than a
majority in principal amount of the Deferrable Interest
Subordinated Debentures then outstanding may declare the principal
of, and all accrued and unpaid interest (including Additional
Interest, if any, and any interest accrued but not paid during an
Extension Period) on, the Deferrable Interest Subordinated
Debentures to be due and payable; provided that, upon certain
events of bankruptcy, insolvency or reorganization of the Company,
such amounts shall immediately become due and payable without any
declaration or other action by the Trustee or such holders. The
Company is required to furnish to the Trustee annually a statement
as to the performance by the Company of its obligations under the
Indenture and as to any default in such performance. Under certain
circumstances, any declaration of acceleration with respect to the
Deferrable Interest Subordinated Debentures may be rescinded and
past defaults (except, unless theretofore cured, a default in the
payment of principal of, or interest on, the Deferrable Interest
Subordinated Debentures) may be waived by the holders of a majority
in principal amount of the Deferrable Interest Subordinated
Debentures then outstanding. The Indenture provides that the
Trustee may withhold notice to the holders of the Deferrable
Interest Subordinated Debentures of any continuing default (except
in the payment of the principal of, or interest on, the Deferrable
Interest Subordinated Debentures) if the Trustee considers it in
the interests of holders of Deferrable Interest Subordinated
Debentures to do so.
Enforcement of Certain Rights by Holders of Preferred Securities
So long as any Deferrable Interest Subordinated Debentures are
held by Met-Ed Capital, the holders of any outstanding Preferred
Securities will have the rights referred to under "Description of
Preferred Securities-Voting Rights", including the right to appoint
a Special Representative authorized to exercise Met-Ed Capital's
right, as the holder of Deferrable Interest Subordinated
Debentures, to accelerate the principal amount of the Deferrable
Interest Subordinated Debentures and to enforce the Company's
obligations under the Indenture and the Deferrable Interest
Subordinated Debentures directly against the Company, without first
proceeding against Met-Ed Capital or any other person or entity.
Consolidation, Merger, Sale or Conveyance
The Indenture provides that the Company may not consolidate
with or merge into any other Person or sell, convey, transfer or
lease all or substantially all of its properties and assets to any
Person, unless (i) the successor Person shall be organized and
existing under the laws of the United States or any state thereof
or the District of Columbia; (ii) the successor Person shall
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<PAGE>
expressly assume (x) by a supplemental indenture, all of the
Company's obligations under the Deferrable Interest Subordinated
Debentures and the Indenture and (y) so long as any Preferred
Securities remain outstanding, the Company's obligations under the
Limited Guarantee; (iii) so long as any Preferred Securities remain
outstanding, the successor Person becomes or acquires the General
Partner; and (iv) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, conveyance, transfer or
lease and such supplemental indenture comply with the Indenture.
In case of any such consolidation, merger, sale, conveyance,
transfer or lease, such successor Person will succeed to and be
substituted for the Company as obligor on the Deferrable Interest
Subordinated Debentures, with the same effect as if it had been
named in the Indenture as the issuer in place of the Company.
The Indenture does not contain any other covenant which
restricts the Company's ability to consolidate or merge with, or
sell, convey, transfer or lease all or substantially all of its
assets to, any Person, firm or corporation or otherwise engage in
restructuring transactions.
Title
The Company, the Trustee and any agent of the Company or the
Trustee may treat the registered owner of any Deferrable Interest
Subordinated Debenture as the absolute owner thereof (whether or
not such Deferrable Interest Subordinated Debenture shall be
overdue and notwithstanding any notice to the contrary) for the
purpose of making payment and for all other purposes.
Defeasance and Discharge
Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the
Deferrable Interest Subordinated Debentures of any series (except
in each case for certain obligations to register the transfer or
exchange of Deferrable Interest Subordinated Debentures, replace
stolen, lost or mutilated Deferrable Interest Subordinated
Debentures, maintain paying agencies and hold monies for payment in
trust) if the Company deposits with the Trustee, in trust, (i)
money and/or (ii) U. S. Government Obligations (as defined in the
Indenture) sufficient to pay all the principal of, and interest on,
the Deferrable Interest Subordinated Debentures of such series on
the dates such payments are due; provided that no Event of Default
has occurred and is continuing. In connection with such a
defeasance and discharge, the Company, among other things, will
deliver to the Trustee an Opinion of Counsel to the effect that (i)
the deposit and related defeasance would not cause the holders of
the Deferrable Interest Subordinated Debentures of such series to
recognize income, gain or loss for federal income tax purposes, or
a copy of a ruling or other formal statement or action to such
effect received from or published by the Internal Revenue Service;
and (ii) the trust resulting from the defeasance is a valid trust
and will not constitute a regulated investment company under the
1940 Act.
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Replacement of Deferrable Interest Subordinated Debentures
Any mutilated Deferrable Interest Subordinated Debenture will
be replaced by the Company at the expense of the holder upon its
surrender to the Trustee. Deferrable Interest Subordinated
Debentures that become destroyed, lost or stolen will be replaced
by the Company at the expense of the holder upon delivery to the
Trustee of evidence of the destruction, loss or theft thereof
satisfactory to the Company and the Trustee. In the case of a
destroyed, lost or stolen Deferrable Interest Subordinated
Debenture, an indemnity satisfactory to the Trustee and the Company
may be required at the expense of the holder of such Deferrable
Interest Subordinated Debenture before a replacement Deferrable
Interest Subordinated Debenture will be issued.
Governing Law
The Indenture and the Deferrable Interest Subordinated
Debentures will be governed by and construed in accordance with the
laws of the State of New York.
Information Concerning the Trustee
Subject to the provisions of the Indenture relating to its
duties, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request, order or
direction of any of the holders thereunder, unless such holders
shall have offered to the Trustee reasonable indemnity. Subject to
such provision for indemnification, the holders of a majority in
principal amount of the Deferrable Interest Subordinated Debentures
then outstanding thereunder will have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee thereunder, or exercising any trust or
power conferred on the Trustee.
The Indenture contains limitations on the right of the
Trustee, as a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in
respect of any such claim as security or otherwise. In addition,
the Trustee may be deemed to have a conflicting interest and may be
required to resign as Trustee if at the time of default under the
Indenture it is a creditor of the Company.
United States Trust Company of New York, the Trustee under the
Indenture, has from time to time engaged in transactions with, or
performed services for, the Company and its affiliates in the
ordinary course of business.
Miscellaneous
For restrictions on certain actions of the General Partner
with respect to Deferrable Interest Subordinated Debentures held by
Met-Ed Capital, see "Description of Preferred Securities-Voting
Rights".
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UNITED STATES TAXATION
General
This section is a summary of certain United States federal
income tax considerations that may be relevant to prospective
purchasers of Preferred Securities and represents the opinion of
Carter, Ledyard & Milburn, special tax counsel to the Company and
Met-Ed Capital, insofar as it relates to matters of law and legal
conclusions. This section is based upon current provisions of the
Internal Revenue Code of 1986, as amended ("Code"), existing and
proposed regulations thereunder and current administrative rulings
and court decisions, all of which are subject to change.
Subsequent changes may cause tax consequences to vary substantially
from the consequences described below.
No attempt has been made in the following discussion to
comment on all United States federal income tax matters affecting
purchasers of Preferred Securities. Moreover, the discussion
focuses on holders of Preferred Securities who are individual
citizens or residents of the United States and has only limited
application to corporations, estates, trusts or non-resident
aliens. Accordingly, each prospective purchaser of Preferred
Securities should consult, and should depend on, his or her own tax
advisor in analyzing the federal, state, local and foreign tax
consequences of the purchase, ownership or disposition of Preferred
Securities.
Income from Preferred Securities
In the opinion of Carter, Ledyard & Milburn, Met-Ed Capital
will be treated as a partnership for federal income tax purposes.
Accordingly, each holder of Preferred Securities (a "Preferred
Securityholder") will be required to include in gross income such
holder's distributive share of the income of Met-Ed Capital. Such
income will not exceed Dividends received on such Preferred
Securities, except in limited circumstances as described below
under "Potential Extension of Interest Payment Period". No portion
of such income will be eligible for the dividends received
deduction.
Disposition of Preferred Securities
Gain or loss will be recognized on a sale (including a
redemption for cash) of Preferred Securities in an amount equal to
the difference between the amount realized and the Preferred
Securityholder's tax basis for the Preferred Securities sold. Gain
or loss recognized by a Preferred Securityholder on the sale or
exchange of a Preferred Security held for more than one year will
generally be taxable as long-term capital gain or loss.
Receipt of Deferrable Interest Subordinated Debentures Upon
Liquidation of Met-Ed Capital
Under certain circumstances described under the caption
"Description of Preferred Securities-Special Event Redemption or
Distribution", Met-Ed Capital may dissolve and cause Deferrable
Interest Subordinated Debentures to be distributed to the holders
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of Preferred Securities in liquidation of such holders' interests
in Met-Ed Capital. As described in "Description of Preferred
Securities-Special Event Redemption or Distribution", in the case
of a Special Event, Deferrable Interest Subordinated Debentures may
not be distributed to the holders of Preferred Securities in
connection with a dissolution of Met-Ed Capital unless Met-Ed
Capital receives an opinion of counsel to the effect that the
holders of the Preferred Securities will not recognize any gain or
loss for federal income tax purposes as a result of such
dissolution and distribution. Such a tax-free transaction would
result in the holder of Preferred Securities receiving an aggregate
tax basis in the Deferrable Interest Subordinated Debentures equal
to such holder's aggregate tax basis in the holder's Preferred
Securities. A holder's holding period in such Deferrable Interest
Subordinated Debentures would include the period for which the
Preferred Securities were held by such holder.
Met-Ed Capital Information Returns and Audit Procedures
The General Partner will furnish each Preferred Securityholder
with a Schedule K-1 each year setting forth such Preferred
Securityholder's allocable share of income for the prior calendar
year. The General Partner is required to furnish such schedules as
soon as practicable following the end of the year, but in any event
prior to March 31.
Any person who holds Preferred Securities as a nominee for
another person is required to furnish to Met-Ed Capital (a) the
name, address and taxpayer identification number of the beneficial
owner and the nominee; (b) information as to whether the beneficial
owner is (i) a person that is not a United States person, (ii) a
foreign government, an international organization or any wholly
owned agency or instrumentality of either of the foregoing, or
(iii) a tax-exempt entity; (c) the amount and description of
Preferred Securities held, acquired or transferred for the
beneficial owner; and (d) certain information including the dates
of acquisitions and transfers, means of acquisitions and transfers,
and acquisition cost for purchases, as well as the amount of net
proceeds from sales. Brokers and financial institutions are
required to furnish additional information, including whether they
are United States persons and certain information on Preferred
Securities they acquire, hold or transfer for their own accounts.
A penalty of $50 per failure (up to a maximum of $100,000 per
calendar year) is imposed by the Code for failure to report such
information to Met-Ed Capital. The nominee is required to supply
the beneficial owners of Preferred Securities with the information
furnished to Met-Ed Capital.
Potential Extension of Interest Payment Period
Under the terms of the Indenture, the Company has the right to
extend from time to time the interest payment period on the
Deferrable Interest Subordinated Debentures to a period not
exceeding 60 consecutive months. In the event that the Company
exercises this right, the Company may not, among other things,
declare dividends on any of its capital stock. Met-Ed Capital and
the Company currently believe that the extension of an interest
payment period is remote. In the event that the interest payment
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period is extended, Met-Ed Capital will continue to accrue income,
on an economic accrual basis, generally equal to the amount of the
interest payment due at the end of the extended interest payment
period, over the length of the extended interest payment period.
Accrued income will be allocated, but not distributed, to
holders of record on the Business Day preceding the last day of
each calendar month. As a result, holders of record during an
extended interest payment period will include interest in gross
income in advance of the receipt of cash, and any such holders who
dispose of Preferred Securities prior to the record date for the
payment of Dividends following such extended interest payment
period will include interest in gross income but will not receive
any cash related thereto from the Company or Met-Ed Capital. The
tax basis of a Preferred Security will be increased by the amount
of any interest that is included in income without a receipt of
cash, and will be decreased when and if such cash is subsequently
received from Met-Ed Capital. The subsequent receipt of such cash
will not be includible in gross income.
United States Alien Holders
For purposes of this discussion, a "United States Alien
Holder" is any holder who or which is (i) a nonresident alien
individual or (ii) a foreign corporation, partnership or estate or
trust, in either case not subject to United States federal income
tax on a net income basis in respect of a Preferred Security.
Under current United States federal income tax law, subject to
the discussion below with respect to backup withholding, and
assuming satisfaction by the Company of its withholding tax
obligations, if any:
(i) payments by Met-Ed Capital or any of its paying
agents to any holder of a Preferred Security who or which
is a United States Alien Holder will not be subject to
United States federal withholding tax provided that (a)
the beneficial owner of the Preferred Security does not
actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the
Company or 10% or more of the Preferred Securities
entitled to vote, (b) the beneficial owner of the
Preferred Security is not a controlled foreign
corporation that is related to the Company or Met-Ed
Capital through stock ownership, and (c) either: (x) the
beneficial owner of the Preferred Security certifies to
Met-Ed Capital or its agent, under penalties of perjury,
that it is a United States Alien Holder and provides its
name and address or (y) the holder of the Preferred
Security is a securities clearing organization, bank or
other financial institution that holds customers'
securities in the ordinary course of its trade or
business (a "financial institution"), and such holder
certifies to Met-Ed Capital or its agent, under penalties
of perjury, that such statement has been received from
the beneficial owner by it or by a financial institution
between it and the beneficial owner and furnishes Met-Ed
Capital or its agent with a copy thereof; and
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(ii) a United States Alien Holder of a Preferred
Security will generally not be subject to United States
federal withholding tax on any gain realized on the sale
or exchange of a Preferred Security unless such holder is
present in the United States for 183 days or more in the
taxable year of sale and either has a "tax home" in the
United States or certain other requirements are met.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to
payments of the proceeds of the sale of Preferred Securities within
the United States to noncorporate United States holders, and
"backup withholding" at a rate of 31% will apply to such payments
if the United States holder fails to provide an accurate taxpayer
identification number.
Payments of the proceeds from the sale by a United States
Alien Holder of Preferred Securities made to or through a foreign
office of a broker will not be subject to information reporting or
backup withholding, except that, if the broker is a United States
person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a
specified three-year period, information reporting may apply to
such payments. Payments of the proceeds from the sale of Preferred
Securities to or through the United States office of a broker is
subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption from information
reporting and backup withholding.
PLAN OF DISTRIBUTION
Met-Ed Capital may offer or sell Preferred Securities to one
or more underwriters for public offering and sale by them. Met-Ed
Capital may sell Preferred Securities as soon as practicable after
effectiveness of the Registration Statement, provided that
favorable market conditions exist. Any such underwriter involved
in the offer and sale of the Preferred Securities will be named in
an applicable Prospectus Supplement.
Underwriters may offer and sell the Preferred Securities at a
fixed price or prices, which may be changed, or from time to time
at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. In
connection with the sale of Preferred Securities, underwriters may
be deemed to have received compensation from the Company and/or
Met-Ed Capital in the form of underwriting discounts or
commissions. Underwriters may sell Preferred Securities to or
through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the
underwriters.
Any underwriting compensation paid by the Company and/or Met-
Ed Capital to underwriters in connection with the offering of
Preferred Securities, and any discounts, concessions or commissions
allowed by underwriters to participating dealers, will be set forth
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in an applicable Prospectus Supplement. Underwriters and dealers
participating in the distribution of the Preferred Securities may
be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the
Preferred Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Company and/or Met-Ed
Capital, to indemnification against and contribution toward certain
liabilities, including liabilities under the Securities Act, and to
reimbursement by the Company and/or Met-Ed Capital for certain
expenses.
Underwriters and dealers may engage in transactions with, or
perform services for, the Company and/or Met-Ed Capital and/or any
of their affiliates in the ordinary course of business.
Each series of Preferred Securities will be a new issue of
securities and will have no established trading market. Any
underwriters to whom Preferred Securities are sold by Met-Ed
Capital for public offering and sale may make a market in such
Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without
notice. The Preferred Securities may or may not be listed on a
national securities exchange. No assurance can be given as to the
liquidity of or the trading markets for any Preferred Securities.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Company and
Met-Ed Capital by Berlack, Israels & Liberman, New York, New York,
and Ryan, Russell, Ogden & Seltzer, Reading, Pennsylvania, and for
any underwriters by Reid & Priest, New York, New York. Certain
matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to Met-Ed Capital.
Berlack, Israels & Liberman and Reid & Priest may rely on the
opinion of Ryan, Russell, Ogden & Seltzer as to matters of
Pennsylvania law, and Berlack, Israels & Liberman, Ryan, Russell,
Ogden & Seltzer and Reid & Priest may rely on the opinion of
Richards, Layton & Finger, P.A., as to matters of Delaware law.
Members and attorneys of Berlack, Israels & Liberman own an
aggregate of 12,091 shares of the Common Stock of the Company's
parent, GPU. In addition, one such member holds 986 such shares as
custodian for his children. Members and attorneys of Ryan,
Russell, Ogden & Seltzer own an aggregate of 2,000 shares of the
Common Stock of GPU.
EXPERTS
The financial statements and financial statement schedules
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993 are incorporated herein by reference in
reliance on the report of Coopers & Lybrand, independent
accountants, given on the authority of said firm as experts in
auditing and accounting. The report of Coopers & Lybrand, included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 incorporated herein by reference, contains
explanatory paragraphs related to a contingency which has resulted
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from the accident at Unit 2 of the Three Mile Island nuclear
generating station and the change in the method of accounting for
unbilled revenues in 1991.
41
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No person has been authorized to
give any information or to make any 4,000,000 Preferred
representations other than those Securities
contained in this Prospectus Supplement
or the Prospectus, and, if given or Met-Ed Capital
made, such information or 9% Cumulative
representations must not be relied upon Monthly Income
as having been authorized. This Preferred Securities,
Prospectus Supplement and the Prospectus Series A
do not constitute an offer to sell or a guaranteed to the
solicitation of an offer to buy any extent the issuer
securities other than the securities has funds as set
described in this Prospectus Supplement forth herein by
or an offer to sell or the solicitation
of an offer to buy such securities in
any circumstances in which such offer
or solicitation is unlawful. Neither METROPOLITAN
the delivery of this Prospectus EDISON
Supplement or the Prospectus nor any COMPANY
sale made hereunder or thereunder
shall, under any circumstances, create
any implication that the information
contained herein or therein is correct
as of any time subsequent to the date
of such information.
___________________ PROSPECTUS
SUPPLEMENT
TABLE OF CONTENTS
Prospectus Supplement
Page
Met-Ed Capital . . . . . . . . . . .
Metropolitan Edison Company . . . . .
Certain Investment Considerations . .
Use of Proceeds . . . . . . . . . . .
Certain Terms of the Series A
Preferred Securities . . . . . . .
Certain Terms of the Series A
Deferrable Interest Subordinated
Debentures . . . . . . . . . . . .
Underwriting . . . . . . . . . . . .
Legal Opinions . . . . . . . . . . .
Prospectus
Available Information . . . . . . . .
Incorporation of Certain Documents
by Reference . . . . . . . . . . .
Metropolitan Edison Company . . . . .
Recent Developments. . . . . . . . . .
Financing Program . . . . . . . . . .
Certain Company Consolidated Financial
Information . . . . . . . . . . . GOLDMAN, SACHS & CO.
Company Coverage Ratios . . . . . . . DEAN WITTER REYNOLDS INC.
Use of Proceeds . . . . . . . . . . . A.G. EDWARDS & SONS, INC.
Met-Ed Capital . . . . . . . . . . . KIDDER, PEABODY & CO.
Description of Preferred Securities . INCORPORATED
Description of the Limited Guarantee MORGAN STANLEY & CO.
Description of the Deferrable Interest INCORPORATED
Subordinated Debentures . . . . . PAINEWEBBER INCORPORATED
United States Taxation . . . . . . . PRUDENTIAL SECURITIES
Plan of Distribution . . . . . . . . INCORPORATED
Legal Opinions . . . . . . . . . . . Representatives of the
Experts . . . . . . . . . . . . . . . Underwriters
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