<PAGE>
Filed pursuant to Rule 424(b)2
File No. 333-46169
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 26, 1998)
$100,000,000
OKLAHOMA GAS AND
ELECTRIC COMPANY
6 1/2% SENIOR NOTES, SERIES DUE APRIL 15, 2028
------------------
Interest on the 6 1/2% Senior Notes, Series due April 15, 2028 (the "Offered
Notes") is payable semi-annually on April 15 and October 15 of each year,
beginning October 15, 1998. The Offered Notes will be redeemable at the option
of Oklahoma Gas and Electric Company (the "Company"), on any date, as a whole or
in part, at a redemption price equal to the greater of (i) 100% of the principal
amount of such Offered Notes and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon from and after
the date of redemption discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined herein) plus 10 basis points, plus in each case
accrued and unpaid interest thereon to the date of redemption. See "DESCRIPTION
OF OFFERED NOTES -- Redemption Provisions" herein.
THE OFFERED NOTES WILL BE UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND
WILL RANK ON A PARITY WITH OTHER UNSECURED INDEBTEDNESS OF THE COMPANY (UNLESS
OTHERWISE SECURED AS DESCRIBED IN THE ACCOMPANYING PROSPECTUS UNDER THE CAPTION
"DESCRIPTION OF NEW NOTES -- LIMITATIONS ON LIENS").
The Offered Notes will be represented by Global Securities registered in the
name of a nominee of The Depository Trust Company, as Depository. Beneficial
interests in the Offered Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depository and its
participants. Except as described in the accompanying Prospectus, Offered Notes
in certificated form will not be issued in exchange for the Global Securities.
All payments of principal and interest will be made by the Company in
immediately available funds unless the Offered Notes are issued in certificated
form. See "BOOK-ENTRY SYSTEM" in the accompanying Prospectus. The Offered Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
repayment or redemption in whole, or until the Offered Notes are issued in
certificated form, and secondary market trading activity will therefore settle
in immediately available funds. See "DESCRIPTION OF OFFERED NOTES -- Same-Day
Settlement and Payment" herein.
--------------------------
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>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Offered Note.......................... 98.431% .875% 97.556%
Total..................................... $98,431,000 $875,000 $97,556,000
</TABLE>
(1) Plus accrued interest, if any, from April 16, 1998 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting" herein.
(3) Before deduction of expenses payable by the Company estimated at $230,000.
--------------------------
The Offered Notes are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters, and by counsel for the
Company and certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Offered Notes will be made, on or about
April 16, 1998, through the book-entry facilities of The Depository Trust
Company, against payment therefor in immediately available funds.
--------------------------
MERRILL LYNCH & CO.
CIBC OPPENHEIMER
LEHMAN BROTHERS
---------------
The date of this Prospectus Supplement is April 13, 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED NOTES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF OFFERED NOTES TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
USE OF PROCEEDS
The net proceeds from the sale of the Offered Notes will be added to the
general funds of the Company and utilized for general corporate purposes,
including the repayment of short-term debt, some of which was incurred to fund
the redemption on April 6, 1998 of $12,500,000 principal amount of the Company's
7 1/8% First Mortgage Bonds, due January 1, 1999, $40,000,000 principal amount
of the Company's 7 1/8% First Mortgage Bonds, due January 1, 2002 and
$35,000,000 principal amount of the Company's 8 5/8% First Mortgage Bonds, due
November 1, 2007, in each case at the principal amount plus the applicable
redemption premium, if any, and accrued interest to the redemption date. At
March 31, 1998, short-term debt approximated $42.0 million.
DESCRIPTION OF OFFERED NOTES
The following description of the particular terms of the Offered Notes
supplements the description of the general terms and provisions of the Senior
Notes set forth in the accompanying Prospectus under the caption "DESCRIPTION OF
NEW NOTES" to which description reference is hereby made. The following
description does not purport to be complete and is qualified in its entirety by
reference to the description in the accompanying Prospectus and to the
instruments referred to therein. THE RELEASE DATE (AS DEFINED IN THE
ACCOMPANYING PROSPECTUS) OCCURRED ON APRIL 6, 1998. ACCORDINGLY, THE OFFERED
NOTES WILL BE UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND WILL NOT BE
SECURED BY FIRST MORTGAGE BONDS OF THE COMPANY. Those portions of the
accompanying Prospectus relating to the Company's First Mortgage Bonds and First
Mortgage Indenture (including, without limitation, "FIRST MORTGAGE BONDS AND
FIRST MORTGAGE INDENTURE") should be disregarded. On April 6, 1998, all of the
Company's First Mortgage Bonds were paid or otherwise discharged and the lien of
the First Mortgage Indenture was released.
The Offered Notes will be issued as a separate series of Senior Notes under
the Senior Note Indenture, dated as of October 1, 1995, as heretofore
supplemented and as to be further supplemented by a Supplemental Indenture dated
as of April 1, 1998, between the Company and The Bank of New York, as trustee.
Provisions of the Senior Note Indenture are more fully described under the
caption "DESCRIPTION OF NEW NOTES" in the accompanying Prospectus. At the date
of this Prospectus Supplement, four series of Senior Notes (excluding the
Offered Notes) in an aggregate principal amount of $470,000,000 have been issued
under the Senior Note Indenture. Capitalized words not defined herein are used
as defined in the accompanying Prospectus.
GENERAL
The Offered Notes will mature on April 15, 2028, and will bear interest at
6 1/2% per annum. Interest on the Offered Notes will accrue from April 16, 1998,
and is payable semi-annually on April 15 and October 15, beginning October 15,
1998. Subject to certain exceptions, the Senior Note Indenture provides for the
payment of interest on the interest payment date only to persons in whose names
the Offered Notes are registered on the Record Date (the March 31 prior to April
15 and the September 30 prior to October 15). The Offered Notes are limited to
$100,000,000 in aggregate principal amount.
REDEMPTION PROVISIONS
The Company, at its option, may redeem on any date all or, from time to
time, any part of the Offered Notes on at least 30 days' but not more than 60
days' notice, mailed to the registered holders thereof at their
S-2
<PAGE>
last registered addresses, at a redemption price equal to the greater of (i)
100% of the principal amount of such Offered Notes and (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon from and after the date of redemption discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 10 basis points, plus in each case accrued and
unpaid interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Offered Notes to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Offered Notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Senior Note Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, CIBC Oppenheimer Corp. and Lehman Brothers Inc., and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such third business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (B) if the Senior Note Trustee is unable to obtain at least four
such Reference Treasury Dealer Quotations, the average of all such Quotations
obtained. "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Senior Note Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Senior Note Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third business day preceding such redemption
date.
If less than all of the Offered Notes represented by a Global Security are
to be redeemed, the particular interest therein to be redeemed will be selected
by lot by the Depository in such manner as the Depository determines. If the
Offered Notes are not represented by a Global Security and if less than all of
the Offered Notes are to be redeemed, the Senior Note Trustee will select in
such manner as it deems appropriate and fair the particular interest in the
Offered Notes to be redeemed.
If at the time of mailing the notice of redemption, the Company has not
irrevocably directed the Senior Note Trustee to apply funds deposited with the
Senior Note Trustee to redeem the Offered Notes called for redemption, such
notice may state that the redemption is subject to the receipt of the redemption
moneys by the Senior Note Trustee before the date fixed for redemption and that
such notice will be of no effect unless such moneys are received before such
redemption date.
S-3
<PAGE>
SECURITY
The Offered Notes will be unsecured general obligations of the Company and
will rank on a parity with other unsecured indebtedness of the Company. Under
certain circumstances, the Senior Notes can become secured by certain property
of the Company as explained in the accompanying Prospectus under the caption
"DESCRIPTION OF NEW NOTES -- Limitations on Liens."
As of the date hereof, the Company has no First Mortgage Bonds outstanding
and has agreed that it will close off its First Mortgage Indenture and will
issue no more First Mortgage Bonds thereunder.
GLOBAL SECURITIES
The Offered Notes will be issued in the form of Global Securities deposited
with, or on behalf of, the Depository and registered in the name of a nominee of
the Depository. Except under the limited circumstances described in the
Prospectus under the caption "BOOK-ENTRY SYSTEM," owners of beneficial interests
in the Global Securities will not be entitled to physical delivery of the
Offered Notes in certificated form. The Global Securities may not be transferred
except as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the Depository
or by the Depository or any nominee to a successor of the Depository or a
nominee of such successor.
A further description of the Depository's procedures with respect to the
Global Securities is set forth in the Prospectus under the caption "BOOK-ENTRY
SYSTEM."
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Offered Notes will be made by the Underwriters in
immediately available funds. So long as the Offered Notes are issued in the form
of Global Securities, the Company will cause all payments of principal of,
premium, if any, and interest on the Offered Notes to be made in immediately
available funds to the Depository or its nominee.
Secondary trading in long-term notes, debentures and bonds of corporate
issuers is generally settled in clearinghouse or next-day funds. In contrast,
the Offered Notes will trade in the Depository's Same-Day Funds Settlement
System until maturity, redemption or repayment in whole, or until the Offered
Notes are issued in certificated form, and secondary market trading activity in
the Offered Notes will therefore be required by the Depository to settle in
immediately available funds. No assurance can be given as to the effect, if any,
of settlement in immediately available funds on trading activity in the Offered
Notes.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, CIBC Oppenheimer Corp. and Lehman Brothers Inc.
(the "Underwriters"), and the Underwriters have severally agreed to purchase
from the Company, the principal amounts of the Offered Notes set forth opposite
their names below. The Purchase Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Offered Notes if any are
purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
--------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................ $ 33,400,000
CIBC Oppenheimer Corp......................................................... 33,300,000
Lehman Brothers Inc........................................................... 33,300,000
--------------
Total............................................................... $ 100,000,000
--------------
--------------
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Offered Notes to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to
S-4
<PAGE>
certain dealers at such price less a concession not in excess of .50% of the
principal amount of the Offered Notes. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of .25% of the principal amount of
the Offered Notes to certain other dealers. After the initial public offering of
the Offered Notes, the public offering price, concession and discount may be
changed.
The Purchase Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Offered Notes will not be listed on any securities exchange, and there
can be no assurance that there will be a secondary market for the Offered Notes.
The Underwriters have advised the Company that they intend to make a market in
the Offered Notes; however, such market making may be discontinued at any time.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Offered Notes.
In connection with this offering, the rules of the Securities and Exchange
Commission permit the Underwriters to engage in certain transactions that
stabilize the price of the Offered Notes. Such transactions may consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
Offered Notes.
If the Underwriters create a short position in the Offered Notes in
connection with the offering, i.e., if they sell more than the aggregate
principal amount of Offered Notes that is set forth on the cover page of this
Prospectus Supplement, the Underwriters may reduce that short position by
purchasing Offered Notes in the open market.
The Underwriters may also impose a penalty bid on certain Underwriters and
any selling group members. This means that if the Underwriters purchase Offered
Notes in the open market to reduce the Underwriters' short position or to
stabilize the price of the Offered Notes, they may reclaim the amount of the
selling concession from the Underwriters and any selling group members who sold
those Offered Notes as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Offered Notes. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Underwriters perform investment banking and other financial services for
the Company and certain of its affiliates in the ordinary course of business and
may be a Reference Treasury Dealer with respect to the Offered Notes.
S-5
<PAGE>
PROSPECTUS
OKLAHOMA GAS AND ELECTRIC COMPANY
SENIOR NOTES
---------------
Oklahoma Gas and Electric Company, an Oklahoma corporation (the "Company"),
may offer from time to time up to $112,500,000 aggregate principal amount of its
senior notes (the "New Notes"), in one or more series on terms to be determined
at the time or times of sale. The specific terms of each issue of New Notes,
together with the terms of the offering of such issue, will be set forth in an
accompanying prospectus supplement (a "Prospectus Supplement"). The applicable
Prospectus Supplement will set forth with regard to the particular New Notes
being offered (the "Offered Notes") the designation or designations, aggregate
principal amount, rate or rates (or method of calculation) and times and place
of any payment of interest, maturity or maturities, offering price, any sinking
fund or other redemption terms and other specific terms of such Offered Notes.
The New Notes will be represented either by Global Securities registered in
the name of The Depository Trust Company ("DTC"), as depository ("Depository"),
or its nominee, or by securities in certificated form issued to the registered
owners thereof, as set forth in the applicable Prospectus Supplement. Interests
in Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository and its participants. Global
Securities will not be issuable as certificated securities except in
circumstances described herein or in the applicable Prospectus Supplement.
The New Notes may be sold through underwriters or dealers, directly to a
limited number of institutional purchasers or through agents. See "PLAN OF
DISTRIBUTION." The applicable Prospectus Supplement will set forth the names of
such underwriters, dealers or agents, if any, any applicable commissions or
discounts and the amount and use of net proceeds from such sale. See "PLAN OF
DISTRIBUTION" for possible indemnification arrangements for such underwriters,
dealers, agents, if any, and purchasers.
------------------------
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 FEBRUARY 26, 1998.
<PAGE>
OKLAHOMA GAS AND ELECTRIC COMPANY
Oklahoma Gas and Electric Company, an Oklahoma corporation (the "Company")
incorporated in 1902 under the laws of the Territory of Oklahoma, is an electric
public utility company with its principal executive offices located at 101 North
Robinson, P.O. Box 321, Oklahoma City, Oklahoma 73101-0321. Telephone (405)
553-3000. The Company is a subsidiary of OGE Energy Corp. ("OGE Energy"), which
is a public utility holding company incorporated in the State of Oklahoma and
located in Oklahoma City, Oklahoma.
The Company is the largest operating electric utility in Oklahoma. The
Company owns and operates an interconnected electric production, transmission
and distribution system which includes eight active generating stations with a
total capability of 5,647,300 kilowatts. The Company furnishes retail electric
service in 274 communities and contiguous rural and suburban territories in
Oklahoma and western Arkansas (population served estimated by the Company at
1,700,000). It also sells electric energy at wholesale for resale in 5
communities and to 2 rural electric cooperatives in those states. The area
served by the Company embraces approximately 30,000 square miles, which includes
Oklahoma City, the largest city in Oklahoma, and the section of Arkansas in the
general area of Ft. Smith, the second largest city in Arkansas. Of the total 279
communities served, 248 are located in Oklahoma and 31 in Arkansas.
Approximately 91% of the Company's electric operating revenues for the year
ended December 31, 1997, was derived from sales in Oklahoma and approximately 9%
from sales in Arkansas.
RESTRUCTURING
The Company and its former subsidiary, Enogex Inc., and Enogex Inc.'s
subsidiaries (collectively, "Enogex") became subsidiaries of OGE Energy on
December 31, 1996 pursuant to a mandatory share exchange whereby each share of
outstanding common stock of the Company was exchanged on a share-for-share basis
for common stock of OGE Energy. Immediately following this exchange, the Company
transferred its shares of Enogex stock to OGE Energy and Enogex became a direct
subsidiary of OGE Energy. OGE Energy now serves as the parent company to the
Company and Enogex. For purposes of the Company's financial statements, Enogex
is shown as discontinued operations. The New Notes will be obligations solely of
the Company and not of OGE Energy or Enogex.
INFORMATION INCORPORATED BY REFERENCE
The following documents, as filed by the Company with the Securities and
Exchange Commission (the "Commission"), are incorporated herein by reference:
(i) Form 10-K Annual Report of the Company for the year ended December 31, 1996,
(ii) Form 10-Q Quarterly Reports of the Company for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) Form 8-K Current Reports of
the Company dated January 29, 1997, January 31, 1997, June 19, 1997, July 17,
1997 and November 21, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this Prospectus and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Prospectus from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in this Prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
(including any beneficial owner) to whom this Prospectus has been delivered, on
the request of any such person, a copy of any or all of the documents referred
to above which have been or may be incorporated in this Prospectus by reference,
other than certain exhibits to such documents. Written or telephone requests for
such copies
2
<PAGE>
should be directed to Ms. Irma B. Elliott, Secretary, Oklahoma Gas and Electric
Company, 101 North Robinson, P.O. Box 321, Oklahoma City, Oklahoma 73101-0321,
(405) 553-3196.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information on file can be inspected and copied at the public reference offices
of the Commission currently at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; 500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade
Center, New York, New York 10048; and copies of such material can be obtained
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, reports, proxy material and other information concerning the Company
may be inspected at the Library of the New York Stock Exchange, 20 Broad Street,
New York, New York 10015. In addition, electronically filed documents, including
reports, proxy statements and other information concerning the Company, can be
obtained from the Commission's web site at http://www.sec.gov. The Company is
not required to, and does not, provide annual reports to holders of its debt
securities unless specifically requested by a holder.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the New
Notes will be used in connection with the payment at maturity or the redemption,
refunding, refinancing or purchase of certain first mortgage bonds of the
Company (the "Prior Securities"), including payment of short-term indebtedness
incurred for such purpose. The specific allocation of the net proceeds of a
particular series of Offered Notes and information relating to the particular
Prior Securities to be paid at maturity, redeemed, refunded, refinanced or
purchased, as well as any such short-term indebtedness incurred for such
purpose, will be described in the applicable Prospectus Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement, any Prior
Securities purchased will be purchased at a price not in excess of the
then-current redemption price applicable to such securities. In case of the
redemption, refunding or purchase of Prior Securities, proceeds of the Offered
Notes may be applied to pay any redemption premium or purchase price in excess
of the principal amount.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Consolidated Ratio of Earnings to Fixed Charges............................... 4.40 4.06 3.48 3.63
<CAPTION>
1993
---------
<S> <C>
Consolidated Ratio of Earnings to Fixed Charges............................... 3.33
</TABLE>
For purposes of this ratio, "Earnings" consist of the aggregate of income
from continuing operations (which excludes Enogex), taxes on income, investment
tax credit (net) and "fixed charges." "Fixed charges" consist of interest on
long-term debt, related amortization, interest on short-term borrowings and a
calculated portion of rents considered to be interest.
The annual interest requirements on the long-term debt of the Company
outstanding at December 31, 1997, was approximately $44 million.
SELECTED FINANCIAL INFORMATION
The following consolidated financial information of the Company, except
percentages, is presented in thousands. Such financial information does not
include Enogex, which, as stated previously, is shown in the Company's financial
statements as discontinued operations for all periods prior to January 1, 1997.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Income Summary:
Operating Revenues........................ $ 1,191,691 $1,200,337 $1,168,287
Operating Income.......................... 174,717 177,349 181,017
Income from Continuing Operations......... 120,994 116,869 112,544
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-------------------------
AMOUNT %
------------ -----------
(UNAUDITED)
<S> <C> <C>
Capitalization Summary:
Long-Term Debt (including current portion)............................................. $ 716,924 44.3%
Preferred Stock (1).................................................................... 49,266 3.1
Common Stock Equity.................................................................... 851,391 52.6
------------ -----
$ 1,617,581 100.0%
------------ -----
------------ -----
</TABLE>
- ------------------------
(1) All outstanding shares of the Company's preferred stock were redeemed in
January 1998.
DESCRIPTION OF NEW NOTES
GENERAL
Each series of New Notes is to be an initial issue of a new series of senior
notes (the "Senior Notes") issued under the Indenture dated as of October 1,
1995, as supplemented by Supplemental Indenture No. 1, dated as of October 16,
1995, Supplemental Indenture No. 2, dated as of July 1, 1997, and as to be
further supplemented by a new supplemental indenture for such series of New
Notes (collectively, the "Senior Note Indenture") between the Company and The
Bank of New York, as successor trustee (the "Senior Note Trustee") to Boatmen's
First National Bank of Oklahoma. The following summaries of certain provisions
of the Senior Note Indenture do not purport to be complete and are subject to,
and qualified in their entirety by, all of the provisions of the Senior Note
Indenture which is an exhibit to the Registration Statement of which this
Prospectus is a part and which is incorporated herein by this
4
<PAGE>
reference. Unless otherwise indicated, references to Section numbers under this
caption are references to the Section numbers of the Senior Note Indenture.
Until the Release Date (as defined below), the Senior Notes (including any
New Notes issued prior to the Release Date) will be secured by one or more
series of the Company's first mortgage bonds issued and delivered by the Company
to the Senior Note Trustee. See "Security; Release Date." ON THE RELEASE DATE,
ANY THEN OUTSTANDING SENIOR NOTES (INCLUDING ANY NEW NOTES ISSUED PRIOR TO THE
RELEASE DATE) WILL CEASE TO BE SECURED BY FIRST MORTGAGE BONDS, WILL BECOME
UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND WILL RANK ON A PARITY WITH
OTHER UNSECURED INDEBTEDNESS OF THE COMPANY. AS OF JANUARY 31, 1998, THERE WERE
OUTSTANDING THREE SERIES OF FIRST MORTGAGE BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT EQUAL TO $87.5 MILLION. The Release Date will occur when all such first
mortgage bonds are retired or redeemed. SENIOR NOTES (INCLUDING NEW NOTES)
ISSUED ON OR AFTER THE RELEASE DATE WILL NOT BE SECURED BY ANY FIRST MORTGAGE
BONDS AND WILL BE UNSECURED GENERAL OBLIGATIONS OF THE COMPANY. The Prospectus
Supplement applicable to each series of Offered Notes will specify whether such
Offered Notes will be secured or unsecured. As of December 31, 1997, the Company
had issued four series of Senior Notes in the aggregate principal amount of $470
million (the "Prior Senior Notes"). The Senior Note Indenture provides that, in
addition to the New Notes offered hereby, additional Senior Notes may be issued
thereunder, without limitation as to aggregate principal amount, provided that,
prior to the Release Date, the amount of Senior Notes that may be issued and
outstanding cannot exceed the amount of first mortgage bonds that the Company is
able to issue under its First Mortgage Indenture. See "FIRST MORTGAGE BONDS AND
FIRST MORTGAGE INDENTURE--Issuance of Additional Bonds." At December 31, 1997,
the Company could issue more than $1.1 billion of additional first mortgage
bonds at an assumed 7.60% interest rate.
There is no requirement under the Senior Note Indenture that future issues
of debt securities of the Company be issued under the Senior Note Indenture, and
the Company will be free to employ other indentures or documentation, containing
provisions different from those included in the Senior Note Indenture or
applicable to one or more issues of Senior Notes (including the New Notes), in
connection with future issues of such other debt securities.
The Senior Note Indenture provides that the New Notes will be issued in one
or more series, may be issued at various times, may have differing maturity
dates and may bear interest at differing rates. The Prospectus Supplement
applicable to each issue of Offered Notes will specify: (1) the designation and
aggregate principal amount of such Offered Notes; (2) the date on which such
Offered Notes will mature; (3) the interest rate or rates, or method of
calculation of such rate or rates, on such Offered Notes, and the date from
which such interest shall accrue; (4) the dates on which such interest will be
payable; (5) the record dates for payments of interest; (6) any redemption
terms; (7) the period or periods within which, the price or prices at which and
the terms and conditions upon which such Offered Notes may be repaid, in whole
or in part, at the option of the holder thereof; and (8) other specific terms
applicable to such Offered Notes, including whether such Offered Notes will be
secured or unsecured. Unless otherwise indicated in the applicable Prospectus
Supplement, the New Notes will be denominated in United States currency in
minimum denominations of $1,000 and integral multiples thereof.
Unless otherwise indicated in the applicable Prospectus Supplement, there
are no provisions in the Senior Note Indenture or the New Notes that require the
Company to redeem, or permit the holders to cause a redemption of, the New Notes
or that otherwise protect the holders in the event that the Company incurs
substantial additional indebtedness, whether or not in connection with a change
in control of the Company. However, any change in control transaction that
involves the incurrence of additional long-term indebtedness (as notes, first
mortgage bonds or otherwise) by the Company in such a transaction would require
approval of state utility regulatory authorities and, possibly, of federal
utility regulatory authorities. Management believes that such approvals would be
unlikely in any transaction that would result in the Company, or a successor to
the Company, having a highly leveraged capital structure.
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REGISTRATION, TRANSFER AND EXCHANGE
New Notes of any series will be exchangeable for other New Notes of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor. (Section 2.06)
Unless otherwise indicated in the applicable Prospectus Supplement, New
Notes may be presented for registration of transfer (duly endorsed or
accompanied by a duly executed written instrument of transfer), at the office of
the Senior Note Trustee and maintained for such purpose with respect to any
series of New Notes and referred to in the applicable Prospectus Supplement,
without service charge and upon payment of any taxes and other governmental
charges as described in the Senior Note Indenture. Such transfer or exchange
will be effected upon the Senior Note Trustee being satisfied with the documents
of title and indemnity of the person making the request. (Sections 2.06 and
2.07)
In the event of any redemption of New Notes of any series, the Senior Note
Trustee will not be required to exchange or register a transfer of any New Notes
of such series selected, called or being called for redemption except, in the
case of any New Note to be redeemed in part, the portion thereof not to be so
redeemed. (Section 2.06) See "BOOK-ENTRY SYSTEM."
PAYMENT AND PAYING AGENTS
Principal of and interest and premium, if any, on New Notes issued in the
form of Global Securities will be paid in the manner described below under the
caption "BOOK-ENTRY SYSTEM." Unless otherwise indicated in the applicable
Prospectus Supplement, interest on New Notes that are in the form of
certificated securities will be paid by check to the person entitled thereto as
such person's name appears in the register for the New Notes maintained by the
Senior Note Trustee; however, a holder of Senior Notes of one or more series
under the Senior Note Indenture in the aggregate principal amount of $10,000,000
or more having the same interest payment dates will be entitled to receive
payments of interest on such series by wire transfer of immediately available
funds to a bank within the continental United States if appropriate wire
transfer instructions have been received by the Senior Note Trustee on or prior
to the applicable regular record date. (Section 2.12) Unless otherwise indicated
in the applicable Prospectus Supplement, the principal of, and interest at
maturity or redemption and premium, if any, on New Notes in the form of
certificated securities will be payable in immediately available funds at the
office of the Senior Note Trustee. (Section 2.12)
All monies paid by the Company to a paying agent for the payment of
principal of, interest or premium, if any, on any New Note which remain
unclaimed at the end of two years after such principal, interest or premium
shall have become due and payable will be repaid to the Company and the holder
of such New Note will thereafter look only to the Company for payment thereof.
(Section 5.04)
SECURITY; RELEASE DATE
Until the Release Date, the Senior Notes (including any New Notes issued
prior thereto) will be secured by one or more series of the Company's first
mortgage bonds ("Senior Note Mortgage Bonds") issued and delivered by the
Company to the Senior Note Trustee (see "FIRST MORTGAGE BONDS AND FIRST MORTGAGE
INDENTURE"). Upon the issuance of a series of Senior Notes (including New Notes)
prior to the Release Date, the Company will simultaneously issue and deliver to
the Senior Note Trustee, as security for all Senior Notes, a series of Senior
Note Mortgage Bonds that will have the same stated rate or rates of interest (or
interest calculated in the same manner), interest payment dates, stated maturity
date and redemption provisions, and will be in the same aggregrate principal
amount as the series of the Senior Notes (including New Notes) being issued.
(Section 4.10) Payment by the Company to the Senior Note Trustee of principal
of, premium, if any, and interest on, a series of Senior Note Mortgage Bonds
will be applied by the Senior Note Trustee to satisfy the Company's obligations
with respect to principal of, premium, if any, and interest on, the Senior
Notes. (Section 4.11) SENIOR NOTES (INCLUDING NEW NOTES) ISSUED ON OR AFTER THE
RELEASE DATE WILL NOT BE SECURED BY ANY FIRST MORTGAGE BONDS AND WILL BE
UNSECURED GENERAL OBLIGATIONS OF THE COMPANY.
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THE RELEASE DATE WILL BE THE DATE THAT ALL FIRST MORTGAGE BONDS ("FIRST
MORTGAGE BONDS") OF THE COMPANY ISSUED AND OUTSTANDING UNDER THE FIRST MORTGAGE
INDENTURE (HEREINAFTER DEFINED), OTHER THAN SENIOR NOTE MORTGAGE BONDS, HAVE
BEEN RETIRED (AT, BEFORE OR AFTER THE MATURITY THEREOF) THROUGH PAYMENT,
REDEMPTION OR OTHERWISE (INCLUDING THOSE FIRST MORTGAGE BONDS DEEMED TO BE PAID
WITHIN THE MEANING OF THE FIRST MORTGAGE INDENTURE). AS OF JANUARY 31, 1998,
THERE WERE OUTSTANDING THREE SERIES OF FIRST MORTGAGE BONDS OTHER THAN SENIOR
NOTE MORTGAGE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL TO $87.5 MILLION. ON
THE RELEASE DATE, THE SENIOR NOTE TRUSTEE WILL DELIVER TO THE COMPANY FOR
CANCELLATION ALL SENIOR NOTE MORTGAGE BONDS AND THE COMPANY WILL CAUSE THE
SENIOR NOTE TRUSTEE TO PROVIDE NOTICE TO ALL HOLDERS OF SENIOR NOTES (INCLUDING
ANY NEW NOTES ISSUED PRIOR TO THE RELEASE DATE) OF THE OCCURRENCE OF THE RELEASE
DATE. AS A RESULT, ON THE RELEASE DATE, THE SENIOR NOTE MORTGAGE BONDS SHALL
CEASE TO SECURE THE SENIOR NOTES (INCLUDING ANY NEW NOTES ISSUED PRIOR TO THE
RELEASE DATE), AND ANY THEN OUTSTANDING SENIOR NOTES (INCLUDING NEW NOTES) WILL
BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY. (Section 4.11) Each series
of Senior Note Mortgage Bonds will be a series of First Mortgage Bonds of the
Company, all of which are secured by a lien on certain property owned by the
Company. In certain circumstances prior to the Release Date, the Company is
permitted to reduce the aggregate principal amount of a series of Senior Note
Mortgage Bonds held by the Senior Note Trustee, but in no event to an amount
lower than the aggregate outstanding principal amount of the series of Senior
Notes initially issued contemporaneously with such Senior Note Mortgage Bonds.
(Section 4.08) Following the Release Date, the Company will cause the First
Mortgage Indenture to be closed and the Company will not issue any additional
First Mortgage Bonds under the First Mortgage Indenture. (Section 4.11) While
the Company will be precluded after the Release Date from issuing additional
First Mortgage Bonds, the Company will not be precluded under the Senior Note
Indenture or New Notes from issuing or assuming other secured debt, or incurring
liens on its property, except to the extent indicated below under "Limitation on
Liens" and except as otherwise indicated in the applicable Prospectus
Supplement.
EVENTS OF DEFAULT
The following constitute events of default under the Senior Note Indenture:
(a) default in the payment of principal of or premium, if any, on any Senior
Note when due and payable and continuance of such default for five days; (b)
default in the payment of interest on any Senior Note when due which continues
for 30 days; (c) default in the performance or breach of any other covenant or
warranty of the Company in the Senior Note Indenture and the continuation
thereof for 90 days after written notice to the Company as provided in the
Senior Note Indenture; (d) prior to the Release Date, the occurrence of a
Completed Default (hereinafter defined) under the First Mortgage Indenture, of
which the First Mortgage Trustee (hereinafter defined), the Company or the
holders of at least 25% in aggregate principal amount of the outstanding Senior
Notes have given written notice thereof to the Senior Note Trustee; and (e)
certain events of bankruptcy, insolvency, assignment or receivership of the
Company. (Section 8.01)
If an event of default occurs and is continuing, either the Senior Note
Trustee or the holders of a majority in aggregate principal amount of the
outstanding Senior Notes may declare the principal amount of all Senior Notes to
be due and payable immediately. Upon such acceleration of the Senior Notes prior
to the Release Date, the Senior Note Trustee is empowered to cause the mandatory
redemption of the Senior Note Mortgage Bonds. At any time after an acceleration
of the Senior Notes has been declared, but before a judgment or decree of the
immediate payment of the principal amount of the Senior Notes has been obtained
and, prior to the Release Date, so long as all First Mortgage Bonds have not
been accelerated, if the Company pays or deposits with the Senior Note Trustee a
sum sufficient to pay all matured installments of interest and the principal and
any premium which has become due otherwise than by acceleration and all defaults
shall have been cured or waived, then such payment or deposit will cause an
automatic rescission and annulment of the acceleration of the Senior Notes.
(Section 8.01)
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The Senior Note Indenture provides that the Senior Note Trustee generally
will be under no obligation to exercise any of its rights or powers under the
Senior Note Indenture at the request or direction of any of the holders unless
such holders have offered to the Senior Note Trustee reasonable security or
indemnity. (Section 9.02) The holders of a majority in principal amount of the
outstanding Senior Notes generally will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Trustee, or of exercising any trust or power conferred on the Senior
Note Trustee. (Section 8.07) Each holder of any Senior Note has the right to
institute a proceeding with respect to the Senior Note Indenture, but such right
is subject to certain conditions precedent specified in the Senior Note
Indenture. (Section 8.04) The Senior Note Indenture provides that the Senior
Note Trustee, within 90 days after the occurrence of a default with respect to
the Senior Notes, is required to give the holders of the Senior Notes notice of
such default, unless cured or waived, but, except in the case of default in the
payment of principal of, or premium, if any, or interest on, any Senior Notes,
the Senior Note Trustee may withhold such notice if it determines in good faith
that it is in the interest of such holders to do so. (Section 8.08) The Company
is required to deliver to the Senior Note Trustee each year a certificate as to
whether or not, to the knowledge of the officers signing such certificate, the
Company is in compliance with the conditions and covenants under the Senior Note
Indenture. (Section 6.06)
MODIFICATION
Modification and amendment of the Senior Note Indenture may be effected by
the Company and the Senior Note Trustee with the consent of the holders of a
majority in principal amount of the outstanding Senior Notes affected thereby,
provided that no such modification or amendment may, without the consent of the
holder of each outstanding Senior Note affected thereby, (a) change the maturity
date of any Senior Note; (b) reduce the rate or extend the time of payment of
interest on any Senior Note; (c) reduce the principal amount of, or premium
payable on, any Senior Note; (d) change the coin or currency of any payment of
principal of, or any premium or interest on, any Senior Note; (e) change the
date on which any Senior Note may be redeemed or repaid at the option of the
holder thereof or adversely affect the rights of a holder to institute suit for
the enforcement of any payment on or with respect to any Senior Note; (f) impair
the interest of the Senior Note Trustee in the Senior Note Mortgage Bonds held
by it or, prior to the Release Date, reduce the principal amount of any series
of Senior Note Mortgage Bonds securing the Senior Notes to an amount less than
the principal amount of the related series of Senior Notes or alter the payment
provisions of such Senior Note Mortgage Bonds in a manner adverse to the holders
of the Senior Notes; or (g) modify the foregoing requirements or reduce the
percentage of outstanding Senior Notes necessary to modify or amend the Senior
Note Indenture or to waive any past default to less than a majority.
Modification and amendment of the Senior Note Indenture may be effected by the
Company and the Senior Note Trustee without the consent of the holders (a) to
add to the covenants of the Company for the benefit of the holders or to
surrender a right conferred on the Company in the Senior Note Indenture; (b) to
add further security for the Senior Notes; or (c) to make certain other
modifications, generally of a ministerial or immaterial nature. (Sections 13.01
and 13.02)
DEFEASANCE AND DISCHARGE
The Senior Note Indenture provides that the Company will be discharged from
any and all obligations in respect to the Senior Notes and the Senior Note
Indenture (except for certain obligations such as obligations to register the
transfer or exchange of Senior Notes, replace stolen, lost or mutilated Senior
Notes and maintain paying agencies) if, among other things, the Company
irrevocably deposits with the Senior Note Trustee, in trust for the benefit of
holders of Senior Notes, money or certain United States government obligations,
or any combination thereof, which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an amount
sufficient, without reinvestment, to make all payments of principal of, and any
premium and interest on, the Senior Notes on the dates such payments are due in
accordance with the terms of the Senior Note Indenture and the Senior Notes;
provided that, unless all of the Senior Notes are to be due within 90 days of
such deposit by redemption or otherwise, the Company shall also have delivered
to the Senior Note Trustee an opinion of
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counsel to the effect that the holders of the Senior Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or discharge of the Senior Note Indenture. Thereafter, the holders of
Senior Notes must look only to such deposit for payment of the principal of, and
interest and any premium on, the Senior Notes. (Section 5.01)
CONSOLIDATION, MERGER AND SALE OR DISPOSITION OF ASSETS
The Company will not consolidate with or merge into any other corporation or
sell, transfer or otherwise dispose of all or substantially all of its assets
unless the successor or transferee corporation assumes by supplemental indenture
the due and punctual payment of the principal of and premium and interest on all
the Senior Notes and the performance of every covenant of the Senior Note
Indenture to be performed or observed by the Company and, prior to the Release
Date, unless the successor or transferee corporation assumes the Company's
obligations under the First Mortgage Indenture with respect to the Senior Note
Mortgage Bonds. Upon any such consolidation, merger, sale, transfer or other
disposition of all or substantially all of the assets of the Company, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Senior
Note Indenture with the same effect as if such successor corporation had been
named as the Company therein and the Company will be released from all
obligations under the Senior Note Indenture. The Senior Note Indenture defines
all or substantially all of the assets of the Company as being 50% or more of
the total assets of the Company as shown on the balance sheet of the Company as
of the end of the prior year and specifically permits any such sale, transfer or
other disposition during a calendar year of less than 50% of total assets
without the consent of the holders of the Senior Notes. (Sections 12.01 and
12.02)
LIMITATIONS ON LIENS
Unless otherwise specified in the applicable Prospectus Supplement with
respect to any series of Offered Notes, the related supplemental indenture will
provide that, from and after the Release Date and so long as any such Offered
Notes are outstanding, the Company may not issue, assume or guarantee any debt
for money borrowed ("Debt") that is secured by any mortgage, security interest,
pledge or lien ("mortgage") of or upon any Operating Property of the Company,
whether owned at the date of the Senior Note Indenture or thereafter acquired,
and will not permit to exist any Debt secured by any such mortgage created on or
prior to the Release Date, without in any case effectively securing the Offered
Notes and all series of Senior Notes issued prior to or contemporaneously with
such Offered Notes (together with, if the Company shall so determine, any other
Senior Notes or indebtedness of the Company ranking senior to, or equally with,
the Senior Notes) with such Debt equally and ratably, except that this
restriction will not apply to: (1) mortgages on any property existing at the
time of its acquisition; (2) mortgages on property of a corporation existing at
the time such corporation is merged into or consolidated with, or disposes of
substantially all its properties (or those of a division) to, the Company; (3)
mortgages to secure the cost of acquisition, construction, development or
substantial repair, alteration or improvement of property or to secure
indebtedness incurred to provide funds for any such purpose or for reimbursement
of funds previously expended for any such purpose, provided such mortgages are
created or assumed contemporaneously with, or within 18 months after, such
acquisition or completion of substantial repair or alteration, construction,
development or substantial improvement or within six months thereafter pursuant
to a commitment for financing arranged with a lender or investor within such 18
month period; (4) mortgages in favor of the United States of America or any
State thereof, or for the benefit of holders of securities issued by any such
entity, or any department, agency or instrumentality or political subdivision of
the United States of America or any State thereof, to secure any Debt incurred
for the purpose of financing all or any part of the purchase price or the cost
of substantially repairing or altering, constructing, developing or
substantially improving the property subject to such mortgages; or (5) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any mortgage referred to in clauses (1)
through (4), provided, however, that the principal amount of indebtedness
secured thereby and not otherwise authorized by said clauses (1) to (4),
inclusive, shall not exceed the principal amount of indebtedness, plus any
premium or fee payable in connection with any such extension,
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renewal or replacement, so secured at the time of such extension, renewal or
replacement. However, the foregoing restriction does not apply to the issuance,
assumption or guarantee by the Company of Debt secured by a mortgage which would
otherwise be subject to the foregoing restrictions up to an aggregate amount
which, together with all other secured Debt of the Company (not including
secured Debt permitted under the foregoing exceptions) and the Value (as defined
below) of Sale and Lease-Back Transactions (as defined below) existing at such
time (other than Sale and Lease-Back Transactions the proceeds of which have
been applied to the retirement of certain indebtedness, Sale and Lease-Back
Transactions in which the property involved would have been permitted to be
mortgaged under the foregoing exceptions and Sale and Lease-Back Transactions
that are permitted by the first sentence of "Limitations on Sale and Lease-Back
Transactions" below), does not exceed the greater of 10% of Net Tangible Assets
(as defined below) or 10% of Capitalization (as defined below). (Section 3.01 of
Form of Supplemental Indenture). The supplemental indentures relating to the
Prior Senior Notes contain a covenant with respect to limitations on liens
substantively identical to the foregoing for the benefit of the Prior Senior
Notes. (Section 4.01 of Supplemental Indenture No. 1 and Section 4.01 of
Supplemental Indenture No. 2).
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
Unless otherwise specified in the applicable Prospectus Supplement with
respect to any series of Offered Notes, the related supplemental indenture will
provide that, from and after the Release Date and for so long as such Offered
Notes are outstanding, the Company may not enter into any Sale and Lease-Back
Transaction with respect to any Operating Property and will not permit to remain
in effect any Sale and Lease-Back Transaction entered into on or prior to the
Release Date with respect to any Operating Property (except in each case, for
transactions involving leases for a term, including renewals, of not more than
48 months), if the purchaser's commitment is obtained more than 18 months after
the later of the completion of the acquisition or the placing in operation of
such Operating Property or of such Operating Property as constructed or
developed or substantially repaired, altered or improved. This restriction will
not apply if (a) the Company would be entitled pursuant to the provisions
described in the first sentence under "Limitations on Liens" above to issue,
assume or guarantee Debt secured by a mortgage on such Operating Property
without equally and ratably securing the Offered Notes and all series of Senior
Notes issued prior to or contemporaneously with such Offered Notes, (b) after
giving effect to such Sale and Lease-Back Transaction, the Company could incur
pursuant to the provisions described in the second sentence under "Limitations
on Liens," additional Debt secured by mortgages, or (c) the Company applies
within 180 days an amount equal to, in the case of a sale or transfer for cash,
the net proceeds (not exceeding the net book value), and, otherwise, an amount
equal to the fair value (as determined by its Board of Directors) of the
Operating Property so leased to the retirement of Senior Notes or other Debt of
the Company ranking senior to, or equally with, the Senior Notes, subject to
reduction for Senior Notes and such Debt retired during such 180-day period
otherwise than pursuant to mandatory sinking fund or prepayment provisions and
payments at stated maturity. (Section 3.02 of Form of Supplemental Indenture).
The supplemental indentures relating to the Prior Senior Notes contain a
covenant with respect to limitations on Sale and Lease-Back Transactions
substantively identical to the foregoing for the benefit of the Prior Senior
Notes. (Section 4.02 of Supplemental Indenture No. 1 and Section 4.02 of
Supplemental Indenture No. 2).
DEFINITIONS
"Capitalization" means the total of all the following items appearing on, or
included in, the balance sheet of the Company: (i) liabilities for indebtedness
maturing more than 12 months from the date of determination; and (ii) common
stock, preferred stock, premium on capital stock, capital surplus, capital in
excess of par value, and retained earnings, less to the extent not otherwise
deducted, the cost of shares of capital stock of the Company held in its
treasury.
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"Net Tangible Assets" means the amount shown as total assets on the balance
sheet of the Company, less the following: (i) intangible assets including, but
without limitation, such items as goodwill, trademarks, trade names, patents and
unamortized debt discount and expense carried as an asset on said balance sheet;
and (ii) appropriate adjustments, if any, on account of minority interests.
"Operating Property" means (i) any interest in real property owned by the
Company and (ii) any asset owned by the Company that is depreciable in
accordance with generally accepted accounting principles.
"Sale and Lease-Back Transaction" means any arrangement with any person
providing for the leasing to the Company of any Operating Property (except for
temporary leases for a term, including any renewal thereof, of not more than 48
months), which Operating Property has been or is to be sold or transferred by
the Company to such person.
"Value" means, with respect to a Sale and Lease-Back Transaction, as of any
particular time, the amount equal to the greater of (i) the net proceeds to the
Company from the sale or transfer of the property leased pursuant to such Sale
and Lease-Back Transaction or (ii) the net book value of such property, as
determined in accordance with generally accepted accounting principles by the
Company at the time of entering into such Sale and Lease-Back Transaction, in
either case multiplied by a fraction, the numerator of which shall be equal to
the number of full years of the term of the lease that is part of such Sale and
Lease-Back Transaction remaining at the time of determination and the
denominator of which shall be equal to the number of full years of such term,
without regard, in any case, to any renewal or extension options contained in
such lease. (Section 3.03 of Form of Supplemental Indenture)
VOTING OF SENIOR NOTE MORTGAGE BONDS HELD BY SENIOR NOTE TRUSTEE
Prior to the Release Date, the Senior Note Trustee, as a holder of Senior
Note Mortgage Bonds, will attend any meeting of bondholders under the First
Mortgage Indenture as to which it receives due notice, or, at its option, will
deliver its proxy in connection therewith. Either at such meeting, or otherwise
where the consent of holders of first mortgage bonds issued under the First
Mortgage Indenture is sought without a meeting, the Senior Note Trustee will
vote all of the Senior Note Mortgage Bonds held by it, or will consent or
withhold its consent with respect thereto, as directed by the holders of a
majority in aggregate principal amount of the outstanding Senior Notes;
provided, however, the Senior Note Trustee may not vote the Senior Note Mortgage
Bonds of any particular series in favor of, or give consent to, any action
which, in the Senior Note Trustee's opinion, would materially adversely affect
such series of Senior Note Mortgage Bonds in a manner not shared generally by
all other Senior Note Mortgage Bonds, except upon notification by the Senior
Note Trustee to the holders of the related series of Senior Notes of such
proposal and consent thereto of the holders of a majority in principal amount of
the outstanding Senior Notes of such series. (Section 4.03)
RESIGNATION OR REMOVAL OF NOTE TRUSTEE
The Senior Note Trustee may resign at any time upon written notice to the
Company specifying the day upon which the resignation is to take effect and such
resignation will take effect immediately upon the later of the appointment of a
successor Senior Note Trustee and such specified day. (Section 9.10)
The Senior Note Trustee may be removed at any time by an instrument or
concurrent instruments in writing filed with the Senior Note Trustee and signed
by the holders, or their attorneys-in-fact, of at least a majority in principal
amount of the then outstanding Senior Notes. In addition, so long as no event of
default or event which, with the giving of notice or lapse of time or both,
would become an event of default has occurred and is continuing, the Company may
remove the Senior Note Trustee upon notice to the holder of each Senior Note
outstanding and the Senior Note Trustee, and appointment of a successor Senior
Note Trustee. (Section 9.10)
CONCERNING THE SENIOR NOTE TRUSTEE
The Bank of New York is the Senior Note Trustee under the Senior Note
Indenture. The Company maintains banking relationships with the Senior Note
Trustee in the ordinary course of business. The Senior Note Trustee also acts as
trustee for the Company's First Mortgage Bonds and as issuing and paying agent
for medium-term notes of Enogex.
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FIRST MORTGAGE BONDS AND FIRST MORTGAGE INDENTURE
GENERAL
Any series of Senior Note Mortgage Bonds issued as security for Senior Notes
prior to the Release Date will be a series of First Mortgage Bonds issued under
the Trust Indenture dated February 1, 1945 as heretofore supplemented and
amended by supplemental trust indentures and a new supplemental trust indenture
for such series of Senior Note Mortgage Bonds (the "New Supplemental
Indenture"), all from the Company to The Bank of New York, as successor Trustee
(the "First Mortgage Trustee") to Boatmen's First National Bank of Oklahoma and
to the First National Bank and Trust Company of Oklahoma City (such Trust
Indenture, as supplemented and as to be supplemented, is herein referred to as
the "First Mortgage Indenture"). Copies of the First Mortgage Indenture, the
supplemental indentures and the form of the New Supplemental Indenture are filed
as exhibits to the Registration Statement of which this Prospectus is a part.
The following summaries of certain provisions of the First Mortgage Indenture do
not purport to be complete and are subject to, and qualified in their entirety
by, the detailed provisions of the First Mortgage Indenture which are
incorporated herein by this reference. References to Article and Section numbers
under this caption are references to Article and Section numbers of the First
Mortgage Indenture unless otherwise indicated. Unless the context indicates
otherwise, words or phrases defined in the First Mortgage Indenture are
capitalized and used with the same meanings herein. As of January 31, 1998,
seven series of First Mortgage Bonds in an aggregate principal amount of $557.5
million were outstanding under the First Mortgage Indenture, including four
series of Senior Note Mortgage Bonds in an aggregate principal amount of $470
million issued as security for the Prior Senior Notes.
TERMS OF SENIOR NOTE MORTGAGE BONDS
Prior to the Release Date and upon the issuance of a series of Senior Notes
(including New Notes), a series of Senior Note Mortgage Bonds will be issued and
delivered to the Senior Note Trustee in an aggregate principal amount equal to
the aggregate principal amount of such series of Senior Notes and with the same
stated rate or rates of interest (or interest calculated in the same manner),
interest payment dates, stated maturity date and redemption provisions as such
series of Senior Notes. The Company's obligations to make payments with respect
to the principal of, premium, if any, and/or interest on a series of Senior Note
Mortgage Bonds shall be fully or partially, as the case may be, discharged to
the extent that, at the time that any such payment shall be due, the then due
principal of, premium, if any, and/or interest on the related series of Senior
Notes shall have been fully or partially paid or there shall have been deposited
with the Senior Note Trustee pursuant to the Senior Note Indenture sufficient
funds to fully or partially pay the then due principal, premium, if any, and/or
interest on such series of Senior Notes.
SECURITY FOR SENIOR NOTE MORTGAGE BONDS
In the opinions of counsel for the Company, the Senior Note Mortgage Bonds,
if and when issued, will be secured by the First Mortgage Indenture, which
constitutes a first mortgage lien, subject only to Permissible Encumbrances,
upon all the property of the Company (except as summarized in the following
paragraph) for the equal pro rata security of each series of First Mortgage
Bonds, subject to the provisions related to any sinking fund or similar fund for
the benefit of First Mortgage Bonds of any particular series. The opinion does
not cover title to easements or rights-of-way as counsel believes the expense of
examination would exceed the cost of acquiring, by condemnation or purchase, any
easements or rights-of-way held under defective titles.
There are excepted from the lien of the First Mortgage Indenture certain
securities, cash, contracts, receivables, motor vehicles, merchandise, equipment
and supplies, and certain non-utility real property. (Granting Clause of the
First Mortgage Indenture).
The First Mortgage Indenture contains provisions for subjecting to the lien
thereof (subject to the limitations in Article XV in the case of consolidation
or merger) all property acquired by the Company after the date of the First
Mortgage Indenture other than property of the kind mentioned in the preceding
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<PAGE>
paragraph. (Granting Clause of the First Mortgage Indenture) Such provisions
might not be effective as to property acquired within the 90-day period
immediately preceding or acquired subsequent to the filing of a case with
respect to the Company under the United States Bankruptcy Code.
MAINTENANCE PROVISIONS
As a Maintenance Fund for the First Mortgage Bonds, the Company covenants to
pay to the First Mortgage Trustee annually on May 1 an amount equal to 15% of
its Gross Operating Revenues for the preceding calendar year, after deducting
from such revenues (i) cost of electricity purchased for resale and (ii) rentals
paid for utility property, less credits at the Company's option for (a)
maintenance, (b) property retirements offset by Permanent Additions, (c)
retirements of First Mortgage Bonds, (d) Amounts of Established Permanent
Additions and (e) 15% of the portion of Gross Operating Revenues during such
calendar year attributable to increases since January 6, 1975, in the Company's
cost of fuel used in electric generation. Withdrawals from the Maintenance Fund
may be made on the basis of retirements of First Mortgage Bonds and Amounts of
Established Permanent Additions, but cash in excess of $100,000 remaining on
deposit in the Maintenance Fund for more than two years must be used for the
retirement of First Mortgage Bonds. Any such retirement through redemption would
be at the applicable regular redemption price of the First Mortgage Bonds to be
redeemed and subject to any restriction on the redemption of such First Mortgage
Bonds. (Article IX, Section 3.03 of Supplemental Indenture dated March 1, 1952,
and Section 1.01 of Supplemental Indenture dated September 14, 1976)
The Company has covenanted to maintain its properties in adequate repair,
working order and condition. The First Mortgage Indenture contains provisions
for a periodic inspection of the Company's properties and report by an
independent engineer as to compliance with this covenant. (Section 8.06)
SINKING FUND PROVISIONS
As an annual sinking fund for each series of First Mortgage Bonds, the
Company covenants to pay to the First Mortgage Trustee annually on December 1 an
amount sufficient to redeem, on the following February 1, for sinking fund
purposes, 1 1/4% of the highest principal amount at any time outstanding of
First Mortgage Bonds of the series for which the sinking fund is applicable.
Sinking fund payments may be offset by (a) application of Amounts of Established
Permanent Additions equal to 166 2/3% of the principal amount of First Mortgage
Bonds which would otherwise be required to be retired by the sinking fund and
(b) retirement or delivery to the First Mortgage Trustee of First Mortgage Bonds
of the series for which the sinking fund is applicable. The First Mortgage
Trustee is required to apply sinking fund money to the purchase or redemption of
First Mortgage Bonds of the series for which such funds are applicable. (Article
XII and Section 3.01 of Supplemental Indenture dated February 1, 1980)
ISSUANCE OF ADDITIONAL BONDS
Additional First Mortgage Bonds secured by the First Mortgage Indenture may
be issued on the basis of (a) 60% of the Cost or Fair Value, whichever is less,
of net Permanent Additions (which become available upon proper certification by
the Company), after making the required deductions on account of Retired
Property (Article V); (b) an equal principal amount of retired First Mortgage
Bonds, the retirement whereof has not been otherwise used under the First
Mortgage Indenture (Article VI); and (c) deposit of an equal amount of cash with
the First Mortgage Trustee, which cash may be withdrawn by applying Amounts of
Established Permanent Additions equal to 166 2/3% of such cash to be withdrawn
or by retirement of First Mortgage Bonds. (Article VII and Section 3.04 of
Supplemental Indenture dated March 1, 1952) No additional First Mortgage Bonds
may be issued on basis (a), basis (b) under specified conditions or basis (c),
unless the Earnings Applicable to Bond Interest for a specified twelve-month
period are equal to twice the annual interest requirements on the First Mortgage
Bonds including those about to be issued. (Sections 5.03, 6.01 and 7.01)
Earnings Applicable to Bond Interest for the twelve months ended December 31,
1997, were 5.6 times the annual interest requirement on the First Mortgage Bonds
of the Company. Additional First Mortgage Bonds may vary from the New Bonds as
to maturity,
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interest rate, redemption prices, sinking fund and in certain other respects.
(Article II) Any Senior Note Mortgage Bonds issued will be issued under (a)
and/or (b) above. At December 31, 1997, the amount of net Permanent Additions
which may be used for the issuance of First Mortgage Bonds exceeded $1.2
billion. At December 31, 1997, the amount of retired First Mortgage Bonds which
may be used for the issuance of First Mortgage Bonds was $299 million.
PROVISIONS OF FIRST MORTGAGE INDENTURE LIMITING DIVIDENDS ON COMMON STOCK
The Company covenants that, so long as any First Mortgage Bonds are
outstanding, earned surplus (retained earnings) equal to the sum of (1) the
amount by which the aggregate of (a) provisions for retirement and depreciation
and (b) expenditures for maintenance, during the period from June 1, 1955, to
the last date for which a statement of income is available, is less than 15% of
Gross Operating Revenues (after deducting cost of electricity and/or gas
purchased for resale, rentals paid for utility property and the portion of gross
operating revenues attributable to increases since January 6, 1975, in the
Company's cost of fuel used in electric generation) for that period and (2) the
amount, if any, by which all of the consideration paid by the Company in
acquiring any shares of its Common Stock during the above period exceeds
$217,301,128 plus any consideration received by the Company from the sale after
September 30, 1991 of its Common Stock, shall not be available for the payment
of cash dividends on Common Stock; and that the Company shall not acquire shares
of its Common Stock for a valuable consideration if after such acquisition the
sum of (1) and (2) above would exceed its then earned surplus (retained
earnings). (Section 3.01 of Supplemental Indenture dated January 1, 1957,
Section 1.01 of Supplemental Indenture dated September 14, 1976 and Section 1.01
of Supplemental Indenture dated December 9, 1991)
RELEASE PROVISIONS
The First Mortgage Indenture contains provisions permitting the release from
its lien of any property upon depositing or pledging cash or certain other
property of comparable Fair Value (Fair Value being defined in substance as the
current value of the property as certified by an engineer, appraiser or similar
expert). The First Mortgage Indenture also contains provisions for the
cancellation, change or alteration of leases, rights-of-way and easements, and
for the surrender and modification of any franchise or governmental consent
subject to certain restrictions, in each case without any release or consent by
the First Mortgage Trustee or accountability thereto for any consideration
received by the Company. (Article XI)
MODIFICATION OF THE FIRST MORTGAGE INDENTURE
With the consent of the Company, the provisions of the First Mortgage
Indenture may be changed by the affirmative vote of the holders of 70% in
principal amount of the First Mortgage Bonds then outstanding except, among
other things, the maturity of a First Mortgage Bond may not be extended, the
interest rate reduced nor the terms of payment of principal or interest changed
without the consent of the holder of such First Mortgage Bond. (Article XVIII)
CONCERNING THE FIRST MORTGAGE TRUSTEE
The Bank of New York is the First Mortgage Trustee under the First Mortgage
Indenture. The Company maintains banking relationships in the ordinary course of
business with the First Mortgage Trustee. The First Mortgage Trustee also serves
as trustee for the Senior Notes and as issuing and paying agent for medium-term
notes of Enogex.
In case of a Completed Default under the First Mortgage Indenture (see
"--Events of Default" below), the First Mortgage Trustee may, and upon request
of the holders of a majority in principal amount of the First Mortgage Bonds
shall, declare the First Mortgage Bonds due and payable. In case of a Completed
Default, it is obligatory upon the First Mortgage Trustee to take the action or
actions provided in the First Mortgage Indenture to enforce payment of the First
Mortgage Bonds and for the enforcement of the lien of the First Mortgage
Indenture upon being requested to do so by the holders of a majority in
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<PAGE>
principal amount of the First Mortgage Bonds and upon being indemnified against
the costs, expenses and liabilities to be incurred therein or thereby without
negligence or bad faith. (Sections 13.01, 13.04 and 13.15)
EVENTS OF DEFAULT
The following is a summary of events defined in the First Mortgage Indenture
as "Completed Defaults": (a) failure to pay principal of any First Mortgage Bond
when due and payable, (b) failure to pay interest on any First Mortgage Bond
within 30 days after it becomes due and payable, (c) failure to meet any payment
to the sinking fund on any First Mortgage Bond within 10 days after same is
payable, (d) the expiration of 30 days after (1) the adjudication of the Company
as a bankrupt or (2) the entry of an order approving a petition filed against
the Company seeking reorganization of the Company, unless during such period
such adjudication or order shall be vacated, (e) the expiration of 90 days
following the appointment of a receiver unless during such period such
appointment shall be vacated, (f) the filing by the Company of a voluntary
petition in bankruptcy or the making of a general assignment for the benefit of
creditors or the consent by the Company to the appointment of a receiver or the
filing by the Company of a petition or answer seeking reorganization or the
filing by the Company of a petition to take advantage of any insolvency act and
(g) failure to perform any other covenant or agreement contained in the First
Mortgage Indenture or First Mortgage Bonds within 60 days following the mailing
by the First Mortgage Trustee or by the holders of at least 15% in principal
amount of the First Mortgage Bonds then Outstanding of a written demand that
such failure be cured. (Section 13.01 and Section 4.01 of Supplemental Indenture
dated February 1, 1980)
The First Mortgage Trustee is required to give notice to bondholders (1)
within 90 days after the occurrence of a default known to the First Mortgage
Trustee within such period, or (2) if a default be not known to the First
Mortgage Trustee within such period, within 30 days after such default shall be
known to the First Mortgage Trustee, unless such default shall have been cured
before the giving of such notice; provided that, except in the case of a default
resulting from the failure to make any payment of principal of or interest on
any First Mortgage Bonds or to make any sinking fund or purchase fund payment,
the First Mortgage Trustee may withhold such notice upon determination in good
faith by the board of directors, the executive committee or a trust committee of
directors and/or responsible officers of the First Mortgage Trustee that the
withholding of such notice is in the interest of the bondholders. (Section
16.07)
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<PAGE>
BOOK-ENTRY SYSTEM
Each series of New Notes may be issued in the form of one or more Global
Securities representing all or part of such series of New Notes and which will
be deposited with or on behalf of the Depository and registered in the name of
the Depository or a nominee of the Depository.
The following is based solely on information furnished by DTC:
Unless otherwise specified in the applicable Prospectus Supplement, DTC will
act as Depository for those New Notes issued as Global Securities. The Global
Securities will be issued as fully-registered securities registered in the name
of Cede & Co. (DTC's partnership nominee). DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants" include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of New Notes under the DTC system must be made by or through
Direct Participants, which will receive a credit for the New Notes on DTC's
records. The ownership interest of each actual purchaser of each New Note
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmation providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the New Notes are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in the New
Notes, except in the event that use of the book-entry system for the New Notes
is discontinued.
To facilitate subsequent transfers, all New Notes deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of the New Notes with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the New Notes so deposited; DTC's records reflect only the
identity of the Direct Participants to whose accounts such New Notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of the holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants or Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
If the Global Securities are redeemable, redemption notices shall be sent to
Cede & Co. If less than all of the Global Securities are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the New
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Company as
soon as possible after the record date. The
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Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the New Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, interest and any premium payments on the New Notes will be made
to DTC. DTC's practice is to credit Direct Participants' accounts on the payable
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Senior Note
Trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, interest and any
premium to DTC is the responsibility of the Company or the Senior Note Trustee,
disbursement of such payments to Direct Participants shall be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to a series of New Notes at any time by giving reasonable notice to the
Company or the Senior Note Trustee. Under such circumstances, if a successor
securities depository is not obtained, certificates for such series of New Notes
are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository) for any series of
New Notes. In that event, certificates for such series of New Notes will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC, and the Company and any underwriters, dealers or
agents take no responsibility for the accuracy thereof.
The underwriters, dealers or agents of any Offered Notes may be Direct
Participants of DTC.
NONE OF THE COMPANY, THE SENIOR NOTE TRUSTEE, THE FIRST MORTGAGE TRUSTEE, OR
ANY AGENT FOR PAYMENT ON OR REGISTRATION OF TRANSFER OR EXCHANGE OF THE GLOBAL
SECURITY WILL HAVE ANY RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS
RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL INTERESTS IN SUCH GLOBAL
SECURITY OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO
SUCH BENEFICIAL INTERESTS.
LEGAL OPINIONS
Legal opinions relating to the New Notes will be rendered by Rainey, Ross,
Rice & Binns, Oklahoma City, Oklahoma, Chisenhall, Nestrud & Julian, P.A.,
Little Rock, Arkansas, and Gardner, Carton & Douglas, Chicago, Illinois, counsel
for the Company, and by Jones, Day, Reavis & Pogue, Chicago, Illinois, counsel
for any underwriters, dealers or agents named in the Prospectus Supplement. As
to matters involving conformity to local laws, the other counsel will rely upon
the opinion of Rainey, Ross, Rice & Binns with respect to laws of Oklahoma and
upon the opinion of Chisenhall, Nestrud & Julian, P.A., with respect to laws of
Arkansas.
The statement contained in this Prospectus under the subcaption "Security
for Senior Note Mortgage Bonds" under the caption "FIRST MORTGAGE BONDS AND
FIRST MORTGAGE INDENTURE" is the opinion of Rainey, Ross, Rice & Binns, counsel
for the Company, to the extent that such statement pertains to Oklahoma law and
is the opinion of Chisenhall, Nestrud & Julian, P.A., to the extent that such
statement pertains to Arkansas law. As of December 31, 1997, attorneys with
Rainey, Ross, Rice & Binns owned beneficial interests in an aggregate of 5,259
shares of Common Stock of OGE Energy, of which Mr. William J. Ross, a partner in
that firm, owned a beneficial interest in 4,659 shares of such Common Stock.
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EXPERTS
The consolidated financial statements and schedule of the Company included
in the Company's Form 10-K Annual Report for the fiscal year ended December 31,
1996, to the extent and for the periods indicated in their reports included in
said Form 10-K, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
PLAN OF DISTRIBUTION
The New Notes may be sold (i) through underwriters or dealers; (ii) directly
to one or more institutional purchasers; or (iii) through agents. The Prospectus
Supplement with respect to each series of New Notes will set forth the terms of
the offering of such New Notes, including the name or names of any underwriters,
the purchase price of such New Notes and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
said New Notes may be listed.
If underwriters are used in the sale, the New Notes 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 sale. The New Notes may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters or directly by one or more of such firms. The
specific managing underwriter or underwriters, if any, will be set forth in the
Prospectus Supplement relating to the New Notes together with the members of the
underwriting syndicate, if any. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase the New
Notes offered thereby will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all such New Notes if any are
purchased.
New Notes may be sold directly by the Company or through agents designated
by the Company from time to time. The Prospectus Supplement will set forth the
name of any agent involved in the offer or sale of the New Notes in respect of
which the Prospectus Supplement is delivered and any commission payable by the
Company to such agent. Unless otherwise indicated in the applicable Prospectus
Supplement, any such agent is acting on a best efforts basis for the period of
its appointment.
Any underwriters, dealers or agents participating in the distribution of the
New Notes may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of the New Notes may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended. Agents and underwriters may be entitled, under agreements entered into
with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
and to contribution with respect to payments which the agents or underwriters
may be required to make in respect thereof. Agents and underwriters may engage
in transactions with or perform services for the Company in the ordinary course
of business.
Any underwriter of New Notes issued prior to the Release Date may be
required under Oklahoma law to pay a mortgage registration tax in an amount
estimated by the Company to be .096% of the principal amount of New Notes
purchased.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR 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.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Use of Proceeds................................ S-2
Description of Offered Notes................... S-2
Underwriting................................... S-4
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Oklahoma Gas and Electric Company..... 2
Information Incorporated by
Reference............................ 2
Available Information................. 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 4
Selected Financial Information........ 4
Description of New Notes.............. 4
First Mortgage Bonds and First
Mortgage Indenture................... 12
Book-Entry System..................... 16
Legal Opinions........................ 17
Experts............................... 18
Plan of Distribution.................. 18
</TABLE>
$100,000,000
OKLAHOMA GAS AND
ELECTRIC COMPANY
6 1/2% SENIOR NOTES
SERIES DUE APRIL 15, 2028
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
CIBC OPPENHEIMER
LEHMAN BROTHERS
APRIL 13, 1998
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