<PAGE>
Rule 424(b)5
Registration No. 33-51301
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 23, 1993
Part of the Allegheny [Logo of Allegheny Power System]
Power System
$70,000,000
MONONGAHELA POWER COMPANY
FIRST MORTGAGE BONDS, 7 5/8% SERIES DUE 2025
------------
The First Mortgage Bonds, 7 5/8% Series Due 2025 (the "Offered New Bonds")
mature on May 1, 2025 and will bear interest from May 1, 1995. Interest on the
Offered New Bonds is payable on May 1 and November 1 of each year, commencing
November 1, 1995. The Offered New Bonds will be redeemable on or after May 1,
2005, in whole or in part, at the option of the Company at the regular
redemption prices set forth herein. The Offered New Bonds may also be redeemed
at 100% of their principal amount through trust money. The Offered New Bonds
will be issued only in registered form in denominations of $1,000 and integral
multiples thereof. See "Description of Offered New Bonds".
------------
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.
------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE (1) DISCOUNT (2) COMPANY (1) (3)
------------------ ------------ ---------------
<S> <C> <C> <C>
Per Offered New Bond............ 98.281% 0.260% 98.021%
Total........................... $68,796,700 $182,000 $68,614,700
</TABLE>
- --------
(1) Plus accrued interest from May 1, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $172,319 payable by the Company.
------------
The Offered New Bonds 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 the Offered New
Bonds will be ready for delivery in New York, New York on or about May 23,
1995.
GOLDMAN, SACHS & CO.
CITICORP SECURITIES, INC.
PAINEWEBBER INCORPORATED
MABON SECURITIES CORP.
PRYOR, MCCLENDON, COUNTS & CO., INC.
------------
The date of this Prospectus Supplement is May 16, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED NEW
BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
USE OF PROCEEDS
The net proceeds from the sale of the Offered New Bonds, together with other
corporate funds, will be used to redeem $70 million of the Company's First
Mortgage Bonds, 8 7/8% Series Due 2019 at the current optional redemption
price of 106.29% of principal amount plus accrued interest to the redemption
date and to pay issuance expenses.
SELECTED FINANCIAL INFORMATION
The following summary income statement information as to the year ended
December 31, 1994 and the twelve months ended March 31, 1995 should be read in
conjunction with the audited Financial Statements contained in the Annual
Report for the Company on Form 10-K for the year ended December 31, 1994. The
unaudited summary income statement information for the twelve months ended
March 31, 1995 reflects all adjustments (which consist only of normal
recurring adjustments) which in the Company's opinion are necessary for a fair
presentation of that period.
<TABLE>
<CAPTION>
12 MONTHS ENDED YEAR ENDED
MARCH 31, 1995 DECEMBER 31, 1994*
--------------- ------------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Income Statement Data:
Total Operating Revenues.................. $679,922 $680,130
Operating Income.......................... 89,616 87,235
Income Before Interest Charges............ 98,912 96,712
Interest Charges.......................... 37,086 36,776
Income Before Cumulative Effect of 61,826 59,936
Accounting Change........................
Cumulative Effect of Accounting Change.... -- 7,945
Net Income................................ 61,826 67,881
Ratio of Earnings to Fixed Charges.......... 3.40 3.33
</TABLE>
- --------
*Income Statement Data includes the cumulative effect of an accounting change
to record unbilled revenues recorded in the first quarter of 1994. The Ratio
of Earnings to Fixed Charges is before the cumulative effect of the
accounting change.
S-2
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at December
31, 1994 and March 31, 1995, and as adjusted to give effect to the sale of the
Offered New Bonds and the refunding of $70 million of the Company's First
Mortgage Bonds, 8 7/8% Series Due 2019.
<TABLE>
<CAPTION>
MARCH 31, 1995 DECEMBER 31, 1994
---------------------- ----------------------
AMOUNT AS ADJUSTED AMOUNT AS ADJUSTED
---------- ----------- ---------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Common Stock, Other Paid-in
Capital
and Retained Earnings........... $ 500,887 $500,887 $ 495,693 $ 495,693
Preferred Stock (Not Subject to
Mandatory Redemption)........... 114,000 114,000 114,000 114,000
Long-Term Debt................... 451,704 451,012 470,131 469,447
---------- ---------- ---------- ----------
Total Capitalization........... $1,066,591 $1,065,899 $1,079,824 $1,079,140
========== ========== ========== ==========
</TABLE>
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1994 amounted to $104 million
and for 1995 and 1996 are expected to aggregate $74 million and $70 million,
respectively. In 1994, these expenditures included $42 million for
environmental control technology, of which $36 million was for compliance with
the Clean Air Act Amendments of 1990 ("CAAA"). The 1995 and 1996 estimated
expenditures include $19 million and $14 million, respectively, for
environmental control technology, of which $11 million and $2 million,
respectively, are to cover costs of compliance with the CAAA. Allowance for
funds used during construction (AFUDC) (shown below) has been reduced for
carrying charges on CAAA expenditures that are being collected through
currently approved base rates.
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Generation.............................................. $ 55.1 $28.3 $34.4
Transmission and Distribution........................... 47.7 44.8 34.9
Other................................................... 1.2 1.3 1.2
------ ----- -----
Total................................................. $104.0 $74.4 $70.5
====== ===== =====
Allowance for Funds Used During Construction included $ 2.9 $ 1.4 $ 1.1
above...................................................
</TABLE>
DESCRIPTION OF OFFERED NEW BONDS
The following description of the particular terms of the Offered New Bonds
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Offered New Bonds set
forth in the Prospectus, to which description reference is hereby made.
GENERAL
The Offered New Bonds will be limited to $70,000,000 aggregate principal
amount and will mature on May 1, 2025. The Offered New Bonds will bear
interest at the rate per annum shown on the front cover of this Prospectus
Supplement from May 1, 1995 or from the most recent interest payment date to
which interest has been paid or provided for, payable semiannually on May 1
and November 1 of each year, commencing November 1, 1995, to the persons in
whose name the Offered New Bonds (or any predecessor Offered New Bonds) are
registered at the close of business on the last business day which is more
than ten days prior to such interest payment date. Principal of and interest
on the Offered New Bonds are payable, and transfers of the Offered New Bonds
are registrable, at the office of the Trustee at 111 Wall Street, New York,
New York.
S-3
<PAGE>
Neither the Indenture nor the Supplemental Indenture relating to the Offered
New Bonds contains any covenants or other provisions that are specifically
intended to afford holders of the Offered New Bonds special protection in the
event of a highly leveraged transaction.
REDEMPTION
On or after May 1, 2005, the Offered New Bonds will be redeemable at the
option of the Company, in whole or in part, at any time during the 12-month
period beginning on May 1 in each year, on at least 30 but not more than 60
days' notice, at the percentages of their principal amount set forth below
opposite such year, plus accrued interest.
<TABLE>
<CAPTION>
IF REDEEMED DURING REGULAR IF REDEEMED DURING REGULAR IF REDEEMED DURING REGULAR
THE 12- MONTH PERIOD REDEMPTION THE 12-MONTH PERIOD REDEMPTION THE 12-MONTH PERIOD REDEMPTION
BEGINNING MAY 1, PRICE BEGINNING MAY 1, PRICE BEGINNING MAY 1, PRICE
- --------------------- ---------- ------------------- ---------- ------------------- ----------
<S> <C> <C> <C> <C> <C>
2005......... 102.953% 2009......... 101.772% 2013......... 100.591%
2006......... 102.658 2010......... 101.477 2014......... 100.295
2007......... 102.362 2011......... 101.181 2015 and
2008......... 102.067 2012......... 100.886 thereafter. . 100.000
</TABLE>
The Special Redemption Price is 100% plus accrued interest and applies to
redemptions of the Offered New Bonds with cash deposited in the trust estate
from proceeds of released property, property taken by eminent domain or
insurance. Redemptions of the Offered New Bonds during any 12-month period
beginning April 30 at the Special Redemption Price with cash included in the
trust estate may not exceed the greater of (a) 1% of the principal amount of
such series of the Offered New Bonds originally issued ($700,000) or (b) the
lowest percentage so redeemed of Bonds of any other series then redeemable
pursuant to such method during such period relative to the respective
aggregate principal amount of Bonds of such series originally issued.
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement
relating to the Offered New Bonds, the Company has agreed to sell to each of
the Underwriters named below, and each of the Underwriters has severally
agreed to purchase, the principal amount of the Offered New Bonds set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
OFFERED NEW
UNDERWRITER BONDS
----------- -----------
<S> <C>
Goldman, Sachs & Co................................................ $19,000,000
Citicorp Securities, Inc........................................... 19,000,000
PaineWebber Incorporated........................................... 19,000,000
Mabon Securities Corp.............................................. 11,000,000
Pryor, McClendon, Counts & Co., Inc................................ 2,000,000
-----------
Total............................................................. $70,000,000
===========
</TABLE>
Under the terms and conditions of the Purchase Agreement, the Underwriters
are committed to take and pay for all of the Offered New Bonds, if any are
taken.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Offered New Bonds in part directly to retail purchasers
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 not in excess of 0.225% of the principal amount of the
Offered New Bonds. The Underwriters may allow and such dealers may reallow to
certain brokers and dealers a concession not in excess of 0.125% of the
principal amount of the
S-4
<PAGE>
Offered New Bonds. After the Offered New Bonds are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Underwriters.
There is presently no established trading market for the Offered New Bonds,
and the Company does not intend to apply for listing of the Offered New Bonds
on a national securities exchange. The Company has been advised by the
Underwriters that they intend to make a market in the Offered New Bonds, but
they are not obligated to do so and may discontinue market-making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Offered New Bonds.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
S-5
<PAGE>
FIRST MORTGAGE BONDS PREFERRED STOCK
(PAR VALUE $100)
MONONGAHELA POWER COMPANY
---------------
Monongahela Power Company (the "Company") may offer and sell from time to
time in one or more series, or all at one time in one or more series, up to
$225,000,000 aggregate principal amount of its First Mortgage Bonds ("New
Bonds") and up to 850,000 shares of its Preferred Stock (par value $100) ("New
Preferred Stock" and together with the New Bonds, the "Securities") at prices
and on terms to be determined at the time of sale. This Prospectus will be
supplemented by one or more prospectus supplements ("Prospectus Supplement")
which will set forth, in the case of an offering of New Bonds, the aggregate
principal amount, maturity, interest rate (or method of calculating the
interest rate), any redemption provisions, offering price, proceeds to the
Company, and any other specific terms of the particular series of New Bonds
and, in the case of an offering of New Preferred Stock, the specific
designation, number of shares, rate and time of payment of dividends, or manner
of determining such rate and time, offering price, any redemption provisions,
proceeds to the Company, and any other specific terms of the particular series
of the New Preferred Stock. The sale of one series of New Bonds or of one
series of New Preferred Stock will not be contingent upon the sale of any other
series of New Bonds or New Preferred Stock, as the case may be.
---------
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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------
THE DATE OF THIS PROSPECTUS IS DECEMBER 23, 1993.
<PAGE>
AVAILABLE INFORMATION
MONONGAHELA POWER COMPANY (THE "COMPANY"), 1310 FAIRMONT AVENUE, P.O. BOX
1392, FAIRMONT, WEST VIRGINIA 26555-1392 (TEL. 304-366-3000), IS SUBJECT TO
THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934 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 AT THE PUBLIC REFERENCE FACILITIES OF
THE COMMISSION, ROOM 1024, JUDICIARY PLAZA, 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549; SUITE 1400, NORTHWESTERN ATRIUM CENTER, 500 WEST
MADISON STREET, CHICAGO, ILLINOIS 60661; AND ROOM 1400, 7 WORLD TRADE CENTER,
13TH FLOOR, NEW YORK, NEW YORK 10048. COPIES OF SUCH MATERIAL CAN BE OBTAINED
FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT PRESCRIBED RATES.
REQUESTS SHOULD BE DIRECTED TO THE COMMISSION'S PUBLIC REFERENCE SECTION, ROOM
1024, JUDICIARY PLAZA, 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549. CERTAIN
SECURITIES OF THE COMPANY ARE LISTED ON THE AMERICAN STOCK EXCHANGE, AND
REPORTS AND OTHER INFORMATION CONCERNING THE COMPANY CAN BE INSPECTED AT THE
OFFICES OF SUCH EXCHANGE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, are hereby
incorporated by reference in this Prospectus:
(i) The Annual Report of the Company on Form 10-K for the year ended
December 31, 1992, as amended by the Company's Report on Form 8 filed
on March 1, 1993 (the "Annual Report");
(ii) The Quarterly Reports of the Company on Form 10-Q for the quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993; and
(iii) The Current Report of the Company on Form 8-K filed on April 29,
1993.
All documents filed by the Company pursuant to Section 13, 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this Prospectus and
prior to the termination of the offering of the Securities offered hereby
shall be deemed to be incorporated in this Prospectus by reference and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein or
in accompanying Prospectus Supplements modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL
REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO: 1310 FAIRMONT AVENUE, P.O. BOX 1392, FAIRMONT, WEST VIRGINIA
26555-1392, ATTENTION: MR. CHARLES S. MULLETT, SECRETARY AND TREASURER (TEL.
304-366-3000).
2
<PAGE>
THE COMPANY
The Company, incorporated in Ohio in 1924, is an electric utility operating
in northern West Virginia and an adjacent portion of Ohio. It also owns
generating capacity in Pennsylvania. The Company is a wholly-owned subsidiary
of Allegheny Power System, Inc. and, together with The Potomac Edison Company
("Potomac Edison"), West Penn Power Company ("West Penn") and Allegheny
Generating Company ("AGC") (the "affiliates"), makes up the Allegheny Power
integrated electric utility system (the "System"). The Company owns 27% of the
common stock of AGC, and Potomac Edison and West Penn own the remainder of
AGC's common stock. AGC owns an undivided 40% interest (840 MW) in a pumped-
storage hydroelectric station in Bath County, Virginia, which is operated by
an unaffiliated company.
SELECTED INFORMATION
The following selected information is qualified in its entirety by the
detailed information appearing elsewhere in this Prospectus and by the
information and financial statements (including the notes thereto) appearing
in the documents incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
TWELVE MONTHS YEARS ENDED DECEMBER 31,
ENDED ---------------------------------------
SEPTEMBER 30, 1993 1992 1991 1990 1989 1988
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Generating capability at
end of period (KW in
Thousands):
Company-owned:
Coal-fired............ 2,098 2,098 2,098 2,098 2,075 2,075
Pumped-storage(a)..... 227 227 227 227 227 227
Nonutility contract(b). 159 79 29 27 27 27
Maximum hour peak demand
(KW in Thousands)...... 1,632 1,609 1,644 1,523 1,667 1,542
Sales (KWh in Millions):
Retail customers....... 9,223 9,142 9,232 8,956 8,836 8,534
Nonaffiliated 3,494 4,578 4,878 5,635 6,491 5,978
utilities(c)..........
Other, including 1,459 824 585 591 942 1,173
affiliates(c).........
Customers (at end of 339,023 336,777 333,228 330,213 327,473 325,291
period)...............
</TABLE>
- ------
(a) Capacity entitlement through percentage ownership of AGC.
(b) Nonutility generating capacity available through contractual arrangements
pursuant to the Public Utility Regulatory Policies Act of 1978.
(c) Amounts for periods prior to 1991 have been reclassified for comparative
purposes to reflect a change in a Federal Energy Regulatory Commission
classification.
CAPITALIZATION
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
------------------------
AMOUNT PERCENT
------ -------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock, Other Paid-in Capital, and Retained $ 480,722 48.0%
Earnings.............................................
Preferred Stock (Not Subject to Mandatory Redemption). 64,000 6.4
Long-Term Debt........................................ 455,872 45.6
---------- -----
Total Capitalization.............................. $1,000,594 100.0%
========== =====
</TABLE>
3
<PAGE>
INCOME STATEMENT SUMMARY
The following summary income information as to the years ended December 31,
1988 through 1992 should be read in conjunction with the audited Financial
Statements contained in the Annual Report. The unaudited income information
for the twelve months ended September 30, 1993 reflects all adjustments (which
consist only of normal recurring adjustments) which in the Company's opinion
are necessary for a fair presentation of that period.
<TABLE>
<CAPTION>
TWELVE MONTHS YEARS ENDED DECEMBER 31,
ENDED --------------------------------------------
SEPTEMBER 30, 1993 1992 1991 1990 1989 1988
------------------ ---- ---- ---- ---- ----
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total Operating $640,496 $631,963 $625,126 $630,328 $628,899 $598,748
Revenues*............
Operating Income....... 87,448 82,061 77,669 77,149 74,369 78,682
Income Before Interest
Charges.............. 98,302 92,456 86,242 87,205 87,011 90,600
Interest Charges....... 34,833 34,112 32,153 32,256 31,566 31,637
Net Income............. 63,469 58,344 54,089 54,949 55,445 58,963
Ratio of Earnings to
Fixed Charges.......... 3.53 3.36 3.49 3.50 3.23 3.57
Ratio of Earnings to
Fixed Charges and
Preferred Stock
Dividend Requirements.. 3.00 2.81 2.85 2.86 2.70 2.94
</TABLE>
- ------
* Amounts for periods prior to 1991 have been reclassified for comparative
purposes to reflect a change in a Federal Energy Regulatory Commission
classification.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be added to the
Company's general funds and, together with other funds available to the
Company, will be used to pay or prepay, to the extent desirable, debt, to
redeem outstanding bonds and preferred stock, and for other corporate
purposes, including the financing of the Company's construction program.
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1992 amounted to $126 million
and for 1993 and 1994 are expected to aggregate $146 million and $89 million,
respectively. In 1992, these expenditures included $51 million for
environmental protection, of which $45 million was for compliance with the
Clean Air Act Amendments of 1990 ("CAAA"). The 1993 and 1994 estimated
expenditures include $74 million and $33 million, respectively, for
environmental protection, of which $69 million and $28 million, respectively,
are to cover costs of compliance with the CAAA. Allowance for funds used
during construction (shown below) has been reduced for carrying charges on
CAAA expenditures which will be collected through a currently approved
surcharge.
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Generation............................................ $ 77.1 $100.7 $49.8
Transmission and Distribution......................... 47.2 42.3 36.6
Other................................................. 2.1 3.2 2.8
------ ------ -----
Total............................................. $126.4 $146.2 $89.2
====== ====== =====
Allowance for Funds used During Construction
included above....................................... $3.9 $8.1 $7.4
</TABLE>
4
<PAGE>
In connection with its construction program, the Company must make estimates
of the availability and cost of capital as well as the future demands of its
customers that are necessarily subject to regional, national, and
international developments, changing business conditions, and other factors.
The construction of facilities and their cost are affected by laws and
regulations, lead times in manufacturing, availability of labor, materials and
supplies, inflation, interest rates, and licensing, rate, environmental, and
other proceedings before regulatory authorities. As a result, the Company's
future plans, as well as its projected ownership of future generating
stations, are subject to continuing review and substantial change.
The Company has financed its construction program through internally
generated funds, first mortgage bond and preferred stock issues, pollution
control and solid waste disposal bonds, instalment loans, long-term lease
arrangements, equity investments by its parent, and, where necessary, interim
short-term debt. The future ability of the Company to finance its construction
program by these means depends on many factors, including rate levels
sufficient to provide internally generated funds and adequate revenues to
produce a satisfactory return on the common equity portion of the Company's
capital structure and to support the issuance of senior securities.
DESCRIPTION OF THE NEW BONDS
GENERAL
The New Bonds are to be issued under an Indenture, dated as of August 1,
1945, between the Company and Citibank, N.A., as Trustee, as supplemented and
as to be supplemented as is necessary to create any series of New Bonds
(collectively, the "Indenture"). The Trustee is a depositary of funds of and a
lender to the Company and its affiliates.
The statements under this caption relating to the New Bonds and the
Indenture are summaries and do not purport to be complete. They make use of
terms defined in the Indenture and are qualified in their entirety by express
reference to the Indenture, the form of which is filed as an exhibit to the
Registration Statement.
Reference is made to the Prospectus Supplement relating to the particular
New Bonds offered thereby (the "Offered New Bonds") for the terms of the
Offered New Bonds, including dates of maturity, the rates of interest, and the
prices at which, the periods within which, and the terms and conditions upon
which the Offered New Bonds may, pursuant to any optional or mandatory
redemption provisions, be redeemed by the Company.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered New Bonds are to be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000. They
will be transferable and exchangeable without charge except for governmental
charges, if any.
The Indenture does not contain any covenants or other provisions that are
specifically intended to afford holders of the New Bonds special protection in
the event of a highly leveraged transaction.
RENEWAL AND REPLACEMENT FUND
So long as any series of Bonds issued under the Indenture before September
2, 1992 ("Prior Bonds") are outstanding, the Company will, on or before April
30 in each year, pay to the Trustee in cash or Bonds an amount equal to 2 1/4%
of the average amount of Depreciable Property of the Company during the
preceding year less certain property additions and Bonds retired or to be
retired. Cash deposited may be used to acquire Prior Bonds or be withdrawn
against Prior Bonds or gross property additions. Excess credits may be used in
any subsequent year. The Company has reserved the right to change the 2 1/4%
with the approval of the Commission.
5
<PAGE>
SECURITY
The New Bonds will be equally and ratably secured, together with all other
Bonds now or hereafter issued, by a direct first lien on all the fixed
properties and franchises now or hereafter owned by the Company. The lien is
subject to statutory liens and equitable priorities for taxes and other
permitted liens and encumbrances and, as to certain after-acquired property,
to preexisting liens and encumbrances, and to rights of others which may
attach prior to recordation of a supplemental indenture specifically
mortgaging the property. There are excepted from the lien all bills, notes,
accounts receivable, cash, agreements, unpledged securities, materials and
supplies and certain other assets.
ISSUANCE OF ADDITIONAL BONDS
Additional Bonds of any series may be issued in an amount equal to (1) 60%
of the net bondable value (such value estimated to be in excess of $577
million as of September 30, 1993) of property additions not subject to an
unfunded prior lien, (2) certain Bonds retired or to be retired and (3) cash
deposited with the Trustee; but (except as to additional Bonds which are
issued to refund Bonds within two years of their maturity) only if net
earnings of the Company available for interest (in 12 out of the 15 preceding
months), after a provision for depreciation (at the higher of (i) 2 1/4% of
Depreciable Property or (ii) book depreciation) but before income taxes, are
at least twice the annual interest charges on all Bonds and prior lien bonds
then outstanding or applied for. Cash deposited for an issue of Bonds may be
withdrawn in an amount equal to either 60% of net bondable value of property
additions not subject to a prior lien or the aggregate principal amount of
certain Bonds retired or to be retired and such property additions or Bonds
may not thereafter be used as a basis to issue additional Bonds.
Additional prior lien bonds (indebtedness secured by a prior lien on any of
the mortgaged property) may be issued with the same limits as those applicable
to the issuance of the additional Bonds, on the basis of property subject to
such prior lien, the retirement of prior lien bonds or the deposit of cash.
The Company expects that the New Bonds will be issued on the basis of
property additions, cash or Bonds retired or to be retired.
MODIFICATION
With the consent of the Company and the holders of 75% in amount of the
Bonds outstanding and (if less than all series are affected) 75% in amount of
each affected series, the Indenture and the rights of the Bondholders may be
changed in any way except to affect the terms of payment of principal or
interest or to reduce said percentage.
DEFAULTS
Failure to pay principal, or, for specified periods, to pay interest or meet
other Indenture requirements constitutes an event of default. A majority of
the Bondholders may direct the time, method and place of exercising any power
conferred upon the Trustee, but the Trustee, subject during default to the
required standard of care, is first entitled to security or indemnity
satisfactory to it. Periodic evidence as to general compliance with the
Indenture is not required to be furnished unless prescribed by the Commission
under the Trust Indenture Act of 1939, but certificates as to compliance with
certain provisions are required to be furnished annually and in connection
with action to be taken by the Trustee at the Company's request.
DESCRIPTION OF THE NEW PREFERRED STOCK
The authorized preferred stock of the Company consists of 1,500,000 shares
of cumulative preferred stock, par value $100 (the "Preferred Stock"), of
which 640,000 shares were issued and outstanding as of September 30, 1993 as
shares of various series heretofore established. The statements herein
concerning the
6
<PAGE>
New Preferred Stock are brief summaries of the relative rights and preferences
of the Preferred Stock. They make use of terms defined in the Company's
charter, as amended, do not purport to be complete, and are qualified in their
entirety by reference to such charter, which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
As set forth below, particular series of the New Preferred Stock may differ
with respect to designation, liquidation preference per share, sinking fund
provisions, if any, amount and method of determining the rate of dividends and
redemption terms, among other things.
Reference is made to the Prospectus Supplement relating to the particular
series of New Preferred Stock offered thereby (the "Offered New Preferred
Stock") for the specific terms of the Offered New Preferred Stock, including
the dividend rate (or, if the rate is not fixed, the method of determining the
dividend rate), the liquidation preference per share, any provisions for
redemption (including by way of sinking fund) and other terms of the Offered
New Preferred Stock.
GENERAL
The Company's charter provides that the Company's Preferred Stock may be
divided into and issued in series. The New Preferred Stock will constitute one
or more new series of the Company's Preferred Stock. All shares of Preferred
Stock are of equal rank. The charter provides that all of the shares of
Preferred Stock shall be identical in all respects, except as to the
designation thereof and except that each series may vary, as fixed and
determined by the Board of Directors of the Company at the time of its
creation and expressed in a resolution, as to (a) the annual dividend rate and
the date from which dividends in such series shall be cumulative, (b) the
price at which, and the terms and conditions on which, such shares may be
redeemed, (c) the amounts payable upon shares in the event of voluntary or
involuntary liquidation, (d) the terms and conditions, if any, on which shares
may be converted and (e) any other powers, preferences and rights and
qualifications, limitations or restrictions of shares of such series.
DIVIDENDS
The holders of each series of the New Preferred Stock shall be entitled to
receive, in preference to any class of stock ranking junior to the Preferred
Stock, as and when declared by the Board of Directors of the Company out of
funds legally available therefor, cumulative cash dividends at the rate for
such series determined in accordance with the charter at the time of creation
of such series. The New Preferred Stock will rank on parity, as to dividends,
with all series of Preferred Stock. No dividend shall be paid upon, or
declared or set apart for, any share of Preferred Stock for any quarterly
dividend period unless at the same time a like proportionate dividend for the
same quarterly dividend period, ratably in proportion to the respective annual
dividend rates fixed therefor, shall be paid upon, or declared and set apart
for, all shares of Preferred Stock of all series then issued and outstanding
and entitled to receive such dividend.
If any dividends are in arrears on the Preferred Stock, the Company may not
acquire (for a sinking fund or otherwise) any shares thereof (except by
redemption of all) without prior approval of the Commission under the Public
Utility Holding Company Act of 1935.
The Company's charter provides that so long as any shares of Preferred Stock
are outstanding, the Company shall not declare any dividends or make any
distributions in respect of outstanding shares of any stock of the Company
ranking junior to the Preferred Stock as to dividends or assets (the "junior
stock"), other than dividends in shares of junior stock, or purchase or
otherwise acquire for value any outstanding shares of junior stock (each such
dividend, distribution, purchase or acquisition being called a "dividend") in
contravention of the following:
(a) If and so long as the junior stock equity, as defined, at the end of
the calendar month immediately preceding the date on which a dividend on
the junior stock is declared is, or as a result of the dividend would
become, less than 20% of total consolidated capitalization, as defined, the
Company
7
<PAGE>
shall not declare such dividends in an amount which, together with all
other dividends on the junior stock paid within the year ending with and
including the date on which such dividend is payable, exceeds 50% of the
consolidated net income of the Company and its subsidiaries available for
dividends on the junior stock for the 12 full calendar months immediately
preceding the calendar month in which such dividends are declared, except
in an amount not exceeding the aggregate of dividends which under the
restriction set forth above could have been, and have not been, declared;
and
(b) If and so long as the junior stock equity, as defined, at the end of
the calendar month immediately preceding the date on which a dividend on
the junior stock is declared is, or as a result of the dividend would
become, less than 25% but not less than 20% of total consolidated
capitalization, as defined, the Company shall not declare dividends on the
junior stock in an amount which, together with all other dividends on the
junior stock paid within the year ending with and including the date on
which such dividend is payable, exceeds 75% of the consolidated net income
of the Company and its subsidiaries available for dividends on the junior
stock for 12 full calendar months immediately preceding the calendar month
in which such dividends are declared, except in an amount not exceeding the
aggregate of dividends on junior stock which under the restriction above
under (a) and in this paragraph could have been, and have not been,
declared.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of the Company, each series of Preferred Stock, pari passu with
each other, shall have preference over any class of stock ranking junior to
the Preferred Stock until an amount equal to the amount per share determined
in accordance with the charter provisions, plus accrued dividends, shall have
been paid. Neither the consolidation or merger of the Company nor the sale or
transfer of all or part of its assets shall be deemed a liquidation,
dissolution or winding up of the affairs of the Company.
VOTING RIGHTS
The Preferred Stock has no voting rights except as indicated below or as
required by law.
If dividends on any of the Preferred Stock are in default in an amount
equivalent to four or more full quarterly dividends, and until all such
dividends in arrears have been paid, the Preferred Stock, voting as a class,
shall be entitled to elect a majority of the Board of Directors. In such case,
each share is entitled to one vote for each director to be elected by the
Preferred Stock, which votes may be cast cumulatively.
A consent of two-thirds of the holders of outstanding shares of the
Preferred Stock, voting as a class, is required to:
(1) change the charter to adversely affect the powers, preferences or rights
of the Preferred Stock (the vote being by the series adversely affected,
voting as a class, if less than all series are adversely affected), but a
change in the authorized amount of the Preferred Stock or the creation, or
change in the amount, of any new class of stock ranking on a parity as to
dividends or assets (hereinafter referred to as "equal rank") or any class of
stock ranking junior to the Preferred Stock or any security convertible into
such stock or into Preferred Stock shall not be deemed to be adverse; or
(2) authorize or create, or increase the authorized amount of, or issue more
than 12 months after such authorization or creation, any prior ranking stock.
A consent of holders of a majority of the outstanding shares of the
Preferred Stock, voting as a class, is required to:
(1) issue or assume any securities representing unsecured debt (except to
refund unsecured debt or retire all outstanding shares of Preferred Stock) if
all unsecured debt to be outstanding would exceed 20%, or all such debt with
maturities of less than 10 years to be outstanding would exceed 10%, of
secured indebtedness, capital and surplus;
8
<PAGE>
(2) issue any additional or reacquired shares of Preferred Stock or stock of
equal rank (except to refinance an equal par amount of Preferred Stock or
stock of equal or prior rank) unless annual interest charges on indebtedness
of the Company and its subsidiaries to be outstanding after the issuance and
annual dividend requirements of all Preferred Stock and stock of equal or
prior rank to be outstanding after the issuance are covered 1 1/2 times by
consolidated gross income (after all taxes) for 12 consecutive calendar months
within the 15 preceding calendar months and unless aggregate capital
applicable to junior stock equity, as defined, is not less than the aggregate
amount payable on involuntary liquidation on all Preferred Stock and stock of
equal or prior rank to be outstanding; or
(3) dispose of substantially all of the Company's assets or merge or
consolidate except (i) with the approval of the Commission under the Public
Utility Holding Company Act of 1935, or (ii) with or to a subsidiary of the
Company, if the Preferred Stock is not adversely affected thereby and if other
conditions are met.
OTHER RIGHTS
There are no preemptive, subscription or conversion rights for the New
Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and the registrar for the Preferred Stock is Chemical
Bank, New York, N.Y.
PLAN OF DISTRIBUTION
The Company will sell the Securities from time to time through underwriters
or dealers in either negotiated or competitively bid transactions. Any
Securities acquired by any underwriters will be acquired by such underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The underwriter or
underwriters with respect to a particular underwritten offering of New Bonds
or New Preferred Stock will be named in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover page of such
Prospectus Supplement. The applicable Prospectus Supplement will also set
forth the purchase price of the New Bonds or New Preferred Stock offered and
the proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers and other specific terms of the particular Securities.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all
of the particular Securities offered thereby if any are purchased.
Underwriters and dealers may be entitled, under agreements to be entered into
with the Company, to indemnification against certain civil liabilities,
including liabilities under the Securities Act of 1933.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report have been so incorporated in reliance on the
reports of Price Waterhouse, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
VALIDITY OF THE SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by Sullivan & Cromwell, New York, New York. Certain legal matters in
connection with the Securities will be passed upon for the Underwriters by
Cahill Gordon & Reindel, a partnership including a professional corporation,
New York, New York. On matters of local law, those firms will rely on Robert
R. Winter, Esq., Vice President, Legal Services of the Company.
9
<PAGE>
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS SUP-
PLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF MONONGAHELA POWER COMPANY SINCE THE DATE
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, OR THAT THE INFORMATION
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE SUCH DATE.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds............................................................ S-2
Selected Financial Information............................................. S-2
Capitalization............................................................. S-3
Construction and Financing................................................. S-3
Description of Offered New Bonds........................................... S-3
Underwriting............................................................... S-4
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
The Company................................................................ 3
Recent Developments........................................................ 3
Selected Information....................................................... 3
Capitalization............................................................. 3
Income Statement Summary................................................... 4
Use of Proceeds............................................................ 4
Construction and Financing................................................. 4
The New Bonds.............................................................. 5
Plan of Distribution....................................................... 9
Experts.................................................................... 10
Validity of the New Bonds.................................................. 10
</TABLE>
===============================================================================
===============================================================================
$70,000,000
MONONGAHELA POWER
COMPANY
FIRST MORTGAGE BONDS,
7 5/8% SERIES DUE 2025
-----------
PROSPECTUS SUPPLEMENT
-----------
GOLDMAN, SACHS & CO.
CITICORP SECURITIES, INC.
PAINEWEBBER INCORPORATED
MABON SECURITIES CORP.
PRYOR, MCCLENDON, COUNTS
& CO., INC.
===============================================================================
