<PAGE>
Registration No. 33-49193
Rule 424(B)(3)
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PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 12, 1994)
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$115,000,000
[LOGO] NEW ENGLAND POWER COMPANY
(A Subsidiary of New England Electric System)
Secured Medium-Term Notes
(General and Refunding Mortgage Bonds, Series Y)
Due From Nine Months to Thirty Years From Date of Issue
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New England Power Company (the Company) intends to offer, from time to time,
up to $115,000,000 aggregate principal amount of its General and Refunding
Mortgage Bonds, which shall be designated as General and Refunding Mortgage
Bonds, Series Y (hereinafter referred to as the New Bonds). The New Bonds may
be offered in one or more issues with maturities ranging from nine months to
thirty years. The New Bonds may be subject to redemption at the option of the
Company prior to maturity and will be issued under a supplement to the
Company's General and Refunding Mortgage Indenture and Deed of Trust dated
as of January 1, 1977. Each issue of New Bonds will bear interest at a fixed
rate, which, together with the price, maturity date, and redemption provisions
(if any) will be established at the time of issuance and set forth in a pricing
supplement (Pricing Supplement) for the issue. Interest will be payable
semiannually on May 1 and November 1 and upon maturity or earlier redemption.
The New Bonds will be issued only as fully registered bonds in denominations
of $1,000 or any integral multiple thereof.
Each issue of New Bonds may be issued either in certificated form or in
book-entry form. In the case that an issue of New Bonds is in book-entry form,
the issue of New Bonds will be represented by a global security registered in
the name of a nominee of The Depository Trust Company or another depositary.
Interests in such New Bonds will be shown on, and transfers thereof will be
effected only through, records maintained by the depositary and its
participants. See "Supplemental Description of the New Bonds".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Maximum Proceeds
Price to Agents' to the Company
Public(1) Commission(1)(2) (1)(2)(3)
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Per New Bond 100.000% .750% 99.250%
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Total $115,000,000 $862,500 $114,137,500
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(1) The New Bonds will be sold at 100% of their principal amount except as may
be provided in the applicable Pricing Supplement. The price to public,
agents' commissions, and proceeds to the Company of each issue will be set
forth in the applicable Pricing Supplement.
(2) The Company will pay a commission to CS First Boston Corporation or
Kidder, Peabody & Co. Incorporated, each as agent (collectively, the
Agents, and singularly, an Agent), in the form of a discount up to a
maximum of .750% of the principal amount of any New Bond sold through such
Agent, depending upon the maturity of the New Bond.
(3) This amount is before deducting other expenses payable by the Company,
estimated to be $250,000, including reimbursement of certain of the
Agents' expenses.
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The New Bonds are being offered by the Company from time to time through
the Agents, each of whom has agreed to use its reasonable best efforts to
solicit purchases of such New Bonds. In addition, the New Bonds may be sold to
any Agent, as principal, for resale to investors. The Company also may sell
the New Bonds to investors on its own behalf. The New Bonds will not
be listed on any securities exchange, and there can be no assurance that the
New Bonds offered by this Prospectus will be sold or that there will be a
secondary market for any of the New Bonds. The Company reserves the right to
withdraw, cancel or modify the offer made hereby without notice. The Company
or the Agent who solicits any offer may reject such offer. See "Plan of
Distribution".
CS First Boston Kidder, Peabody & Co.
Incorporated
The date of this Prospectus Supplement is August 12, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW BONDS AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SUPPLEMENTAL DESCRIPTION OF THE NEW BONDS
The information herein concerning the New Bonds should be read in
conjunction with the statements under "Description of the New Bonds" in the
accompanying Prospectus. The following description will apply to the New Bonds
unless otherwise specified in the applicable Pricing Supplement.
General
The New Bonds will be issued under and secured by a General and Refunding
Mortgage Indenture and Deed of Trust dated as of January 1, 1977, from the
Company to Bank of New England, N.A. (formerly New England Merchants National
Bank), as Trustee, and indentures supplemental thereto, including a
Supplemental Indenture to State Street Bank and Trust Company (successor
trustee to Bank of New England, N.A.), with respect to the New Bonds
(collectively, the G&R Indenture). The New Bonds will be secured (ratably with
all other bonds heretofore or hereafter issued under the G&R Indenture) by a
lien on substantially all the property of the Company as more fully described
under "Description of New Bonds" in the accompanying Prospectus. The principal
amount of each issue of New Bonds, the date of maturity (which date will be not
less than nine months nor more than thirty years from the Original Issue Date
(as defined below)), the interest rate, the provisions for call and redemption
(including any premium or premiums payable thereon), and any other terms not
inconsistent with the provisions of the G&R Indenture, will be established
from time to time. This information will be set forth in the applicable Pricing
Supplement for each issue of the New Bonds.
Payment of Interest and Principal
Each issue of the New Bonds will bear interest beginning from the date as
of which such issue is first certified and delivered (the Original Issue
Date), at the rate established for such issue. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. Interest will be payable
semiannually on May 1 and November 1 (each an Interest Payment Date), and at
maturity or upon earlier redemption; provided, however, that the first payment
of interest on New Bonds with an Original Issue Date between April 15 and May
1 or between October 15 and November 1 will be due and payable on the next
succeeding November 1 or May 1, respectively.
The record date with respect to any Interest Payment Date shall be the
April 15 or October 15 next preceding such Interest Payment Date (or if such
day is not a business day, as provided in the Indenture, the next preceding
business day) (the Record Date). Interest payable and punctually paid or duly
provided for on any Interest Payment Date will be paid to the person in whose
name a New Bond is registered at the close of business on the Record Date next
preceding such Interest Payment Date; provided, however, that interest payable
at maturity or upon earlier redemption will be payable to the person to whom
principal shall be payable.
Form of Delivery
The New Bonds may be issued either in certificated form or in book-entry
form, as specified in the applicable Pricing Supplement. New Bonds will be
issued only in fully registered form in denominations of $1,000 or any
integral multiple thereof. If a New Bond is issued in certificated form,
principal and premium, if any, will be payable at the office of the Trustee.
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Interest will be payable at the office of the Trustee or, at the Company's
option, by mailing checks to registered owners at their addresses set forth
in the bond register. It is the Company's general practice to instruct the
Trustee to mail interest checks to registered owners. Any of the certificated
New Bonds may be presented at the office of the Trustee for exchange for an
equal aggregate principal amount of New Bonds of the same issue of other
authorized denominations or for transfer, in either case, without payment
of any charge other than stamp taxes or other governmental charges, if
any, required to be paid by the Company.
If New Bonds are issued in book-entry form (Book-Entry New Bonds), a
single global security for that issue (the Global Security) in registered form
will be issued to Depository Trust Company (DTC), another depositary, or a
nominee of either (the Depositary), which will maintain the book-entry system.
The Depositary will be specified in the Pricing Supplement. Each Book-Entry
New Bond will have the same maturity, interest rate, and redemption provisions
as the Global Security for that issue.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depositary for such Global Security
(Participants) or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Depositary for such Global Security (with respect to
interests of Participants) and on the records of Participants (with respect to
interests of persons other than Participants). Upon the issuance of a Global
Security, the Depositary will credit the Participants' accounts with the
respective principal amounts of the New Bonds represented by such Global
Security. Such amounts shall be designated by the Agents.
The Depositary will be considered the sole owner or holder of the
Book-Entry New Bonds represented by such Global Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have Book-Entry New Bonds
represented by such Global Security registered in their names nor will they be
entitled to receive physical delivery of Book-Entry New Bonds in certificated
form.
Principal, premium, if any, and interest payments on Book-Entry New Bonds
will be made to the Depositary to whom the Global Security has been issued and
registered. Neither the Company nor the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Security for such
Book-Entry New Bonds or for maintaining, supervising, or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium, or interest, will immediately credit Participants'
accounts with payments in amounts proportionate to their interests in the
principal amount of the Global Security as shown on the records of the
Depositary. The Company also expects that payments by Participants to owners
of beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices as is now
the case with securities registered in "street name", and will be the
responsibility of such Participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within
90 days, the Company will issue New Bonds in certificated registered form in
exchange for the Global Security representing such Book-Entry New Bonds. In
such instance, a beneficial owner of a Book-Entry New Bond will be entitled to
physical delivery in certificated form of the New Bonds equal in principal
amount to such Book-Entry New Bond and to have such New Bonds registered in
its name.
DTC has advised the Company and the Agents as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New
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York, 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 Securities
Exchange Act of 1934, as amended.
DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the Agents), banks, trust companies, clearing corporations, and
certain other organizations, some of whom (and/or their representatives) own
DTC. Access to DTC's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Redemption
The redemption provisions for each issue of New Bonds will be set forth
in a certificate as to form and the Pricing Supplement for that issue. In the
event of a redemption, the Company's notice of redemption shall be issued not
less than 30 days nor more than 60 days prior to the redemption date.
PLAN OF DISTRIBUTION OF THE NEW BONDS
The New Bonds are being offered by the Company from time to time through
the Agents, each of whom has agreed to use its reasonable best efforts to
solicit purchases of the New Bonds. The Company will pay a commission for each
New Bond sold through an Agent. This commission will vary depending upon the
maturity of the New Bond, to a maximum of .750% of the principal amount of the
New Bond. Although at this time the Company does not intend to sell the New
Bonds to purchasers without using agents, it reserves the right to do
so. The Company may also sell New Bonds to any of the Agents, acting as
principal, at a discount to be agreed upon at the time of sale, for resale (i)
to one or more investors at varying prices related to prevailing market prices
at the time of such resale, as determined by such Agent, or (ii) to certain
securities dealers at the public offering price set forth on the cover page
of the applicable Pricing Supplement, less the applicable concession expressed
as a percentage of the principal amount of the New Bonds. The Company has
agreed to reimburse the Agents for certain expenses in connection with the
offering of the New Bonds.
The Company will have the sole right to accept offers to purchase New
Bonds and may reject any proposal to purchase New Bonds in whole or in part.
Each Agent will have the right, in its discretion reasonably exercised, to
reject any offer to purchase New Bonds received by it in whole or in part.
Each of the Agents has in the past engaged in transactions with and
performed services for the Company or its affiliates in the ordinary course of
business.
The New Bonds will not have an established trading market when issued.
The New Bonds will not be listed on any securities exchange. Each Agent may
make a market in the New Bonds, but such Agent is not obligated to do so and
may discontinue any market-making at any time without notice. There can be no
assurance of a secondary market for any New Bonds, or that the New Bonds will
be sold.
The Company has agreed to indemnify each Agent, and each Agent has agreed
to indemnify the Company, against certain civil liabilities, including
liabilities under the Securities Act of 1933 (the 1933 Act). The Company and
each Agent have also agreed to contribute to payments which may be required to
be made by the other party in respect of such civil liabilities. Each Agent
may be deemed to be an "underwriter" within the meaning of the 1933 Act with
respect to the New Bonds sold through it.
S-4
<PAGE>
PROSPECTUS
(LOGO) NEW ENGLAND POWER COMPANY
(A Subsidiary of New England Electric System)
$115,000,000
GENERAL AND REFUNDING MORTGAGE BONDS
BOND INTEREST WILL BE PAYABLE SEMIANNUALLY.
THE BONDS WILL BE ISSUED ONLY AS FULLY REGISTERED BONDS
IN DENOMINATIONS OF $1,000 AND INTEGRAL MULTIPLES THEREOF.
------------------------
New England Power Company (the Company) intends to offer, from time to
time, not exceeding $115 million aggregate principal amount of its General and
Refunding Mortgage Bonds (the New Bonds). The New Bonds may be offered as one
or more issues, and each issue of New Bonds will bear interest at a fixed
rate, which, together with the price, maturity date, interest payment dates,
and redemption provisions, if any, will be established at the time of issuance
and set forth in a prospectus supplement for that issue. Interest will be
payable semiannually and upon maturity or earlier redemption. The New Bonds
will be secured by a mortgage on substantially all of the Company's
properties.
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The Company may sell the New Bonds by publicly inviting bids for the
purchase of the New Bonds, through negotiation with one or more underwriters,
through agents designated from time to time, or directly to other purchasers.
See "Plan of Distribution". The names of the purchasers, underwriters or
agents, the initial public offering price, any applicable discounts or
commissions and the proceeds to the Company with respect to the New Bonds will
be set forth in a prospectus supplement.
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.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER CONTAINED HEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
IN ANY STATE IN WHICH SUCH OFFER MAY NOT LAWFULLY BE MADE.
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The date of this Prospectus is August 12, 1994
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
AND ADDITIONAL INFORMATION
The Company 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 (SEC).
Certain information, as of particular dates, with respect to the Company's
directors and officers, their remuneration, and their material interest in
transactions with the Company, if any, and with respect to New England
Electric System, the holder of the Company's common stock, is disclosed in
information statements distributed to stockholders of the Company and filed
with the SEC.
The following documents, which have heretofore been filed by the Company
with the SEC pursuant to the Securities Exchange Act of 1934, are incorporated
by reference in this prospectus and shall be deemed to be a part hereof:
(1) Annual Report on Form 10-K for the year ended December 31, 1993,
which contains financial statements and financial statement schedules of
the Company as of December 31, 1993, and for each of the three years in
the period ended December 31, 1993, and incorporates by reference or
includes the related reports of Coopers & Lybrand, independent certified
public accountants.
(2) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1994 and June 30, 1994.
(3) Information Statement for the Annual Meeting of Stockholders
dated April 14, 1994.
All documents filed by the Company with the SEC pursuant to section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 subsequent
to the date of this prospectus and prior to the termination of the offering
made by this prospectus shall be incorporated herein by reference and shall be
deemed 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 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 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
hereof.
Such reports, proxy and information statements, and other information can
be inspected and copied at the Public Reference Room in the office of the SEC,
450 Fifth Street, N.W., Washington, D.C.; or at SEC Regional Offices at 7
World Trade Center, New York, New York, and 500 West Madison Street, Chicago,
Illinois. Copies of such material can be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY
OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS. WRITTEN OR ORAL REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE
TREASURER, NEW ENGLAND POWER COMPANY, 25 RESEARCH DRIVE, WESTBOROUGH,
MASSACHUSETTS 01582 (TELEPHONE 508-366-9011).
2
<PAGE>
SUMMARY INFORMATION
The following material is qualified in its entirety by the information
and financial statements appearing elsewhere in this prospectus and in the
documents and information incorporated herein by reference.
The Company
Company............................ New England Power Company
Parent............................. New England Electric System
Business........................... Wholesale electric generation and
transmission utility
Area of Operation.................. New England
The Offering
Securities Offered................. Not exceeding $115 million principal
amount of General and Refunding Mortgage
Bonds
Interest Payment Dates............. Semiannually on dates to be determined
Maturity........................... To be determined
Redemption......................... To be determined for each issue of
New Bonds. See "Description of the
New Bonds --Redemption Provisions"
Security Interest.................. Secured by a mortgage on substantially
all of the Company's properties.
See "Description of the New Bonds--
Security and Priority"
Replacement Fund................... See "Description of the New Bonds --
Replacement Fund under the G&R Indenture"
3
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<TABLE>
NEW ENGLAND POWER COMPANY
SELECTED FINANCIAL INFORMATION
(Dollars in Thousands)
<CAPTION>
12 Months Ended Years Ended December 31,
June 30, 1994 -----------------------------------------------------------------------
(Unaudited) 1993 1992 1991 1990 1989
-------------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Operating Revenue........ $ 1,548,881 $1,549,014 $1,530,875 $ 1,472,291 $ 1,342,074 $ 1,252,386
Net Income(1)............ $ 149,805 141,468 134,151 $ 134,747 $ 222,219 $ 124,617
Ratio of Earnings to
Fixed Charges(1)(2):
Actual.............. 6.39 5.60 4.52 4.09 5.13 3.55
Utility Plant, net (end of
period)(3)................. $ 1,828,215 $1,771,156 $1,744,885 $ 1,760,150 $ 1,799,202 $ 1,669,494
As of June 30, 1994
(Unaudited)
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Amount Ratio
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Capital Structure:
Long-term Debt.............................. $ 667,535 41.55%
Cumulative Preferred Stock.................. 60,516 3.77
Common Stock Equity......................... 878,478 54.68
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Total............................. $ 1,606,529 100.00%
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<FN>
(1) 1990 includes an increase of $115 million after-tax, due to the effect of reversing a portion
of a 1988 write-down related to the Seabrook 1 nuclear unit.
(2) In determining the ratios of earnings to fixed charges, earnings were arrived at by adding
to net income, excluding undistributed income of nuclear power companies, all income taxes
and fixed charges. Fixed charges consist of interest and amortization of debt premiums,
discounts and expense on all indebtedness.
(3) Includes construction work in progress.
</FN>
As of June 30, 1994, the Company had $84 million of short-term indebtedness
outstanding and had cash of approximately $2 million.
4
</TABLE>
<PAGE>
THE COMPANY
The Company is a Massachusetts corporation and a wholly owned subsidiary
of New England Electric System (NEES), a registered holding company under the
Public Utility Holding Company Act of 1935. The Company's business is
principally that of generating, purchasing, transmitting, and selling electric
energy in wholesale quantities. For the twelve months ended June 30, 1994,
approximately 95% of the Company's revenue from the sale of electricity was
derived from sales for resale to affiliated companies and approximately 5%
from sales for resale to municipal and other utilities. The Company's rates
are subject to approval by the Federal Energy Regulatory Commission. The
Company's sources of generation include coal, oil, and gas fired units,
hydroelectric plants, and interests in nuclear units. The Company's principal
executive offices are located at 25 Research Drive, Westborough, Massachusetts
01582 (telephone 508-366-9011).
USE OF PROCEEDS
The proceeds from the sale of the New Bonds will be applied to reimburse
the Company's treasury for, or to retire short-term indebtedness incurred
for, retirement of First Mortgage Bonds or General and Refunding Mortgage
Bonds of the Company. The interest rates on these bonds ranged from 4-1/2%
to 9-1/2%, and the maturities from 1993 to 2016.
CONSTRUCTION AND FINANCING
The Company's construction expenditures, excluding allowance for funds
used during construction, were $157 million in 1993, and are estimated to be
about $240 million in 1994, and $160 million in 1995. The Company conducts a
continuing review of its construction program. This program and the above
estimates relating thereto are subject to revisions based upon changes in
assumptions concerning, among other things, load growth and rates of
inflation.
Approximately 95% of the funds needed to pay for construction
expenditures in 1994-1995 are expected to be provided from internal sources
and the balance from additional financing. It is expected that any such
additional financing will be provided initially from short-term borrowings to
be repaid with the proceeds of General and Refunding Mortgage Bonds, preferred
stock, or common stock or capital contributions made by NEES.
The Company typically provides for its short-term borrowing needs through
the sale of commercial paper, borrowings from commercial banks, and borrowings
from affiliates. The Company's preferred stock preference provisions, which
are set forth in its Articles of Organization and By-Laws, limit the amount of
short-term unsecured debt which may be outstanding to 10% of the sum of
secured indebtedness, capital, premiums, and retained earnings unless a higher
amount is authorized by vote of the holders of a majority of its Dividend
Series Preferred Stock and Preferred Stock -- Cumulative (collectively,
the Cumulative Preferred). The holders of Cumulative Preferred have voted
to increase this limit to 20% through November 1, 1998. As of June 30, 1994,
this limit was approximately $320 million.
Under its Articles of Organization and By-Laws, the Company may issue
additional preferred stock, absent a vote of a majority of the holders of
Cumulative Preferred, only when (a) the net income, as defined, for any 12
consecutive calendar months within the preceding 15 months available for
dividends on its preferred stock is at least two times the annual dividend
requirement of all preferred stock, (b) the gross income, as defined, for the
same 12 months available for interest on indebtedness and dividends on its
preferred stock is at least 1-1/2 times the annual interest charges and
dividend requirements on all interest bearing indebtedness and all preferred
stock, (c) the aggregate outstanding par value of Cumulative Preferred does
not exceed $250 million, and (d) the equity of stock junior to the preferred
stock is at least equal to the par value of the preferred stock. Under the
5
<PAGE>
most restrictive of these tests, the Company could issue approximately $197
million of new preferred stock at June 30, 1994.
For information on limitations on the Company's ability to issue General
and Refunding Mortgage Bonds, see "Additional General and Refunding Mortgage
Bonds" in this prospectus.
DESCRIPTION OF THE NEW BONDS
The New Bonds will be issued under and secured by a General and Refunding
Mortgage Indenture and Deed of Trust dated as of January 1, 1977, and
indentures supplemental thereto, including one or more supplemental indentures
with respect to the New Bonds (collectively, the G&R Indenture), between the
Company and State Street Bank and Trust Company, as successor trustee (the
G&R Trustee). Each issue of New Bonds will mature in the year shown in its
title, and will bear interest beginning from the date as of which such issue
is first authenticated at the rate per annum shown in its title. Interest will
be paid semiannually. Principal and premium, if any, will be payable at the
office of the G&R Trustee. Interest will be payable at the office of the G&R
Trustee or, at the Company's option, by mailing checks to registered owners
at their addresses set forth in the bond register. It is the Company's general
practice to mail interest checks to registered owners.
The designation and principal amount of each issue of the New Bonds, the
date of maturity (which date will not be more than thirty years from the date
on which such New Bonds of that series were first authenticated and
delivered), the interest rate, the interest payment dates, and the provisions
for redemption (including any premium or premiums payable thereon) will be
separately established for the issue and set forth in the applicable
prospectus supplement.
The New Bonds will be issued only in the form of fully registered bonds
without coupons in denominations of $1,000 and integral multiples thereof and
may be presented at the office of the G&R Trustee for exchange for a like
aggregate principal amount of New Bonds of the same issue of other authorized
denominations or for transfer, without payment in either case of any charge,
other than stamp taxes or other governmental charges, if any, required to be
paid by the Company.
The brief summary herein of certain provisions of the G&R Indenture is
merely an outline and does not purport to be complete. It uses terms defined
in the G&R Indenture and is qualified in its entirety by reference to the G&R
Indenture which is filed as an exhibit to the registration statement numbered
33-49193.
Security and Priority
The New Bonds, when duly issued, will be secured, together with all other
General and Refunding Mortgage Bonds heretofore and hereafter issued under the
G&R Indenture, by a mortgage lien on substantially all the principal
properties and franchises then owned by the Company, subject only to liens
permitted by the G&R Indenture and property excepted in the granting clauses
in the G&R Indenture.
The G&R Indenture contains an after-acquired property clause which by its
terms and to the extent permitted by law covers the interest of the Company in
all after-acquired property. Such after-acquired property may be subject to a
lien to secure a purchase money obligation, not in excess of 60% of the Cost or
Fair Value, whichever is less, of such property. Certain types of property are
excepted from the lien of the G&R Indenture, including, among others: fuel;
nuclear cores and materials; all gas, oil, and other mineral properties and
tangible personal property related thereto; supplies; vehicles; cash;
securities; contracts; and accounts receivable.
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No debt may be created by the Company ranking prior to or on a parity
with the New Bonds with respect to the security provided by the G&R Indenture,
except additional General and Refunding Mortgage Bonds issued in the manner
summarized below, obligations supported by additions and enlargements to
property already subject to certain types of prior liens (none of which
currently exist), and purchase money obligations existing or created in
connection with the acquisition of after-acquired property. Prior liens and
purchase money obligations shall not exceed 25% of the sum of all outstanding
General and Refunding Mortgage Bonds and obligations representing liens prior
to the G&R Indenture.
In addition, the G&R Indenture provides that the Company will not
dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it, unless, among
other things, the successor corporation executes and delivers to the G&R
Trustee, and causes to be recorded, an indenture supplemental to the G&R
Indenture, in form satisfactory to the G&R Trustee, whereby the successor
corporation expressly assumes the Company's obligations under the G&R
Indenture and all bonds issued thereunder.
Under the Atomic Energy Act, neither the G&R Trustee nor any other
transferee of the Company's property may operate a nuclear generating station
without authorization from the Nuclear Regulatory Commission.
Redemption Provisions
The redemption provisions of each issue of New Bonds will be described in
the prospectus supplement relating thereto.
Replacement Fund Under the G&R Indenture
Under the G&R Indenture, the Company is obligated to pay annually as a
replacement fund 1.3% of its average investment in depreciable hydroelectric
property on the last day of each month of the previous calendar year and 3.0%
of such average investment in depreciable property other than hydroelectric
property. (The 1.3% and 3.0% are subject to change as provided in the G&R
Indenture.) The replacement fund requirement may be satisfied by cash, General
and Refunding Mortgage Bonds of any series, or an Available Amount of
Additional Property. Additional Property evidenced under the replacement fund
may be used to offset certain retirements in computing Available Net Additional
Property.
Additional General and Refunding Mortgage Bonds
Additional General and Refunding Mortgage Bonds of any series may be
issued as follows:
(i) against 60% of the Available Net Additional Property;
(ii) to refund a like amount of bonds originally issued under a
mortgage (the lien of which is prior to the lien of the G&R Indenture)
existing on property at or immediately prior to the time of acquisition
by the Company of such property;
(iii) to refund a like amount of General and Refunding Mortgage Bonds
of any series which have not been used for certain other purposes; and
(iv) against the deposit of money; money so deposited may be
withdrawn in amounts equal to the principal amount of General and
Refunding Mortgage Bonds otherwise issuable against Available Net
Additional Property or to refund bonds.
When issuing General and Refunding Mortgage Bonds against Additional
Property or the deposit of money, the Company must demonstrate that Net
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Earnings (including revenues subject to refund unless there has been issued a
final decision, which has not been stayed, of a regulatory commission or of a
court ordering a refund of such revenues) for any 12 consecutive calendar
months within the preceding 15 calendar months are at least twice the annual
interest charges on all General and Refunding Mortgage Bonds outstanding and
applied for and on all equal or prior lien indebtedness. Except in certain
instances, no earnings test is required in connection with the refunding of
a like amount of bonds.
The New Bonds will be issued against a combination of additional property
and bonds theretofore retired. At June 30, 1994, the Company had approximately
$750 million of Available Net Additional Property. In addition, the Company
has retired approximately $270 million of bonds against which New Bonds could
be issued.
Pursuant to the limitations described above (the additional property and
retired bonds limitations being the most restrictive), the Company as of
June 30, 1994, could have issued approximately $720 million of additional
General and Refunding Mortgage Bonds.
Dividend Restrictions
The supplemental indenture for the New Bonds will not contain a provision
restricting the payment of dividends by the Company. Dividend restrictions
dependent upon earned surplus are binding on the Company so long as any of the
Company's Series K or Series L Bonds are outstanding.
Pursuant to the provisions of the Company's Articles of Organization and
By-Laws relating to the Cumulative Preferred, certain restrictions on payment
of dividends on the common stock would come into effect if the "junior stock
equity" was, or by reason of payment of such dividends became, less than 25%
of "total capitalization." The junior stock equity at June 30, 1994 was
55% of total capitalization.
None of the Company's retained earnings as of June 30, 1994 were
unavailable for dividends on common stock.
Periodic Examination of Property Under the G&R Indenture
An examination and report as to maintenance must be made at least once
in every five calendar years by an independent engineer. Deficiencies so
reported must be made good with all reasonable speed.
Modification of the G&R Indenture
The G&R Indenture may be modified under certain conditions without the
consent of holders of the General and Refunding Mortgage Bonds and otherwise
with the consent of the holders of 66 2/3% of all General and Refunding
Mortgage Bonds at the time outstanding (or, if one or more but less than all
the series of General and Refunding Mortgage Bonds would be materially
adversely affected, 66 2/3% of the total General and Refunding Mortgage Bonds
of the one or more series so affected). No such modification may (a) affect
the payment of principal, premium, and interest (except in the case of an
adjustment in accordance with the Indenture) on any General and Refunding
Mortgage Bonds, or extend the maturity or time of payment, without the consent
of the holders of the General and Refunding Mortgage Bonds affected, (b)
permit the creation by the Company of any lien not otherwise permitted ranking
prior to or on a parity with the lien of the G&R Indenture, or (c) reduce the
above-specified percentages of General and Refunding Mortgage Bondholder
consents. No modification may be made which would conflict with the Trust
Indenture Act of 1939 as then in effect. The G&R Trustee is not obligated to
execute a supplemental indenture which would affect its own rights, duties, or
immunities under the G&R Indenture.
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The G&R Trustee
If the G&R Trustee acquires any conflicting interest it must either
eliminate the conflicting interest or resign. There are limitations on the
rights of the G&R Trustee in respect of certain payments and property received
by the G&R Trustee within four months prior to default. The G&R Trustee may
become the owner or pledgee of General and Refunding Mortgage Bonds as freely
as if it were not the G&R Trustee.
The holders of a majority in principal amount of the General and
Refunding Mortgage Bonds outstanding may require the G&R Trustee to take
certain action, except when forbidden by law or when the G&R Trustee in good
faith by its responsible officers determines that such action would involve
the G&R Trustee in personal liability or would be unjustifiably prejudicial to
the other General and Refunding Mortgage Bondholders.
The G&R Trustee participates in the Company's lines of credit and those
of its parent, and is trustee for bonds issued by an affiliate of the Company.
Defaults Under the G&R Indenture
The following are defaults under the G&R Indenture: failure to pay
principal when due; failure for 30 days to pay interest; failure for 60 days
to pay any sinking, replacement, or analogous fund installment; default,
beyond grace periods, under certain other mortgages (but not including the
G&R Indenture); failure for 60 days after notice from the G&R Trustee to
perform any other covenant or agreement; and certain events of bankruptcy,
insolvency, or reorganization, subject to grace periods. The G&R Trustee may
withhold notice to the General and Refunding Mortgage Bondholders of any
default, except in the payment of principal, interest, or any sinking,
replacement, or analogous fund installment, if its responsible officers in
good faith determine that withholding such notice is in the interests of the
General and Refunding Mortgage Bondholders.
Evidence to be Furnished to Trustee Under the G&R Indenture
Evidence is required periodically as to the absence of default in
connection with certain annual sinking and replacement fund requirements and
as to compliance with certain other terms of the G&R Indenture. Further, prior
to the issuance of additional General and Refunding Mortgage Bonds, release of
property, withdrawal of cash, and various other actions under the G&R
Indenture, evidence as to the absence of default and as to compliance with
certain terms of the G&R Indenture is required.
EXPERTS
The balance sheets of the Company as of December 31, 1993 and 1992 and
the related statements of income, retained earnings, and statements of cash
flows for each of the three years in the period ended December 31, 1993, and
the related financial statement schedules, all included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the reports of Coopers & Lybrand, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
The statements of law and legal conclusions made in this prospectus, not
otherwise attributed, have been reviewed by Robert King Wulff, Corporation
Counsel, and/or Kirk L. Ramsauer, Assistant General Counsel, and are made on
their authority as experts.
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LEGAL MATTERS
Legal matters in connection with the securities offered hereby will be
passed upon for the Company by Robert King Wulff, Corporation Counsel, and/or
Kirk L. Ramsauer, Assistant General Counsel, 25 Research Drive, Westborough,
Massachusetts, and for the purchasers, underwriters or agents by Milbank,
Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York. The
opinion of Robert King Wulff and/or Kirk L. Ramsauer as to legal matters in
connection with the securities offered hereby is filed as an exhibit to the
registration statements.
PLAN OF DISTRIBUTION
The Company may sell the New Bonds in any of the following ways: (i)
through competitive bidding; (ii) through negotiation with one or more
underwriters; (iii) through negotiation with purchasers; or (iv) any
combination of the above. In addition, the New Bonds may be sold through one
or more agents designated by the Company from time to time. The terms of any
offering of the New Bonds, including the name or names of any underwriters or
agents with whom the Company has entered into arrangements with respect to
the sale of such New Bonds, the proceeds to the Company, any underwriting
discounts or commissions and other terms constituting underwriters'
compensation, the initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers, will be set forth in
the prospectus supplement relating to such offering. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
If an underwriter or underwriters are involved in the sale of any of the
New Bonds, the Company will execute an underwriting or purchase agreement with
such underwriters at the time of sale, and the names of the underwriters, the
principal amount of the New Bonds to be purchased thereby and the other terms
and conditions of the transaction will be set forth in the prospectus
supplement relating to such sale. The New Bonds will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. Unless
otherwise indicated in the prospectus supplement, the underwriting or purchase
agreement will provide that the underwriter or underwriters are obligated to
purchase all of an issue of the New Bonds offered in the prospectus supplement
if any are purchased.
If any of the New Bonds are sold through an agent or agents designated by
the Company from time to time, the prospectus supplement will name any such
agent and set forth any commissions payable by the Company to any such agent
and the obligations of such agent with respect to the New Bonds. Unless
otherwise indicated in the prospectus supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
In connection with the sale of the New Bonds, any purchasers,
underwriters, or agents may receive compensation from the Company or from
purchasers in the form of concessions or commissions. The underwriters will
be, and any agents and any dealers participating in the distribution of the
New Bonds may be, deemed to be underwriters within the meaning of the
Securities Act of 1933. The agreement between the Company and any purchasers,
underwriters, or agents will contain reciprocal covenants of indemnity between
the Company and the purchasers, underwriters, or agents against certain
liabilities, including liabilities under the Securities Act of 1933.
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus Supplement and the Prospectus (including any accompanying Pricing
Supplement), in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Company or by any of the Agents. Neither the
delivery of this Prospectus Supplement or the Prospectus (including any
accompanying Pricing Supplement) nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date as of which information is given in this
Prospectus Supplement and the Prospectus (including any accompanying Pricing
Supplement). This Prospectus Supplement and the Prospectus (including any
accompanying Pricing Supplement) do not constitute an offer or solicitation by
anyone in any jurisdiction in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation.
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TABLE OF CONTENTS
Page
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PROSPECTUS SUPPLEMENT
Supplemental Description of the New Bonds...... S-2
Plan of Distribution of the New Bonds.......... S-4
PROSPECTUS
Incorporation of Certain Documents by
Reference and Additional Information......... 2
Summary Information............................ 3
Selected Financial Information................. 4
The Company.................................... 5
Use of Proceeds................................ 5
Construction and Financing..................... 5
Description of the New Bonds................... 6
Experts........................................ 9
Legal Matters.................................. 10
Plan of Distribution........................... 10
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NEW ENGLAND POWER COMPANY
(A Subsidiary of New England Electric System)
$115,000,000
Secured Medium-Term Notes
(General and Refunding Mortgage Bonds, Series Y)
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PROSPECTUS SUPPLEMENT
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CS First Boston
Kidder, Peabody & Co.
Incorporated
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