$250,000,000
PECO ENERGY COMPANY
COLLATERALIZED MEDIUM-TERM NOTES, SERIES B
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
----------
PECO Energy Company (Company) may from time to time offer its
Collateralized Medium-Term Notes, Series B (Series B Notes), in an
aggregate principal amount of up to $250,000,000. The Series B Notes
will be offered at maturities, which may vary from 9 months to 30 years
from their dates of issuance, and may be subject to redemption at the
option of the Company. Each Series B Note will bear interest at a fixed
rate as set forth in the pricing supplement (Pricing Supplement) to this
Prospectus applicable to such Series B Note. See "DESCRIPTION OF SERIES
B NOTES AND NOTE INDENTURE." The Series B Notes will be secured by a
series of the Company's First and Refunding Mortgage Bonds to be issued
and pledged to First Fidelity Bank, National Association (successor to
Fidelity Bank, National Association), acting as trustee under the
Collateralized Note Indenture. See "DESCRIPTION OF SERIES B FIRST
MORTGAGE BONDS AND MORTGAGE."
The issue price, interest rate, maturity date and optional
redemption provisions of each Series B Note will be established at the
time of issuance of such Note and set forth in the Pricing Supplement.
The Series B Notes will be issued in book-entry form or, in certain
circumstances, fully registered certificated form. Beneficial interests
in Series B Notes in book-entry form will be shown on, and transfers
thereof will be effected only through, records maintained by The
Depository Trust Company, as Depositary, and its participants. See
"DESCRIPTION OF SERIES B NOTES AND NOTE INDENTURE -- Book-Entry Notes."
The authorized denominations of Series B Notes will be $1,000 and
any integral multiple thereof.
Interest on each Series B Note will accrue at a fixed rate from its
date of issuance and will be payable semiannually on each January 1 and
July 1 and at maturity or upon earlier redemption.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING
SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
PRICE TO AGENTS' PROCEEDS TO THE
PUBLIC (1) COMMISSIONS (2) COMPANY (2) (3)
---------- --------------- ---------------
Per Note ....... 100% .125%-.750% 99.250%-99.875%
Total ..........$250,000,000 $312,500-$1,875,000 $248,125,000-$249,687,500
- ----------
(1) The Series B Notes will be sold at 100% of their principal amount
except as may be provided in a Pricing Supplement hereto.
(2) The Company will pay a commission to Goldman, Sachs & Co., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
or Morgan Stanley & Co. Incorporated each as an Agent (collectively,
the Agents), in the form of a discount, ranging from .125% to .750%,
depending upon the maturity of the Series B Note sold through such Agent
(or sold to such Agent as principal at negotiated discounts, for resale
to investors and other purchasers). The Company has agreed to indemnify
each Agent against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended.
(3) Before deducting other expenses payable by the Company, estimated
to be $376,000, including reimbursement of certain of the Agents'
expenses.
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Offers to purchase the Series B Notes are being solicited, on a reasonable
efforts basis, from time to time by the Agents on behalf of the Company.
The Series B Notes may be sold to the Agents on their own behalf at
negotiated discounts. The Company reserves the right to sell the Series B
Notes directly on its own behalf. The Company also reserves the right to
withdraw, cancel or modify the offering contemplated hereby without notice.
No termination date for the offering of the Series B Notes has been
established. The Company or the Agents may reject any order as a whole or
in part. See "PLAN OF DISTRIBUTION."
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus is May 18, 1995
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF THE SERIES B NOTES, THE
AGENTS MAY OVER-ALLOT OR EFFECT TRANSACTIONS IN THE SERIES B NOTES WITH
A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICES OF THE SERIES B
NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY OVER-THE-COUNTER
MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
STATEMENT OF AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (Exchange Act) and, in accordance
therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (SEC). Such
reports, proxy and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, DC 20549, and at certain
of its regional offices at 500 West Madison Street, Chicago, IL
60661-2511 and 7 World Trade Center, New York, NY 10048. Copies of such
material may also be obtained from the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, DC 20549 at prescribed rates.
Securities of the Company are listed on the New York and Philadelphia
Stock Exchanges, where reports, proxy material and other information
concerning the Company may be inspected.
----------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed (File No. 1-1401) with the SEC
pursuant to Section 13 of the Exchange Act by the Company are
incorporated herein by reference:
1. the Company's Annual Report on Form 10-K for the year ended
December 31, 1994;
2. the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995; and
3. the Company's Current Report on Form 8-K dated February 2, 1995.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date
of filing of such documents. Any statement contained herein or in a
document all or a portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
THE COMPANY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL THE
DOCUMENTS DESCRIBED ABOVE UNDER "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," OTHER THAN EXHIBITS TO SUCH DOCUMENTS. SUCH REQUESTS SHOULD
BE DIRECTED TO PECO ENERGY COMPANY, FINANCIAL DIVISION, S21-1, P.O. BOX
8699, PHILADELPHIA, PA 19101, (215) 841-5741.
THE COMPANY
The Company was incorporated in Pennsylvania in 1929 and is an
operating utility which provides electric and gas service to the public in
southeastern Pennsylvania. The total area served by the Company and its
subsidiaries covers 2,475 square miles. Electric service is supplied in an
area of 2,340 square miles with a population of about 3,700,000, including
1,600,000 in the City of Philadelphia. Approximately 95% of the electric
service area and 63% of retail kilowatthour sales are in the suburbs around
Philadelphia and in northeastern Maryland, and 5% of the service area and
37% of such sales are in the City of Philadelphia. In 1994, approximately
60% of the Company's electric output was generated from nuclear sources.
The Company esti-
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mates for 1995 that 59% of its electric output will be generated
from nuclear sources. Natural gas service is supplied in a
1,475-square-mile area of southeastern Pennsylvania adjacent to
Philadelphia with a population of 1,900,000. The Company and its
subsidiaries hold franchises to the extent necessary to operate in the
areas served.
The principal executive offices of the Company are located at 2301
Market Street, Philadelphia, Pennsylvania. Its mailing address is P.O. Box
8699, Philadelphia, PA 19101, and its telephone number is (215) 841-4000.
USE OF PROCEEDS
The net proceeds from sales of the Series B Notes will be used for
the reduction of the outstanding amount of certain series of the
Company's previously issued long-term debt or preferred stock and/or
for general corporate purposes.
DESCRIPTION OF SERIES B NOTES AND NOTE INDENTURE
The Series B Notes will be issued under a Collateralized Note
Indenture dated as of October 1, 1989, as previously amended, and as
supplemented by a Second Supplemental Indenture dated as of May 1, 1995
(Note Indenture), between the Company and First Fidelity Bank, National
Association, as trustee (in such capacity, the Note Trustee). Copies of
the Note Indenture and the form of Second Supplemental Indenture are on
file with the SEC as exhibits to the Registration Statement covering the
Series B Notes or as exhibits to other documents. The statements under
this caption are brief summaries of certain provisions of the Note
Indenture and are qualified in their entirety by reference to the
provisions of the Note Indenture. Each section reference under this
caption refers to the corresponding provision in the Note Indenture.
GENERAL
The Series B Notes may be sold from time to time in an aggregate
principal amount not to exceed $250,000,000. Each Series B Note will
bear interest at a fixed rate (not to exceed 10%) to maturity specified
in the applicable Pricing Supplement. The Series B Notes will mature on
any Business Day from 9 months to 30 years from the date of issue, but
not later than July 1, 2024, as selected by the purchaser and agreed to
by the Company. Series B Notes may be subject to optional redemption by
the Company prior to maturity at the price or prices set forth in the
applicable Pricing Supplement. The Series B Notes will not be subject
to any sinking fund or mandatory redemption.
The applicable Pricing Supplement relating to each sale of Series B
Notes will describe the following terms of such Series B Notes: (1) the
price (expressed as a percentage of the aggregate principal amount
thereof) at which the Series B Notes will be sold; (2) the date on which
the Series B Notes will mature; (3) the rate at which the Series B Notes
will bear interest and the date from which any such interest will
accrue; and (4) the date, if any, after which, and the price at which,
the Series B Notes may be redeemed, in whole or in part, at the option
of the Company.
The Series B Notes will be authenticated and delivered upon receipt
by the Note Trustee from the Company of a request for authentication, an
officers' certificate stating that no Event of Default under the Note
Indenture has occurred and is continuing and that conditions precedent
for issuance have been met, an opinion of counsel and the Series B First
Mortgage Bonds, as defined below.
The Company presently anticipates that the Series B Notes will be
issued in book-entry form (Book-Entry Notes) through The Depository
Trust Company (DTC) or other depositary selected by the Company
(Depositary), see "Book-Entry Notes" below. However, the Company
reserves the right to issue the Series B Notes in fully registered
certificated form. If the Series B Notes are issued in fully registered
certificated form or in book-entry form through a Depositary other than
DTC, the applicable Pricing Supplement will contain information with
respect thereto.
The authorized denominations of the Series B Notes will be $1,000
and any integral multiple thereof. The Series B Notes will be
exchangeable for other Series B Notes of like tenor and aggregate
principal amount,
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<PAGE>
without payment of any charge other than a sum sufficient to
reimburse the Company for any tax or other governmental charge incident
to the exchange. Transfers and exchanges of Series B Notes in
certificated form may be made at the principal corporate trust offices
of First Fidelity Bank, National Association, Philadelphia,
Pennsylvania. The Company will not be required to: (i) register the
transfer of or exchange such Series B Notes during a period beginning at
the opening of business 15 days before any selection of Series B Notes
to be redeemed and ending at the close of business on the day of mailing
of the relevant notice of redemption; or (ii) register the transfer of
or exchange any Series B Note, or portion thereof, called for
redemption, except the unredeemed portion of any Series B Note being
redeemed in part (Section 2.07 of Article II).
Additional Notes, unlimited as to principal amount, may be issued
from time to time in one or more series under the Note Indenture
(Section 2.03 of Article II). Such additional Notes may not be issued
unless the Note Trustee receives mortgage bonds of the Company equal to
the aggregate principal amount of the additional Notes to be issued and
meeting the debt service requirements of such additional Notes (Section
3.01 of Article III). All Notes from time to time outstanding under the
Note Indenture, including the Series B Notes, will be equally secured
thereunder and are hereinafter referred to as Notes.
In order to secure its obligations under the Note Indenture, the
Company is required to deliver to the Note Trustee the Company's First
and Refunding Mortgage Bonds corresponding to the Notes then being
issued. Concurrently with each issuance of Series B Notes, the Company
will deliver to the Note Trustee a like principal amount of its First
and Refunding Mortgage Bonds, Medium-Term Note Series B (Series B First
Mortgage Bonds). The Series B First Mortgage Bonds will contain
provisions for the payment of principal or redemption price and interest
corresponding to the principal or redemption price and interest payments
on the Series B Notes. For a description of the security for the Series
B Notes, see "Security: Pledge of First Mortgage Bonds" below and
"DESCRIPTION OF SERIES B FIRST MORTGAGE BONDS AND MORTGAGE."
PAYMENT OF PRINCIPAL AND INTEREST
Each Series B Note will bear interest from its date of issue at the
rate per annum stated on the face thereof until the principal amount
thereof is paid or made available for payment. Interest on each Series
B Note will be payable semiannually on each January 1 and July 1 (each,
an Interest Payment Date) and at maturity or upon earlier redemption;
provided, however, that the first payment of interest on any Series B
Note with a date of issue between a record date and an Interest Payment
Date will be made on the next succeeding Interest Payment Date. The
record date with respect to any Interest Payment Date will be the
fifteenth day of the calendar month preceding such Interest Payment
Date. Each payment of interest in respect of an Interest Payment Date
will include interest accrued to but excluding such Interest Payment
Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months (Section 2.02 of Article II).
Interest payable and punctually paid or duly provided for on any
Interest Payment Date will be paid to the person in whose name a Series
B Note is registered at the close of business on the record date for
such Interest Payment Date; provided, however, that interest payable at
maturity or upon earlier redemption will be payable to the person to
whom principal shall be payable (Sections 2.09 and 2.10 of Article II).
Any payment required to be made in respect of a Series B Note on a
date that is not a business day need not be made on such date, but may
be made on the next succeeding business day with the same force and
effect as if made on such date, and no additional interest shall accrue
as a result of such delayed payment.
Both principal and interest payable at maturity or on redemption of
the Series B Notes will be payable at the principal corporate trust
office of First Fidelity Bank, National Association, Philadelphia,
Pennsylvania. Interest payable on any Interest Payment Date will be
paid by check mailed to the registered holders of the Series B Notes at
their registered addresses (Section 2.09 of Article II). Holders of
greater than $10 million of Series B Notes will be entitled to interest
payments by wire transfer.
BOOK-ENTRY NOTES
Series B Notes may be issued in whole or in part in book-entry form
only through DTC or such other Depositary as is specified in the Pricing
Supplement. In order to facilitate the issuance of Book-Entry Notes, a
single certificated Series B Note (Global Note) registered in the name
of the Depositary or its nominee and
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<PAGE>
representing Book-Entry Notes having the same date of issue,
maturity date, redemption provisions and interest rate will be deposited
with or on behalf of the Depositary (Section 2.12 of Article II). Upon
the deposit of a Global Note with or on behalf of the Depositary, the
Depositary will credit the accounts of persons held with it with the
respective principal amounts of the Book-Entry Notes represented by such
Global Note. Such amounts shall be designated by the Agents with
respect to such Book-Entry Notes.
Ownership of beneficial interests in a Global Note will be limited
to persons who have accounts with the Depositary for such Global Note or
its nominee (participants) or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Note by
participants will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the Depositary or its
nominee (with respect to interests of participants) for such Global Note
and on the records of participants (with respect to interests of persons
other than participants).
Payment of principal of and any premium and interest on Book-Entry
Notes will be made to the Depositary or its nominee, as the case may be,
as the registered owner of the Global Note representing the Book-Entry
Notes. None of the Company, the Note Trustee, the Mortgage Trustee, or
any agents of the foregoing will have any responsibility or liability
for any aspect of the Depositary's records relating to or payments made
on account of beneficial ownership interests in a Global Note
representing any Book-Entry Notes or for maintaining, supervising or
reviewing any of the Depositary's records relating to such beneficial
ownership interests.
The Company has been advised by DTC that upon receipt of any payment
of principal of or any premium or interest on any Global Note, DTC will
immediately credit, on its book-entry registration and transfer system,
the accounts of participants with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such
Global Note as shown on the records of DTC. Payments by participants to
owners of beneficial interests in a Global Note held through such
participants will be governed by standing instructions and customary
practices, as is now the case with securities held for customer accounts
registered in "street name," and will be the sole responsibility of such
participants.
A Global Note representing Book-Entry Notes is exchangeable for
definitive Series B Notes in registered form, bearing interest at the
same rate, having the same date of issuance, maturity date and
redemption provisions, if any, and of differing denominations
aggregating a like amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for
such Global Note or if at any time the Depositary ceases to be a
clearing agency registered or in good standing under the Exchange Act or
(ii) the Company in its sole discretion determines that such Global
Notes shall be exchangeable for definitive Series B Notes in registered
form. Upon such exchange, the definitive Series B Notes will be
registered in the names of the owners of the beneficial interests in
such Global Note as provided by the Depositary's relevant participants
(as identified by the Depositary holding such Global Note).
Except as provided above, owners of beneficial interests in a Global
Note will not be entitled to receive physical delivery of Series B Notes
in definitive form and will not be considered the holders thereof for
any purpose under the Note Indenture. Accordingly, each person owning a
beneficial interest in a Global Note must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures
of the participant through which such person owns its interest, to
exercise any rights of a Series B Noteholder under the Note Indenture.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Note.
The Note Indenture provides that the Depositary may grant proxies
and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other
action which a Series B Noteholder is entitled to give or take under the
Note Indenture. The Company understands that under existing industry
practices, in the event that the Company requests any action of Series B
Noteholders or that an owner of a beneficial interest in such a Global
Note desires to give or take any action which a Series B Noteholder is
entitled to give or take under the Note Indenture, the Depositary would
authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such
action or would otherwise act upon the instructions of beneficial owners
owning through them.
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<PAGE>
DTC has advised the Company and the Agents as follows: DTC is a
limited-purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of its
participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the Agents), banks, trust companies, clearing corporations,
and certain other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
REDEMPTION, REPURCHASE AND REFUND
The Pricing Supplement relating to each sale of Series B Notes will
indicate whether such Series B Notes will be redeemable by the Company
prior to maturity and, if redeemable, the redemption periods and the
redemption prices applicable thereto and any limitations relating to
redemptions with proceeds from borrowed funds having a lower cost of
money than such Series B Notes. The Series B Notes will not be subject
to any sinking fund or mandatory redemption. The Company may redeem any
of the Series B Notes which are redeemable, either in whole or from time
to time in part, upon not less than 30 nor more than 45 days' notice by
first class mail to the registered holders of the Series B Notes to be
redeemed at their registered addresses (Section 4.05 of Article IV).
The Note Indenture does not limit the Company's right at any time to
purchase Series B Notes at any price in the open market or otherwise.
The Series B Notes so purchased by the Company will be surrendered to
the Note Trustee for cancellation.
SECURITY: PLEDGE OF MORTGAGE BONDS
Concurrently with each issuance of Series B Notes, the Company will
deliver to the Note Trustee a like principal amount of its Series B
First Mortgage Bonds. The Series B First Mortgage Bonds will be issued
under the Company's First and Refunding Mortgage dated May 1, 1923, as
amended and supplemented, including the Ninety-sixth Supplemental
Indenture dated as of May 1, 1995 relating to the Series B First
Mortgage Bonds (herein sometimes referred to as the Mortgage). First
Fidelity Bank, National Association, is Trustee under the Mortgage (in
such capacity, the Mortgage Trustee). The Series B First Mortgage Bonds
will bear interest at times and in amounts sufficient to provide for the
payment of interest on the Series B Notes and will be redeemed at times
and in amounts that correspond to the required payments of principal of
the Series B Notes. The Company will deposit in trust with the Note
Trustee amounts sufficient to provide for the payment of any premium on
any optional redemption of the Series B Notes by the Company. Payments
on the Series B Notes will satisfy payment obligations on the Series B
First Mortgage Bonds relating thereto (Section 6.04 of Article VI). The
Series B First Mortgage Bonds will be secured by a first mortgage lien
on certain property owned by the Company and will rank on a parity with
all other mortgage bonds of the Company. At May 1, 1995, the Company
had outstanding $4,161,842,500 aggregate principal amount of mortgage
bonds. See "DESCRIPTION OF SERIES B FIRST MORTGAGE BONDS AND MORTGAGE."
The Company covenants and agrees under the Note Indenture that upon
the required payment of principal becoming due and payable with respect
to any Series B Notes, it will redeem Series B First Mortgage Bonds in
an aggregate principal amount of such Series B Notes becoming due and
payable (Section 5.04 of Article V).
Until satisfied in accordance with their terms or released pursuant
to the Note Indenture, the Note Trustee will hold all mortgage bonds
delivered to it in trust for the holders of the Notes. Subject to
certain minor exceptions, the Note Trustee shall not sell, assign or
transfer such mortgage bonds, and the Note Trustee shall at all times
maintain physical possession of each of such mortgage bonds until paid
or otherwise satisfied and discharged in accordance with the terms of
the Note Indenture (Section 5.01 of Article V).
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<PAGE>
SECURITY: VOTING OF MORTGAGE BONDS
The Note Trustee, as the holder of mortgage bonds, may attend
meetings of the holders of the mortgage bonds outstanding under the
Mortgage and either at such meeting or otherwise vote the mortgage bonds
held by it in connection with any proposed amendment, change,
modification, waiver or consent (hereinafter collectively referred to as
an "amendment") to or in respect of the Mortgage or the mortgage bonds
held by it. The Note Trustee may agree to any such amendment, without
the consent of the Noteholders, where such amendment does not adversely
affect the Noteholders. In the case of proposed amendments which would
adversely affect the Noteholders, the Note Trustee shall not consent
without notice to the Noteholders and approval by the Noteholders as
follows:
(a) If the proposed amendment affects no mortgage bonds
outstanding under the Mortgage other than the mortgage bonds held by
the Note Trustee under the Note Indenture, the Note Trustee may
consent thereto only with the approval of the holders of at least
66-2/3% in principal amount of the outstanding Notes which would be
affected by the proposed action.
(b) If the proposed amendment affects mortgage bonds
outstanding under the Mortgage other than or in addition to the
mortgage bonds held by the Note Trustee under the Note Indenture,
the Note Trustee shall establish a procedure for the Noteholders to
direct how they wish the Note Trustee to vote on the proposed
action. If the holders of at least 33-1/3% in principal amount of
the outstanding Notes respond in accordance with such procedure, the
Note Trustee shall vote all of such mortgage bonds proportionately
in accordance with the directions received from the responding
Noteholders; provided that if the holders of at least 66-2/3% in
principal amount of the outstanding Notes respond with the same
direction, the Note Trustee shall vote all of such mortgage bonds in
accordance with such direction. If the holders of less than 33-1/3%
in principal amount of the outstanding Notes respond in accordance
with such procedure, the Note Trustee shall vote an equivalent
portion (in principal amount) of the mortgage bonds held by the Note
Trustee under the Note Indenture in accordance with the directions
so received and shall not vote the remaining such mortgage bonds.
Notwithstanding the foregoing, the Note Trustee shall not, without
the unanimous consent of the outstanding Noteholders, consent to any
such amendment which would (i) decrease the amounts payable on the
mortgage bonds held by the Note Trustee under the Note Indenture, (ii)
change the principal or interest payment dates on or the redemption
provisions of such mortgage bonds, or (iii) require unanimous consent of
the holders of the mortgage bonds outstanding under the Mortgage
(Section 5.06 of Article V).
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default
under the Note Indenture: (a) failure to pay any interest on any Note
when due, continued for 60 days; (b) failure to pay principal of (or
premium, if any, on) any Note when due; or (c) if outstanding mortgage
bonds shall have been declared due and payable prior to their stated
maturities (Section 7.01 of Article VII). See "DESCRIPTION OF SERIES B
FIRST MORTGAGE BONDS AND MORTGAGE -- Rights of Bondholders Upon Default."
If an Event of Default other than an Event of Default described
under (c) above occurs and is continuing, the Note Trustee or the
holders of 25% in principal amount of all Notes then outstanding may
declare the principal of all Notes to be immediately due and payable.
If an Event of Default described under (c) above occurs, the principal
of all Notes then outstanding together with interest accrued thereon
shall become due and payable immediately; provided, however, that a
waiver of default and rescission of the declaration of acceleration of
the mortgage bonds pursuant to the provisions of the Mortgage shall also
constitute a waiver of the Event of Default described under (c) above
and its consequences (Section 7.02 of Article VII).
Upon the issuance of additional Notes, the Company is required to
file with the Note Trustee documents and reports with respect to absence
of default.
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MODIFICATION OF NOTE INDENTURE
The Note Indenture may be amended or supplemented from time to time
for various purposes, including the issuance of additional series of
Notes, to provide for the acceptance of a successor trustee or
co-trustee and to modify, eliminate or add provisions to the extent
necessary or helpful to qualify the Note Indenture under the Trust
Indenture Act of 1939 without the consent of Noteholders (Section 11.01
of Article XI). With the consent of the holders of not less than a
majority in principal amount of the outstanding Notes affected, the
Company and the Note Trustee are empowered to change the Note Indenture
in any way; provided, however, that no such supplemental indenture
shall, without the consent of the holder of each outstanding Note
affected thereby, (a) reduce the amount or extend the due dates of or
the principal of or interest on the Notes, (b) reduce the percentage of
Noteholders required to effect changes in the Note Indenture, (c) change
any obligation of the Company to maintain an office or agency for the
payment of the Notes or (d) modify or waive certain provisions of the
Note Indenture, except to increase the percentage of Noteholders
necessary for such action (Section 11.02 of Article XI).
SATISFACTION AND DISCHARGE OF NOTE INDENTURE
The Note Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes
expressly provided for), and the Note Trustee shall execute instruments
acknowledging satisfaction and discharge of the Note Indenture, and
shall deliver to the Company all mortgage bonds then held by the Note
Trustee upon satisfaction of the following conditions: (1) when either
(A) all Notes authenticated and delivered have been delivered to the
Note Registrar for cancellation; or (B) all such Notes not delivered to
the Note Registrar for cancellation (i) have become due and payable, or
(ii) will become due and payable at their stated maturity within one
year, or (iii) are to be called for redemption within one year under
arrangements satisfactory to the Note Trustee, and the Company, in the
case of (i), (ii) or (iii) above, has deposited or caused to be
deposited with the Note Trustee in trust an amount sufficient to pay and
discharge the entire indebtedness on such Notes not delivered to the
Note Registrar for cancellation; (2) when the Company has paid or caused
to be paid all other sums payable under the Note Indenture; and (3) when
the Company has delivered to the Note Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent
relating to the satisfaction and discharge of the Note Indenture have
been complied with (Section 12.01 of Article XII).
NOTE TRUSTEE
First Fidelity Bank, National Association, is the Note Trustee under
the Note Indenture. First Fidelity Bank, National Association, also
serves as Mortgage Trustee under the Mortgage. See "DESCRIPTION OF
SERIES B FIRST MORTGAGE BONDS AND MORTGAGE -- Mortgage Trustee."
DESCRIPTION OF SERIES B FIRST MORTGAGE BONDS AND MORTGAGE
The Series B First Mortgage Bonds will be issued under the Company's
Mortgage dated May 1, 1923, as amended and supplemented, including the
Ninety-sixth Supplemental Indenture dated as of May 1, 1995 relating to
the Series B First Mortgage Bonds. The Series B First Mortgage Bonds
will be delivered to the Note Trustee on each date that Series B Notes
are issued in an amount equal to such Series B Notes. Copies of the
First and Refunding Mortgage and the supplemental indentures thereto
that amend the Mortgage or that relate to mortgage bonds which are
currently outstanding, including the Ninety-sixth Supplemental Indenture
dated as of May 1, 1995, are on file with the SEC as exhibits to the
Registration Statement covering the Series B Notes or as exhibits to
other documents.
The following description of the Series B First Mortgage Bonds and
brief summaries of certain Mortgage provisions are qualified in their
entirety by the provisions of the Mortgage. Each section reference
under this caption refers to the corresponding provision in the
Mortgage.
The Series B First Mortgage Bonds will have a stated interest rate
of 10% per annum, with interest payable on the Interest Payment Dates
for the Series B Notes; will mature on July 1, 2025; and will be
redeemed by the Company in amounts and at times corresponding to the
maturities or earlier redemption of the Series B Notes. The Company
will be entitled to a credit against the Series B First Mortgage Bonds
to the extent it
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makes payments directly on the Series B Notes and to the extent that
interest due on the Series B First Mortgage Bonds exceeds interest due
on the Series B Notes. At the time any Series B Notes cease to be
outstanding under the Note Indenture, the Note Trustee will surrender to
the Mortgage Trustee an equal aggregate principal amount of Series B
First Mortgage Bonds.
SECURITY
The Series B First Mortgage Bonds will be secured equally with all
other mortgage bonds outstanding or hereafter issued under the Mortgage
by the lien of the Mortgage which, subject to minor exceptions and
certain excepted encumbrances as defined in the Mortgage and to the
Mortgage Trustee's prior lien for compensation and expenses, constitutes
a first lien on all the Company's properties (including its undivided
fractional interests in certain properties), consisting principally of
electric generating stations, electric transmission and distribution
lines and substations, gas production plants, gas distribution
facilities and general office and service buildings, other than property
which has been released from the lien of the Mortgage in accordance with
the terms thereof.
Under the Atomic Energy Act, neither the Mortgage Trustee nor any
other transferee of the Company's property may operate a nuclear
generating station without authorization from the NRC.
The Company has pledged with the Mortgage Trustee, as additional
security for the Series B First Mortgage Bonds and all other mortgage
bonds now outstanding or hereafter issued under the Mortgage, all of the
common stock of PECO Energy Power Company (a subsidiary of the Company).
The Company reserves broad rights with respect thereto and also the
right to sell or dispose of said common stock so long as the Company
shall not be in default under the terms of the Mortgage.
No securities may be issued by the Company which will rank ahead of
the mortgage bonds as to security. The Company may acquire property
subject to prior liens, but, if such property is made the basis for the
issuance of additional bonds under the Mortgage, all additional mortgage
bonds issued under the prior lien after acquisition of the property by
the Company must be pledged under the Mortgage (Sections 5, 6 and 7 of
Article V).
AUTHENTICATION AND DELIVERY OF ADDITIONAL BONDS
The Mortgage permits the issuance from time to time of additional
mortgage bonds thereunder without limit as to aggregate amount, upon the
terms and conditions provided in Article II thereof, which are
summarized briefly below:
Such additional mortgage bonds may be in principal amount equal to:
(1) the principal amount of underlying mortgage bonds secured
by prior lien upon property acquired by the Company after March 1,
1937 and deposited with the Mortgage Trustee under the Mortgage
(paragraph (a) of Section 3 of Article II);
(2) the principal amount of any such underlying mortgage bonds,
redeemed or retired, or for the payment, redemption or retirement of
which funds have been deposited in trust (paragraph (b) of Section 3
of Article II);
(3) the principal amount of mortgage bonds authenticated under
the Mortgage on or after March 1, 1937 which have been delivered to
the Mortgage Trustee (paragraph (c) of Section 3 of Article II);
(4) the principal amount of mortgage bonds issued under the
Mortgage on or after March 1, 1937, which are being refunded or
redeemed, if funds for said refunding or redemption have been
deposited with the Mortgage Trustee (paragraph (d) of Section 3 of
Article II);
(5) an amount not exceeding 60% of the actual cost or the fair
value, whichever is less, of the net amount of permanent additions
to the property subject to the lien of the Mortgage, made or
acquired after November 30, 1941, and of additional plants or
property acquired by the Company after November 30, 1941, and to be
used in connection with its electric or gas business as part of one
connected system and located in Pennsylvania or within 150 miles of
Philadelphia (paragraph (e) of Section 3 of Article II; Sections 15
and 16 of Article II); and
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(6) the amount of cash deposited with the Mortgage Trustee,
which cash shall not at any time exceed $3,000,000 or 10% of the
aggregate principal amount of bonds then outstanding under the
Mortgage, whichever is greater, and which cash may subsequently be
withdrawn to the extent of 60% of capital expenditures, as described
in Item 5 above (paragraph (f) of Section 3 of Article II).
No additional bonds may be issued under the Mortgage as outlined in
Items (5) and (6) and, in certain cases, Item (3) hereinabove, unless
the net earnings of the Company (as defined in Section 4 of Article II),
after deductions for amounts set aside for renewal and replacement or
depreciation reserves and before provision for income taxes, for 12
consecutive calendar months within the 15 calendar months immediately
preceding the application for such mortgage bonds shall have been equal
to at least twice the annual interest charges on all bonds outstanding
under the Mortgage (including those then applied for) and any other
mortgage bonds secured by a lien on property of the Company. For
purposes of this test, the Company has not included in earnings
Allowance for Funds Used During Construction which is included in net
income in the Company's consolidated financial statements in accordance
with the prescribed system of accounts. The coverages under the
earnings test of the Mortgage and the ratios of earnings to fixed
charges are or will be included under "Part I, Item 1. Business -- Capital
Requirements and Financing Activities" of the Company's Annual Report to
the SEC on Form 10-K and under "Part I. Financial Information, Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations" of the Company's Quarterly Reports to the SEC on Form
10-Q described above under "Incorporation of Certain Documents By
Reference." At December 31, 1994, the Company had at least $1.165 billion
of available property additions (the most restrictive issuance test of
the Mortgage at December 31, 1994) against which $699 million of
mortgage bonds could have been issued. In addition, at December 31,
1994, the Company was entitled to issue approximately $3.5 billion of
mortgage bonds without regard to the earnings and property additions
tests against previously retired mortgage bonds. The Series B First
Mortgage Bonds will be issued against previously retired mortgage bonds
(see Item (3) above).
RELEASE AND SUBSTITUTION OF PROPERTY
The Company, while no event of default exists, may obtain the
release from the lien of the Mortgage of property subject thereto only
upon the deposit or pledge with the Mortgage Trustee of cash or purchase
money obligations, or in certain instances upon the substitution of
other property of equivalent value (Sections 1, 2 and 3 of Article VI).
The Mortgage also contains certain requirements relating to the
withdrawal or application of proceeds of released property and other
funds held by the Mortgage Trustee (Section 4 of Article VI).
CORPORATE EXISTENCE
The Company may consolidate or merge with or into or convey,
transfer or lease all of the mortgaged property as an entirety or
substantially as an entirety to any corporation lawfully entitled to
acquire or lease and operate the property, provided that such
consolidation, merger, conveyance, transfer or lease in no respect
impairs the lien of the Mortgage or any rights or powers of the Mortgage
Trustee or the holders of the outstanding mortgage bonds and provided
that such successor corporation executes and causes to be recorded an
indenture which assumes all of the terms, covenants and conditions of
the Mortgage and any supplement thereto (Sections 1 and 2 of Article
VII).
DEFAULTS
Events of default are defined in the Mortgage as (a) default for 60
days in the payment of interest on bonds or sinking fund deposits under
the Mortgage, (b) default in the payment of principal of bonds under the
Mortgage, (c) default in the performance of any other covenant in the
Mortgage continuing for a period of 60 days after written notice from
the Mortgage Trustee, and (d) certain events of bankruptcy or insolvency
of the Company (Section 2 of Article VIII).
Upon the authentication and delivery of additional mortgage bonds,
and the release of cash or property, the Company is required to file
with the Mortgage Trustee documents and reports with respect to the
absence of default.
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RIGHTS OF BONDHOLDERS UPON DEFAULT
The holders of a majority in principal amount of all the outstanding
mortgage bonds may, upon the occurrence of an event of default, require
the Mortgage Trustee to accelerate the maturity of the mortgage bonds
(Section 2 of Article VIII) and to enforce the lien of the Mortgage
(Section 5 of Article VIII). Any such acceleration of the maturity of
the mortgage bonds may, prior to any sale under the Mortgage, and upon
the remedying of all defaults, be annulled by the holders of at least a
majority of the outstanding mortgage bonds (Section 22 of Article VIII).
The Mortgage permits the Mortgage Trustee to require indemnity before
proceeding to enforce the lien of the Mortgage (Sections 5 and 7 of
Article VIII).
AMENDMENTS
The Company and the Trustee may amend the Mortgage without the
consent of the holders of mortgage bonds: (1) to subject additional
property to the lien to the Mortgage; (2) to define the covenants and
provisions permitted under or not inconsistent with the Mortgage; (3) to
add to the limitations of the authorized amount, date of maturity,
method, conditions and purposes of issue of any bonds issued under the
Mortgage; (4) to evidence the succession of another corporation to the
Company and the assumption by a successor corporation of the covenants
and obligations of the Company under the Mortgage; (5) to make such
provision in regard to matters or questions arising under the Mortgage
as may be necessary or desirable and not inconsistent with the Mortgage
(Section 1 of Article XI).
In addition, when the Company's First and Refunding Mortgage Bonds
of the 6-1/8% Series due 1997 no longer remain outstanding, the Company
and the Trustee may amend the Mortgage or modify the rights of the
holders of the mortgage bonds with the written consent of the holders of
at least 66-2/3% of the principal amount of the mortgage bonds then
outstanding; provided, that no such amendment shall, without the written
consent of the holder of each outstanding mortgage bond affected
thereby: (1) change the date of maturity of the principal of, or any
installment of interest on, any mortgage bond, or reduce the principal
amount of any mortgage bond or the interest thereon or any premium
payable on the redemption thereof, or change any place of payment where,
or currency in which, any mortgage bond or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the date of maturity thereof; (2) reduce the
percentage in principal amount of the outstanding mortgage bonds, the
consent of whose holders is required for any amendment, waiver of
compliance with the provisions of the Mortgage or certain defaults and
their consequences; (3) modify any of the amendment provisions or
Section 22 of Article VIII (relating to waiver of default), except to
increase any such percentage or to provide that certain other provisions
of the Mortgage cannot be modified or waived without the consent of the
holder of each mortgage bond affected thereby (Sections 2 and 3 of
Article XI).
MORTGAGE TRUSTEE
First Fidelity Bank, National Association, the Mortgage Trustee
under the Mortgage, is also registrar and disbursing agent for the
Company's mortgage bonds. First Fidelity Bank, National Association is
the Note Trustee and is also a depository of the Company, from time to
time makes loans to the Company and is the trustee under an indenture
securing pollution control revenue bonds issued for the benefit of the
Company which are secured by bonds now outstanding under the Mortgage.
EXPERTS
The consolidated financial statements and schedules of the Company
incorporated by reference in this Registration Statement have been
audited by Coopers & Lybrand, L.L.P., independent accountants, for the
periods indicated in their report thereon which is included in the
Annual Report on Form 10-K for the year ended December 31, 1994. The
consolidated financial statements and schedules audited by Coopers &
Lybrand have been incorporated herein by reference in reliance on their
report given on their authority as experts in accounting and auditing.
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LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Ballard
Spahr Andrews & Ingersoll, who will rely on Cahill, Wilinski & Cahill as
to certain matters of New Jersey law. Certain legal matters will be
passed upon for the Agents by Drinker Biddle & Reath.
The statements as to matters of law and legal conclusions under
"DESCRIPTION OF SERIES B FIRST MORTGAGE BONDS AND MORTGAGE" have been
reviewed by Ballard Spahr Andrews & Ingersoll as to matters of
Pennsylvania and Maryland law and Cahill, Wilinski & Cahill as to
matters of New Jersey law, and such statements are included herein upon
the authority of such counsel.
PLAN OF DISTRIBUTION
The Series B Notes will be offered on a continual basis or from time
to time by the Company through the Agents. The Company will pay an
Agent a commission of .125% to .750% of the principal amount of Series B
Notes sold through such Agent, depending upon the maturity of such
Series B Notes. The Company may sell Series B Notes to any of the
Agents acting as principal, at a discount to be agreed upon at the time
of sale, or a purchasing Agent may receive from the Company a commission
or discount equivalent to that set forth on the cover page hereof in the
case of any such principal transaction in which no other discount is
agreed to by the Company and such purchasing Agent. Such Series B Notes
may be resold at prevailing market prices, or at prices related thereto,
at the time of such resale, as determined by the Agents. The Company
reserves the right to sell Series B Notes directly on its own behalf.
No commission will be payable on any Series B Notes sold directly by the
Company.
In addition, the Agents may offer Series B Notes they have purchased
as principal to other dealers. The Agents may sell Series B Notes to
any dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any dealer may
include all or part of the discount to be received from the Company.
After the initial public offering of Series B Notes to be resold to
investors and other purchasers on a fixed public offering price basis,
the public offering price, concession and discount may be changed.
The Company will agree to indemnify each Agent against certain civil
liabilities, including liabilities under the Securities Act of 1933
(Act) or to contribute to payments such Agent may be required to make in
respect thereof. Each Agent may be deemed to be an "underwriter" within
the meaning of the Act with respect to Series B Notes sold through it.
The Company will agree to reimburse the Agents for certain expenses.
Series B Notes may also be sold at the price to the public set forth
in the Pricing Supplement relating thereto to dealers who may resell to
investors. Such dealers may be deemed to be "underwriters" within the
meaning of the Act.
The Company will have the right, in its sole discretion, to accept
offers to purchase Series B Notes and may reject any proposal to
purchase Series B Notes in whole or in part. Each Agent will have the
right, in its discretion reasonably exercised, to reject any offer to
purchase Series B Notes received by it in whole or in part.
The Series B Notes are a new issue of securities and will not have
an established trading market when issued. The Series B Notes will not
be listed on any securities exchange. Each Agent may make a market in
the Series B Notes, but such Agent is not obligated to do so and may
discontinue any market-making at any time without notice. There can be
no assurance as to the existence or liquidity of a secondary market for
any Series B Notes, or that all or any of the Series B Notes will be
sold.
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================================== ==================================
NO DEALER, SALESMAN OR ANY
OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO $250,000,000
MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN PECO
THIS PROSPECTUS, AND IF GIVEN OR ENERGY
MADE SUCH INFORMATION OR COMPANY
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY COLLATERALIZED
ANY PURCHASER OR UNDERWRITER. MEDIUM-TERM NOTES, SERIES B
THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ----------
ANY OF THE SECURITIES COVERED BY
THIS PROSPECTUS TO ANY PERSON IN PROSPECTUS
ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER ----------
OR SOLICITATION. NEITHER
DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS
HEREIN SET FORTH SINCE THE DATE
HEREOF.
----------------
TABLE OF CONTENTS
PAGE
----
Statement of Available
Information .............. 2 GOLDMAN, SACHS & CO.
Incorporation of Certain
Documents by Reference.... 2
The Company ................ 2 MERRILL LYNCH & CO.
Use of Proceeds............. 3
Description of Series B
Notes and Note Indenture.. 3 MORGAN STANLEY & CO.
Description of Series B INCORPORATED
First Mortgage Bonds
and Mortgage.............. 8
Experts..................... 11
Legal Matters............... 12
Plan of Distribution........ 12
================================== ==================================
