<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 7, 1996)
$150,000,000
[LOGO OF PUBLIC SERVICE COMPANY OF COLORADO APPEARS HERE]
SECURED MEDIUM-TERM NOTES, SERIES C
(BEING A SERIES OF FIRST COLLATERAL TRUST BONDS)
DUE FROM NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE
________________
Public Service Company of Colorado (the "Company") may offer from time to
time up to $150,000,000 aggregate principal amount of its Secured Medium-Term
Notes, Series C (being a series of First Collateral Trust Bonds) (the
"Notes"). Each Note will mature on a date from nine months to thirty years
from its date of issue, as specified in the applicable pricing supplement
hereto (each, a "Pricing Supplement"), and may be subject to redemption at the
option of the Company or repayment at the option of the Holder thereof, in
each case, in whole or in part, prior to its Stated Maturity, and may be
subject to redemption pursuant to sinking fund or other mandatory redemption
provisions, if specified in the applicable Pricing Supplement. The Notes will
be issued in minimum denominations of $100,000 and any greater amount that is
an integral multiple of $1,000.
Each Note will bear interest at a fixed rate. Interest on each Note will
accrue from its date of issue and, unless otherwise specified in the
applicable Pricing Supplement, will be payable semiannually in arrears on
February 1 and August 1 of each year and at Maturity. Notes may also be issued
that do not bear any interest currently or that bear interest at a below
market rate.
The variable terms of each Note will be established by the Company on the
date of issue of such Note and will be specified in the applicable Pricing
Supplement. Interest rates and other terms of the Notes are subject to change
by the Company, but no such change will affect any Note previously issued or
as to which an offer to purchase has been accepted by the Company.
Each Note will be issued in book-entry form (a "Book-Entry Note") or in
fully registered certificated form (a "Certificated Note"), as specified in
the applicable Pricing Supplement. Each Book-Entry Note will be represented by
one or more fully registered global securities (the "Global Securities")
deposited with or on behalf of The Depository Trust Company (or such other
depositary identified in the applicable Pricing Supplement) (the "Depositary")
and registered in the name of the Depositary or the Depositary's nominee.
Interests in the Global Securities will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary (with
respect to its participants) and the Depositary's participants (with respect
to beneficial owners). Except in limited circumstances, Book-Entry Notes will
not be exchangeable for Certificated Notes.
________________
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, THE
PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
===============================================================================================
<S> <C> <C> <C>
PRICE TO AGENT'S DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(1)(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------
Per Note......................... 100% .125%-.750% 99.875%-99.250%
- -----------------------------------------------------------------------------------------------
Total............................ $150,000,000 $187,500-$1,125,000 $149,812,500-$148,875,000
===============================================================================================
</TABLE>
(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Agent"), individually or in a syndicate, may purchase Notes, as
principal, from the Company for resale to investors and other purchasers
at varying prices relating to prevailing market prices at the time of
resale as determined by the Agent or, if so specified in the applicable
Pricing Supplement, for resale at a fixed offering price. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to the Agent
as principal will be purchased by the Agent at a price equal to 100% of
the principal amount thereof less a percentage of the principal amount
equal to the commission applicable to an agency sale (as described below)
of a Note of identical maturity. If requested by the Company and agreed to
by the Agent, the Agent may utilize its reasonable efforts on an agency
basis to solicit offers to purchase the Notes at 100% of the principal
amount thereof, unless otherwise specified in the applicable Pricing
Supplement. The Company will pay a commission to the Agent, ranging from
.125% to .750% of the principal amount of a Note, depending upon its
stated maturity, sold through the Agent. See "Plan of Distribution".
(2) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Plan of Distribution".
(3) Before deducting expenses payable by the Company estimated at $300,000.
________________
The Notes are being offered on a continuing basis directly by the Company or
by the Company to or through the Agent. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be listed on any securities
exchange. There is no assurance that the Notes offered hereby will be sold or,
if sold, that there will be a secondary market for the Notes or liquidity in
the secondary market if one develops. The Company reserves the right to cancel
or modify the offer made hereby without notice. The Company or the Agent, if
it solicits the offer on an agency basis, may reject any offer to purchase
Notes in whole or in part. See "Plan of Distribution".
________________
MERRILL LYNCH & CO.
________________
The date of this Prospectus Supplement is February 26, 1997.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY THE AGENT AS PRINCIPAL
ON A FIXED OFFERING PRICE BASIS, THE AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF NOTES AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_________________
RECENT DEVELOPMENTS
On February 24, 1997, the Company and American Electric Power ("AEP")
jointly announced that they have reached agreement with the board of directors
of Yorkshire Electricity Group plc ("Yorkshire Electricity"), a United Kingdom
("UK") regional electricity company, on the terms of a recommended cash tender
offer for all of the outstanding and to be issued ordinary shares of Yorkshire
Electricity (the "Proposed Acquisition").
The Company and AEP, through a joint venture named Yorkshire Holdings plc
("Yorkshire Holdings"), are offering the equivalent of US $15.02 (9.27 pounds)
per ordinary share, for a total purchase price of approximately US $2.4 billion
(1.5 billion pounds). The boards of directors of the Company and AEP have
approved the transaction. The board of directors of Yorkshire Electricity has
agreed to recommend the offer to Yorkshire Electricity's shareholders. The offer
will be made through Yorkshire Holdings, a wholly-owned subsidiary of Yorkshire
Power Group Ltd. ("Yorkshire Power"), a newly formed UK corporation owned
equally by the Company and AEP.
Consummation of the Proposed Acquisition is subject to customary conditions
in the UK, including regulatory clearance and acceptance of the offer by holders
of at least 90% of the outstanding shares of Yorkshire Electricity. Yorkshire
Holdings may waive the latter condition when it has recieived acceptances of
its offer and has otherwise acquired shares which in total represent more than
50% of the outstanding shares of Yorkshire Electricity. The Company cannot
predict at this time whether or not these conditions will be met or waived.
Yorkshire Electricity is one of two remaining UK independent regional
electricity companies ("RECs"). The RECs were created when the government-
owned electric supply industry was privatized in 1990. Of the original twelve
RECs, six have been acquired by companies involved in the US energy industry and
four have been acquired by companies in the UK.
According to Yorkshire Electricity's 1996 Annual Report and Accounts,
Yorkshire Electricity's principal activities are the distribution of electricity
to 2.1 million industrial, commercial, agricultural and domestic customers in
its authorized area, which covers 4,180 square miles of northeast England.
Yorkshire Electricity is also active in electricity supply and generation and
the supply of natural gas, including the ownership of gas assets. Other
activities include the development of telecommunications services and the
construction and operation of windfarms.
For the fiscal year ended March 31, 1996, Yorkshire Electricity reported a
consolidated profit on ordinary activities before taxation and exceptional items
of US $310.8 million (199.2 million pounds) on revenues of US $2.2 billion (1.4
billion pounds), had reported total assets at that date of US $2.2 billion (1.4
billion pounds), and reported net assets at that date of US $818.9 million
(521.1 million pounds).
The Company will make its investment through New Century International,
Inc., a wholly-owned subsidiary of the Company. If the Proposed Acquisition is
completed, the Company would have an indirect 50% ownership interest in
Yorkshire Electricity, which would be accounted for using the equity method of
accounting. For the fiscal year ended December 31, 1996, the Company reported
net income of US $190.3 million on revenues of US $2.17 billion.
The Proposed Acquisition will be financed by Yorkshire Power through a
combination of approximately 25% equity and 75% debt, including the assumption
of existing debt of Yorkshire Electricity. The funds for the Proposed
Acquisition will be obtained from the Company's and AEP's investments in
Yorkshire Power of approximately US $360 million (220 million pounds) each, with
the remainder to be obtained by Yorkshire Power through the issuance of non-
recourse debt. Yorkshire Power will, in turn, fund Yorkshire Holdings for the
purpose of the Proposed Acquisition. The Company intends initially to use debt
to fund its entire equity investment in Yorkshire Power, including the issuance
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of US $250 million of its secured medium-term notes with varying maturities and
drawings of US $110 million on its short-term lines of credit.
The Company has previously announced a proposed business combination (the
"Merger") with Southwestern Public Service Company ("SPS") through the
formation of New Century Energies, Inc. ("NCE"), a holding company which would
be the parent company of the Company and SPS. It is currently anticipated that
the Company's entire equity investment in Yorkshire Power will be refinanced
through the issuance of common equity at the NCE level within six to eighteen
months from the date of consummation of the Proposed Acquisition.
The shareholders of each of the Company and SPS have approved the Merger
and certain regulatory approvals have been obtained. While the timing of the
consummation of the Merger is primarily dependent upon the timing of the receipt
of the remaining necessary approvals (from the Federal Energy Regulatory
Commission and the Securities and Exchange Commission (the "SEC") under the
Public Utilities Holding Company Act of 1935 (the "1935 Act")), the Company
currently anticipates that the Merger will be completed in the second quarter of
1997.
The SEC, in an order issued on February 19, 1997 under Section 3(b) of the
1935 Act, exempted Yorkshire Electricity from all provisions of the 1935 Act
which would be applicable to it as a subsidiary of the Company. In connection
with its application for such order, the Company also requested and obtained a
no-action letter from the Division of Investment Management of the Office of
Public Utility Regulation of the SEC stating that, as long as the Merger is
completed by September 30, 1997, it will not recommend any enforcement action
with respect to the possible effect of the Proposed Acquisition on the Company's
existing Section 3(a)(2) exemption under the 1935 Act. In seeking the Section
3(b) exemption for Yorkshire Electricity, the Company informed the SEC that its
investment in Yorkshire Electricity would be less than 50% of the Company's and
SPS's combined retained earnings as of September 30, 1996, consistent with the
requirements of Rule 53 under the 1935 Act. The Company also informed the SEC
in its application for a Section 3(b) exemption that upon completion of the
Merger, NCE would hold the proposed investment in Yorkshire Power through a
separate subsidiary and not through the Company. At that time, Yorkshire
Electricity would be qualified as a foreign utility company under Section 33 of
the 1935 Act.
APPLICATION OF PROCEEDS
The net proceeds from the sale of the Notes will be used to finance a
portion of the Proposed Acquisition. (See "Recent Developments".) If the
Proposed Acquisition is not completed, the net proceeds from the sale of the
Notes will be used to refinance matured or maturing debt incurred to fund
defueling expenses of the Company's Fort St. Vrain Nuclear Generating Station,
to fund the Company's construction program and for other general corporate
purposes, including the repayment of short term debt.
SUPPLEMENTAL DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Notes set forth under "Description of the
New Bonds" in the accompanying Prospectus, to which reference is hereby made.
Certain capitalized terms used herein are defined under "Description of the New
Bonds" in the accompanying Prospectus.
GENERAL
The Notes will be issued from time to time in an aggregate principal
amount not to exceed $150,000,000, as a series of First Collateral Trust Bonds
under the 1993 Mortgage. The Notes will be issued on the basis of Class A
Bonds, which are to be issued under the 1939 Mortgage. See "Description of the
New Bonds" in the accompanying Prospectus.
The Notes will be issued in fully registered form only, without coupons.
Each Note will be issued as a Book-Entry Note represented by one or more fully
registered Global Securities or as a Certificated Note. Except as set forth
herein under "Book-Entry Notes" or in any Pricing Supplement relating to
specific Notes, the Notes will not be issuable
S-3
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as Certificated Notes. The authorized denominations of the Notes will be
$100,000 and any greater amount that is an integral multiple of $1,000.
Each Note will mature on a date from nine months to thirty years from its
date of issue. Each Note may also be subject to redemption prior to Stated
Maturity at the option of the Company or at the option of the Holder, and may be
subject to redemption pursuant to sinking fund or other mandatory redemption
provisions, all as may be set forth in the applicable Pricing Supplement.
The Pricing Supplement relating to a Note will describe the following
terms: (i) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Note will be issued; (ii) the date on which such
Note will be issued (the "Original Issue Date"); (iii) the date on which such
Note will mature (the "Stated Maturity"); (iv) the rate per annum at which such
Note will bear interest; (v) whether such Note may be redeemed at the option of
the Company prior to Stated Maturity as described under "Redemption at the
Option of the Company" below and, if so, the provisions relating to such
redemption; (vi) the obligation of the Company to redeem such Note pursuant to
any sinking fund or other mandatory redemption provisions applicable to such
Note; (vii) any provisions for the repayment of such Note at the option of the
Holder as described under "Repayment at the Option of the Holder" below; and
(vii) any other special terms of such Notes.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates and other terms of Notes are subject to change by the Company
from time to time, but no such change will affect any Note previously issued or
as to which an offer to purchase has been accepted by the Company.
PAYMENT OF PRINCIPAL AND INTEREST
Each Note will bear interest, computed on the basis of a 360-day year
consisting of twelve 30-day months, from its Original Issue Date at the rate per
annum stated on the face thereof and in the applicable Pricing Supplement until
the principal amount thereof is paid or duly made available for payment.
Interest on each Note will be payable semiannually in arrears on February 1 and
August 1 in each year, or such other dates as may be specified in the applicable
Pricing Supplement (each such date being hereinafter called an "Interest Payment
Date") and at maturity (whether at Stated Maturity, by declaration of
acceleration, upon call for redemption or otherwise, hereinafter "Maturity").
Unless otherwise specified in the applicable Pricing Supplement, interest
payments will be made in an amount equal to the interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly made available for payment (or from and including
the Original Issue Date, if no interest has been paid or duly made available for
payment) to but excluding the applicable Interest Payment Date or the Stated
Maturity, as the case may be.
Payments of interest on the Notes (other than interest payable at Maturity)
will be made, except as provided below, by check mailed to the Holders of such
Notes as of the Record Date (as hereinafter defined) next preceding each
Interest Payment Date, except that (a) in the case of Global Securities
representing Book-Entry Notes, such payment will be made in accordance with
arrangements then in effect among the Company, the 1993 Mortgage Trustee and the
Depository, (b) if the Original Issue Date of a Note is after a Record Date and
before the corresponding Interest Payment Date, the first payment of interest on
such Note will be made on the next succeeding Interest Payment Date to the
Holder of such Note on the Record Date with respect to such succeeding Interest
Payment Date and (c) if the Company defaults in the payment of the interest due
on any Note on any Interest Payment Date, such defaulted interest will be
payable to the Holder of such Note as of a Special Record Date fixed by the 1993
Mortgage Trustee, which shall be not more than 30 days and not less than 10 days
prior to the date of payment of such defaulted interest, or payable to the
Holder in such other manner as permitted by the 1993 Mortgage. See "Book-Entry
Notes". Unless otherwise specified in the applicable Pricing Supplement, the
"Record Date" with respect to each Interest Payment Date will be the January 15
or July 15, as the case may be, next preceding such Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, the
principal of, premium, if any, and interest on any Note payable at Maturity will
be paid upon surrender thereof at the office of the 1993 Mortgage Trustee.
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<PAGE>
If the date of making any payment with respect to a Note is not a Business
Day, such payment may be made on the next succeeding Business Day, and if
payment is made or duly provided for on such succeeding Business Day no interest
shall accrue for the period from and after such Interest Payment Date.
"Business Day" means any day other than a Saturday or Sunday, which is not a day
on which banking institutions or trust companies in The City of New York are
generally authorized or required by law, regulation or executive order to remain
closed.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to Stated Maturity only if an Initial Redemption
Date is specified in the applicable Pricing Supplement. If so specified, the
Notes will be subject to redemption at the option of the Company on any date on
and after the applicable Initial Redemption Date in whole or from time to time
in part in increments of $1,000 (provided that any remaining principal amount
thereof shall be at least $100,000), at the applicable Redemption Price (as
hereinafter defined), together with unpaid interest accrued thereon to the date
of redemption, on written notice given to the Holders thereof not more than 60
nor less than 30 calendar days prior to the date of redemption and in accordance
with the provisions of the 1993 Mortgage. "Redemption Price", with respect to a
Note, means an amount equal to the Initial Redemption Percentage specified in
the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
to be redeemed. The Initial Redemption Percentage, if any, applicable to a Note
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the applicable Annual Redemption Percentage Reduction, if any, until
the Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity thereof only if one or more Optional
Repayment Dates are specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to repayment at the option of the Holders
thereof on any Optional Repayment Date in whole or from time to time in part in
increments of $1,000 (provided that any remaining principal amount thereof shall
be at least $100,000), at a repayment price equal to 100% of the unpaid
principal amount to be repaid, together with unpaid interest accrued thereon to
the date of repayment. For any Note to be repaid, such Note must be received,
together with the form thereon entitled "Option to Elect Repayment" duly
completed, at the office of the 1993 Mortgage Trustee, not more than 60 nor less
than 30 calendar days prior to the date of repayment. Exercise of such
repayment option by the Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any portion
of the Book-Entry Notes represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct the Depositary to exercise the repayment option on their
behalf by delivering the related Global Security and duly completed election
form to the 1993 Mortgage Trustee as aforesaid. In order to ensure that such
Global Security and election form are received by the 1993 Mortgage Trustee on a
particular day, the applicable Beneficial Owner must so instruct the Participant
through which it owns its interest before such Participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
Beneficial Owners should consult the Participants through which they own their
interest for the respective deadlines for such Participants. All instructions
given to Participants from Beneficial Owners of Global Securities relating to
the option to elect repayment shall be irrevocable. In addition, at the time
such instructions are given, each such Beneficial Owner shall cause the
Participant through which it owns its interest to transfer such Beneficial
Owner's interest in the Global Security or Securities representing the related
Book-Entry Notes, on the Depositary's records, to the 1993 Mortgage Trustee.
See "Book-Entry Notes".
If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules promulgated thereunder, and any other securities laws or
regulations in connection with any such repayment.
S-5
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The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
BOOK-ENTRY NOTES
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes of like tenor and terms up to
$200,000,000 aggregate principal amount will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the 1993 Mortgage. Except as otherwise provided below, the Beneficial Owners of
the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the 1993 Mortgage, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the 1993 Mortgage. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if (i) the Depositary
notifies the Company and the 1993 Mortgage Trustee that it is unwilling or
unable to continue as Depositary for the Global Securities or the Company
becomes aware that the Depositary has ceased to be a clearing agency registered
under the Exchange Act and, in any such case, the Company shall not have
appointed a successor to the Depositary within 90 days thereafter, (ii) the
Company, in its sole discretion, determines that the Global Securities shall be
exchangeable for Certificated Notes or (iii) an Event of Default shall have
occurred and be continuing with respect to the Notes under the 1993 Mortgage,
the 1993 Mortgage Trustee shall have given notice thereof to the Holders, and
there shall have been delivered to the Company and the 1993 Mortgage Trustee an
Opinion of Counsel to the effect that the interests of the beneficial owners of
the Global Securities will be materially impaired unless such owners become
Holders of Certificated Notes. Upon any such exchange, the Certificated Notes
shall be registered in the names of the Beneficial Owners of the Global Security
or Securities representing Book-Entry Notes, which names shall be provided by
the Depositary's relevant Participants (as identified by the Depositary) to the
1993 Mortgage Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Security will be issued for each
issue of Book-Entry Notes, each in the aggregate principal amount of such
issue, and will be deposited with the Depositary.
The Depositary 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. The Depositary
S-6
<PAGE>
holds securities that its participants ("Participants") deposit with the
Depositary. The Depositary 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 of the Depositary ("Direct
Participants") include securities brokers and dealers (including the
Agent), banks, trust companies, clearing corporations and certain other
organizations. The Depositary 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 Depositary's 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 the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be
made by or through Direct Participants, which will receive a credit for
such Book-Entry Notes on the Depositary's records. The ownership interest
of each actual purchaser of each Book-Entry Note represented by a Global
Security ("Beneficial Owner") is in turn to be recorded on the records of
Direct Participants and Indirect Participants. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Book-Entry Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Securities representing the Book-Entry Notes. Under
its usual procedures, the Depositary mails an Omnibus Proxy to the Company
as soon as possible after the applicable record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the
applicable record date (identified in a listing attached to the Omnibus
Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made in
immediately available funds to the Depositary. The Depositary's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive
payment on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is 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 the Depositary, the 1993 Mortgage Trustee or the
Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium, if any, and/or
interest, if any, to the Depositary is the responsibility of the Company
and the 1993 Mortgage Trustee, disbursement of such payments to Direct
S-7
<PAGE>
Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct Participants and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes of like tenor and terms are being
redeemed, the Depositary's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by the Company, through its Participant, to the
1993 Mortgage Trustee, and shall effect delivery of such Book-Entry Notes
by causing the Direct Participant to transfer the Participant's interest in
the Global Security or Securities representing such Book-Entry Notes, on
the Depositary's records, to the 1993 Mortgage Trustee. The requirement for
physical delivery of Book-Entry Notes in connection with a demand for
repayment will be deemed satisfied when the ownership rights in the Global
Security or Securities representing such Book-Entry Notes are transferred
by Direct Participants on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the 1993 Mortgage Trustee. Under such
circumstances, in the event that a successor securities depository is not
obtained, Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In that
event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
NONE OF THE COMPANY, THE 1993 MORTGAGE TRUSTEE OR ANY AGENT FOR PAYMENT ON
OR REGISTRATION OF TRANSFER OR EXCHANGE OF THE NOTES 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 NOTE OR FOR
MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL
INTERESTS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale directly by the
Company or by the Company to or through Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Agent"). The Agent, individually or
in a syndicate, may purchase Notes, as principal, from the Company from time to
time for resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the Agent or, if
so specified in the applicable Pricing Supplement, for resale at a fixed
offering price. If agreed to by the Company and the Agent, the Agent may also
utilize its reasonable efforts on an agency basis to solicit offers to purchase
the Notes at 100% of the principal amount thereof, unless otherwise specified in
the applicable Pricing Supplement. The Company will pay a commission to the
Agent, ranging from .125% to .750% of the principal amount of each Note,
depending upon its stated maturity, sold through the Agent as an agent of the
Company.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to the Agent as principal will be purchased by the Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. The Agent may sell Notes it has purchased from the Company
as principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with such purchase. The Agent may allow, and
such dealers may reallow, a discount to certain other dealers. After the initial
offering of Notes, the offering price (in the case of Notes to be resold on a
fixed offering price basis), the concession and the reallowance may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through the Agent). The Agent will have
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the right, in its discretion reasonably exercised, to reject in whole or in part
any offer to purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in The City of New York on the date of settlement.
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agent may from time to
time purchase and sell Notes in the secondary market, but the Agent is not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agent may make a market in the Notes, but
the Agent is not obligated to do so and may discontinue any market-making
activity at any time.
The Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agent against certain liabilities (including liabilities
under the Securities Act). The Company has agreed to reimburse the Agent for
certain other expenses.
In the ordinary course of its business, the Agent and its affiliates have
engaged and may in the future engage in investment and commercial banking
transactions with the Company and certain of its affiliates.
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<PAGE>
PROSPECTUS
$400,000,000
[LOGO OF PUBLIC SERVICE COMPANY OF COLORADO APPEARS HERE]
FIRST COLLATERAL TRUST BONDS
________________
Public Service Company of Colorado (the "Company") intends to offer from
time to time up to $400,000,000 aggregate principal amount of its First
Collateral Trust Bonds in one or more series of medium-term notes (the "New
Bonds"), on terms to be determined at the time or times of sale.
For each offering of the New Bonds for which this Prospectus is being
delivered, there will be an accompanying Prospectus Supplement (each a
"Prospectus Supplement") that will set forth where applicable, with respect to
the New Bonds, the series designation, the aggregate principal amount of the
series, the maturity date or dates, the interest rate or rates and times of
payment of interest, the provisions for redemption, if any, and other
provisions, together with the initial public offering price and the terms of
offering of such New Bonds.
The New Bonds may be sold by the Company through underwriters or dealers,
directly by the Company or through agents for offering pursuant to the terms
fixed at the time of sale. See "Plan of Distribution" 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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 7, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC") and the New York, Chicago and
Pacific Stock Exchanges. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and
at the following regional offices of the SEC: New York Regional Office, 13th
Floor, Seven World Trade Center, New York, New York, and the Chicago Regional
Office, 14th Floor, 500 West Madison Street, Chicago, Illinois. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 or from the SEC's Web site at "http://www.gov".
Certain of the Company's securities are listed on the New York, Chicago and
Pacific Stock Exchanges and such reports, proxy statements and other information
can also be inspected and copied at the offices of the New York Stock Exchange,
located on the 7th Floor, 20 Broad Street, New York, New York; the Chicago Stock
Exchange, located on the 12th Floor, 440 South LaSalle Street, Chicago,
Illinois; and the Pacific Stock Exchange, located at 301 Pine Street, San
Francisco, California.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates herein by reference the following documents
which have been filed by the Company with the SEC pursuant to the Exchange Act:
1. Annual Report on Form 10-K for the year ended December 31, 1995.
2. Quarterly Report on Form 10-Q for the quarter ending March 31, 1996.
3. Quarterly Report on Form 10-Q for the quarter ending June 30, 1996.
4. Current Reports on Form 8-K dated January 18, 1996, January 31, 1996
and May 21, 1996.
All documents filed by the Company with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering made hereby shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective dates of filing
thereof. The documents incorporated or deemed to be incorporated herein by
reference are sometimes hereinafter called the "Incorporated Documents". Any
statement contained in an Incorporated Document shall be deemed to be modified
or superseded for all purposes to the extent that a statement contained herein
or in any Prospectus Supplement or in any subsequently filed Incorporated
Document 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.
2
<PAGE>
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE INCORPORATED DOCUMENTS, EXCLUDING THE EXHIBITS THERETO UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS.
REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO RICHARD C. KELLY, SENIOR VICE
PRESIDENT, FINANCE, TREASURER AND CHIEF FINANCIAL OFFICER, BY MAIL AT 1225 17TH
STREET, SUITE 900, DENVER, COLORADO 80202-5533, OR BY TELEPHONE AT (303) 571-
7511.
THE COMPANY
The Company, incorporated through merger of predecessors under the laws of
the State of Colorado in 1924, is an operating public utility engaged, together
with its subsidiaries, principally in the generation, purchase, transmission,
distribution and sale of electricity and in the purchase, transmission,
distribution, sale and transportation of natural gas, with the Company's
principal distribution center being the Denver metropolitan area. The Company's
executive offices are located at 1225 17th Street, Denver, Colorado 80202-5533,
where the telephone number is (303) 571-7511.
The Incorporated Documents contain information with respect to the proposed
mergers of two wholly-owned subsidiaries of New Century Energies, Inc. ("New
Century"), a newly formed holding company, into the Company and Southwestern
Public Service Company ("SPS"), respectively. As a result, New Century would
become the holding company for the Company and SPS, but the transaction would
not affect the outstanding debt of the Company or the New Bonds offered hereby.
The transaction would result in the common shareholders of the Company owning
approximately 62% of the common equity of New Century and the common
shareholders of SPS owning approximately 38% of the common equity of New
Century.
The transaction is subject to customary closing conditions, including,
without limitation, the receipt of all necessary governmental approvals and the
making of all necessary governmental filings. Furthermore, the merger agreement
may be terminated under certain circumstances, including, without limitation, by
mutual written consent of the Boards of Directors of the Company and SPS.
Following the transaction, New Century will maintain its corporate offices
in Denver, Colorado and significant operating offices in Amarillo, Texas. The
headquarters of the Company and SPS will remain in their current locations, and
each of the Company and SPS will continue their existing utility operations.
3
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RATIO OF CONSOLIDATED EARNINGS TO
CONSOLIDATED FIXED CHARGES
<TABLE>
<CAPTION>
Six Months
Twelve Months Ended Ended June 30,
December 31,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of consolidated earnings to 2.94 2.43 2.54 2.53 2.78 2.95
consolidated fixed charges
</TABLE>
APPLICATION OF PROCEEDS
Except as may be otherwise provided in the applicable Prospectus Supplement
or any supplement thereto, the net proceeds from the sale of the New Bonds will
be used to refinance matured or maturing debt incurred to fund defueling
expenses of the Company's Fort St. Vrain Nuclear Generating Station, to fund the
Company's construction program and for other general corporate purposes.
DESCRIPTION OF THE NEW BONDS
GENERAL: The New Bonds will be issued in one or more series as fully
registered bonds, without coupons, under an Indenture, dated as of October 1,
1993 (the "Original 1993 Mortgage"), between the Company and First Trust of New
York, National Association, as successor trustee (together with any further
successor thereto, the "1993 Mortgage Trustee"). The Original 1993 Mortgage, as
supplemented and to be supplemented by various supplemental indentures,
including one or more supplemental indentures relating to the New Bonds, is
hereinafter referred to as the "1993 Mortgage". The summaries under this heading
do not purport to be complete and are subject to, and qualified in their
entirety by, the detailed provisions of the 1993 Mortgage. Capitalized terms
used under this heading which are not otherwise defined in this Prospectus shall
have the meanings ascribed thereto in the 1993 Mortgage. Wherever particular
provisions of the 1993 Mortgage or terms defined therein are referred to, such
provisions or definitions are incorporated by reference as a part of the
statements made herein and such statements are qualified in their entirety by
such reference. References to article and section numbers herein, unless
otherwise indicated, are references to article and section numbers of the
Original 1993 Mortgage.
The 1993 Mortgage provides that, in addition to the New Bonds, other debt
securities may be issued thereunder, without limitation as to the aggregate
principal amount, on the basis of Class A Bonds (as hereinafter defined),
property additions, retired Mortgage Securities (as hereinafter defined) and
cash. (See "Issuance of Additional Mortgage Securities".) The New Bonds and all
other debt securities heretofore or hereafter issued under the 1993 Mortgage are
collectively referred to herein as the "Mortgage Securities" or the "Bonds".
4
<PAGE>
Reference is made to the Prospectus Supplement and any supplement thereto
for a description of the following terms of the series of New Bonds in respect
of which this Prospectus is being delivered: (i) the title of such New Bonds;
(ii) the aggregate principal amount of such New Bonds; (iii) the price
(expressed as a percentage of principal amount) at which such New Bonds will be
issued; (iv) the date or dates on which the principal of such New Bonds is
payable; (v) the rate or rates at which such New Bonds will bear interest, the
date or dates from which such interest will accrue, the dates on which such
interest will be payable ("Interest Payment Dates"), and the regular record
dates for the interest payable on such Interest Payment Dates; (vi) the option,
if any, of the Company to redeem such New Bonds and the period or periods within
which, or the date or dates on which, the prices at which and the terms and
conditions upon which, such New Bonds may be redeemed, in whole or in part, upon
the exercise of such option; (vii) the obligation, if any, of the Company to
redeem or purchase such New Bonds at the option of the registered holder or
pursuant to any sinking fund or analogous provisions and the period or periods
within which, or the date or dates on which, the price or prices at which and
the terms and conditions upon which such New Bonds will be redeemed or
purchased, in whole or in part, pursuant to such obligation; (viii) the
denominations in which such New Bonds will be issuable, if other than $1,000 and
integral multiples thereof; (ix) whether such New Bonds are to be issued in
whole or in part in book-entry form and represented by one or more global New
Bonds and, if so, the identity of the depositary for such global New Bonds; and
(x) any other terms of such New Bonds, including with respect to any series, if
applicable, any consents to modifications or waivers of covenants in the 1993
Mortgage or the 1939 Mortgage (as defined below)
PAYMENT OF BONDS; TRANSFERS; EXCHANGES: Except as may be provided in the
applicable Prospectus Supplement or any supplement thereto, interest, if any, on
each Bond payable on each Interest Payment Date will be paid to the person in
whose name such Bond is registered (the registered holder of any Mortgage
Security being hereinafter called a "Holder") as of the close of business on the
regular record date relating to such Interest Payment Date; provided, however,
that interest payable at maturity (whether at stated maturity, upon redemption
or otherwise, hereinafter "Maturity") will be paid to the person to whom
principal is paid at Maturity. However, if there has been a default in the
payment of interest on any Bond, such defaulted interest may be payable to the
Holder of such Bond as of the close of business on a date selected by the
Trustee which is not more than 30 days and not less than 10 days prior to the
date proposed by the Company for payment of such defaulted interest or in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which such Bond may be listed, if the Trustee deems such manner of
payment practicable. (See Section 307.)
Unless otherwise specified in a Prospectus Supplement or supplement
thereto, the principal of and premium, if any, and interest on the Bonds due at
Maturity will be payable upon presentation of the Bonds at the corporate trust
office of First Trust of New York, National Association, in New York, New York,
as Paying Agent for the Company. The Company may change the Place of Payment on
the Bonds, may appoint one or more additional Paying Agents (including the
Company) and may remove any Paying Agent, all
5
<PAGE>
at its discretion. (See Section 602 and Article 1 of the Supplemental
Indenture(s) relating to the New Bonds.)
Unless otherwise specified in a Prospectus Supplement or supplement
thereto, the transfer of Bonds may be registered, and Bonds may be exchanged for
other Bonds of the same series and tranche, of authorized denominations and of
like tenor and aggregate principal amount, at the corporate trust office of
First Trust of New York, National Association, in New York, New York, as
Security Registrar for the Bonds. The Company may change the place for
registration of transfer and exchange of the Bonds, and may designate one or
more additional places for such registration and exchange, all at its
discretion. (See Section 602.) Except as otherwise provided in the applicable
Prospectus Supplement or a supplement thereto, no service charge will be made
for any transfer or exchange of the Bonds, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of the
Bonds. The Company will not be required to execute or to provide for the
registration of transfer of or the exchange of (a) any Bond during a period of
15 days prior to giving any notice of redemption or (b) any Bond selected for
redemption in whole or in part, except the unredeemed portion of any Bond being
redeemed in part. (See Section 305.)
REDEMPTION: Any terms for the optional or mandatory redemption of New Bonds
will be set forth in the Prospectus Supplement or a supplement thereto. Except
as shall otherwise be provided in the applicable Prospectus Supplement or a
supplement thereto with respect to Bonds redeemable at the option of the Holder,
Bonds will be redeemable only upon notice by mail not less than 30 nor more than
60 days prior to the date fixed for redemption, and, if less than all the Bonds
of a series, or any tranche thereof, are to be redeemed, the particular Bonds to
be redeemed will be selected by such method as shall be provided for any
particular series, or in the absence of any such provision, by such method of
random selection as the Security Registrar deems fair and appropriate. (See
Sections 503 and 504.)
Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Paying Agent or Agents, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such Bonds and that
if such money has not been so received, such notice will be of no force and
effect and the Company will not be required to redeem such Bonds. (See Section
504.)
While the Original 1993 Mortgage contains provisions for the maintenance of
the Mortgaged Property, it does not contain any provisions for a maintenance or
sinking fund and, except as may be provided in the applicable Prospectus
Supplement or a supplement thereto, there will be no provisions for any such
funds for the New Bonds.
6
<PAGE>
SECURITY: General. Except as discussed under this heading and under
"Issuance of Additional Mortgage Securities" below, all Mortgage Securities now
or hereafter issued under the 1993 Mortgage will be secured, equally and
ratably, primarily by
(a) an equal principal amount of first mortgage bonds (which need not
bear interest) issued under the Company's Indenture, dated as of December
1, 1939 (the "Original 1939 Mortgage"), between the Company and First Trust
of New York, National Association, as successor trustee (together with any
further successor thereto, the "1939 Mortgage Trustee"), and delivered to
the Trustee under the 1993 Mortgage (the Original 1939 Mortgage, as amended
and supplemented, being hereinafter called the "1939 Mortgage"). As
discussed under "DESCRIPTION OF THE 1939 MORTGAGE -- Security", the 1939
Mortgage constitutes, subject to certain exceptions, a first mortgage lien
on substantially all properties of the Company; and
(b) the lien of the 1993 Mortgage on substantially all of the
Company's properties used or to be used in or in connection with the
business of generating, purchasing, transmitting, distributing and/or
selling electric energy (the "Electric Utility Business"), which lien is
junior to the lien of the 1939 Mortgage.
As discussed below under "Class A Bonds", following a merger or
consolidation of another corporation into the Company or the transfer to the
Company of property subject to the lien of an existing mortgage and the
assumption by the Company of all the obligations of the mortgagor under such
mortgage, the Company could deliver to the 1993 Mortgage Trustee bonds issued
under a mortgage existing on the properties acquired in such transaction in lieu
of or in addition to bonds issued under the 1939 Mortgage. In such event, the
Mortgage Securities would be secured, additionally, by such bonds and by the
lien of the 1993 Mortgage on such properties, which would be junior to the liens
of such existing mortgage and the 1939 Mortgage on such properties. The 1939
Mortgage and all such other mortgages are hereinafter collectively referred to
as "Class A Mortgages", and all bonds issued under the Class A Mortgages and
delivered to the 1993 Mortgage Trustee are hereinafter collectively referred to
as "Class A Bonds". If and when no Class A Mortgages are in effect, the 1993
Mortgage will constitute a first mortgage lien on all property of the Company
subject thereto, subject to certain Permitted Liens (as discussed below under
"Lien of the 1993 Mortgage.") As discussed below under "Class A Bonds", at the
date of this Prospectus the only Class A Mortgage is the 1939 Mortgage. The
Company currently believes that it is possible that, prior to the Stated
Maturity of the New Bonds, all Class A Bonds outstanding under the 1939
Mortgage, other than Class A Bonds delivered to and held by the 1993 Mortgage
Trustee as the basis of authentication and delivery of Mortgage Securities, may
have been paid, redeemed or otherwise retired and that, thereupon, the Class A
Bonds issued under the 1939 Mortgage would be surrendered for cancellation and
the 1939 Mortgage would be discharged. Upon discharge of the 1939 Mortgage and
assuming no other Class A Mortgage exists at the time, the 1993 Mortgage would
become a first mortgage lien on all property of the Company subject thereto,
subject to certain Permitted Liens.
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<PAGE>
Class A Bonds. Class A Bonds issued as the basis for the authentication and
delivery of Mortgage Securities will be issued and delivered to, and registered
in the name of, the 1993 Mortgage Trustee or its nominee and will be owned and
held by the 1993 Mortgage Trustee, subject to the provisions of the 1993
Mortgage, for the benefit of the Holders of all Mortgage Securities Outstanding
from time to time, and the Company will have no interest in such Class A Bonds.
Class A Bonds issued as the basis of authentication and delivery of Mortgage
Securities (a) will mature or be subject to mandatory redemption on the same
dates, and in the same principal amounts, as such Mortgage Securities and (b)
will contain, in addition to any mandatory redemption provisions applicable to
all Class A Bonds Outstanding under the related Class A Mortgage, mandatory
redemption provisions correlative to provisions for mandatory redemption of such
Mortgage Securities (pursuant to a sinking fund or otherwise), or for redemption
at the option of the Holder of such Mortgage Securities. Class A Bonds issued as
the basis for authentication and delivery of a series or tranche of Mortgage
Securities (x) may, but need not, bear interest, any such interest to be payable
at the same times as interest on the Mortgage Securities of such series or
tranche and (y) may, but need not, contain provisions for the redemption thereof
at the option of the Company, any such redemption to be made at a redemption
price or prices not less than the principal amount of such Class A Bonds. (See
Sections 402 and 701.) To the extent that Class A Bonds issued as the basis for
the authentication and delivery of New Bonds do not bear interest, holders of
Mortgage Securities will not have the benefit of the lien of the 1939 Mortgage
in respect of an amount equal to accrued interest, if any, on such New Bonds;
however, such holders will nevertheless have the benefit of the lien of the 1993
Mortgage in respect of such amount.
Any payment by the Company of principal of, or premium or interest on, the
Class A Bonds held by the 1993 Mortgage Trustee will be applied by the 1993
Mortgage Trustee to the payment of any principal, premium or interest, as the
case may be, in respect of the Mortgage Securities which is then due and, to the
extent of such application, the obligation of the Company under the 1993
Mortgage to make such payment in respect of the Mortgage Securities will be
deemed satisfied and discharged. If, at the time of any such payment of
principal of Class A Bonds, there shall be no principal then due in respect of
the Mortgage Securities, such payment in respect of the Class A Bonds will be
deemed to constitute Funded Cash and will be held by the 1993 Mortgage Trustee
as part of the Mortgaged Property, to be withdrawn, used or applied as provided
in the 1993 Mortgage; and thereafter the Mortgage Securities authenticated and
delivered on the basis of such Class A Bonds will, to the extent of such payment
of principal, be deemed to have been authenticated and delivered on the basis of
the deposit of cash. If, at the time of any such payment of premium or interest
on Class A Bonds, there shall be no premium or interest, as the case may be,
then due in respect of the Mortgage Securities, such payment will be remitted to
the Company at its request; provided, however, that, if an Event of Default, as
described below, shall have occurred and be continuing, such payment shall be
held as part of the Mortgaged Property until such Event of Default shall have
been cured or waived. (See Section 702 and "Withdrawal of Cash" below.) Any
payment by the Company of principal of, or premium or interest on, Mortgage
Securities authenticated and delivered on the basis of the issuance and delivery
to the 1993 Mortgage Trustee of Class A Bonds (other
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<PAGE>
than by application of the proceeds of a payment in respect of such Class A
Bonds) will, to the extent thereof, be deemed to satisfy and discharge the
obligation of the Company, if any, to make a payment of principal, premium or
interest, as the case may be, in respect of such Class A Bonds which is then
due. (See Section 702 and Article One of the Supplemental Indenture(s) to the
1939 Mortgage creating the Class A Bonds to be delivered in connection with the
issuance of the New Bonds.)
The 1993 Mortgage Trustee may not sell, assign or otherwise transfer any
Class A Bonds except to a successor trustee under the 1993 Mortgage. (See
Section 704.) At the time any Mortgage Securities of any series or tranche,
which have been authenticated and delivered upon the basis of the issuance and
delivery to the 1993 Mortgage Trustee of Class A Bonds, cease to be Outstanding
(other than as a result of the application of the proceeds of the payment or
redemption of such Class A Bonds), the 1993 Mortgage Trustee will surrender to
or upon the order of the Company an equal principal amount of such Class A
Bonds. (See Section 703.)
At the date of this Prospectus, the only Class A Mortgage is the 1939
Mortgage and the only Class A Bonds issuable at this time are first mortgage
bonds issuable thereunder. The 1993 Mortgage provides that, in the event that a
corporation which was a mortgagor under an existing mortgage has merged into or
consolidated with the Company, or a corporation has conveyed or otherwise
transferred property to the Company subject to the lien of an existing mortgage
and the Company has assumed all the obligations of the mortgagor under such
existing mortgage, and in either case such existing mortgage constitutes a lien
on properties of such other corporation or on such transferred properties, as
the case may be, prior to the lien of the 1993 Mortgage, such existing mortgage
may be designated by the Company as an additional Class A Mortgage. Bonds
thereafter issued under such additional mortgage would be Class A Bonds and
could provide the basis for the authentication and delivery of Mortgage
Securities under the 1993 Mortgage. (See Section 706.) When no Class A Bonds are
Outstanding under a Class A Mortgage except for Class A Bonds held by the 1993
Mortgage Trustee, then, at the request of the Company and subject to
satisfaction of certain conditions, the 1993 Mortgage Trustee will surrender
such Class A Bonds for cancellation and the related Class A Mortgage will be
satisfied and discharged, the lien of such Class A Mortgage on the Company's
property will cease to exist and the priority of the lien of the 1993 Mortgage
will be increased accordingly. (See Section 707.)
The 1993 Mortgage contains no restrictions on the issuance of Class A Bonds
in addition to Class A Bonds issued to the 1993 Mortgage Trustee as the basis
for the authentication and delivery of Mortgage Securities. Class A Bonds may
currently be issued under the 1939 Mortgage on the basis of property additions,
retirements of bonds previously issued under the 1939 Mortgage and cash
deposited with the 1939 Mortgage Trustee. (See "DESCRIPTION OF THE 1939
MORTGAGE --Issuance of Additional Bonds Under the 1939 Mortgage".)
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Lien of the 1993 Mortgage. In the opinion of counsel for the Company (see
"EXPERTS") based on information obtained from public records and from the
Company, the 1993 Mortgage constitutes a mortgage lien on the property
specifically or generally described or referred to therein as subject to the
lien thereof, except such property as may have been disposed of or released from
the lien thereof in accordance with the terms thereof, subject to no liens prior
to the lien of the 1993 Mortgage other than the lien of the 1939 Mortgage (so
long as the 1939 Mortgage remains in effect), the liens of any other Class A
Mortgages and Permitted Liens; and the 1993 Mortgage effectively subjects to the
lien thereof property (other than excepted property) acquired by the Company
after the date of the execution and delivery thereof to the extent, and subject
to the qualifications, hereinafter described. So long as the 1939 Mortgage is in
effect, the New Bonds will have the benefit of the first mortgage lien of the
1939 Mortgage on such property, and the benefit of the prior lien of any
additional Class A Mortgage on any property subject thereto, to the extent of
the aggregate principal amount of Class A Bonds issued under the respective
Class A Mortgages and held by the 1993 Mortgage Trustee for the benefit of
holders of First Collateral Trust Bonds, including the New Bonds. The properties
subject to the lien of the 1993 Mortgage, whether currently owned or hereafter
acquired, are the Company's properties used or to be used in or in connection
with the Electric Utility Business (whether or not such is the sole use of such
properties). Properties relating to the Company's gas and steam businesses are
not subject to the lien of the 1993 Mortgage.
The lien of the 1993 Mortgage is subject to Permitted Liens which include,
among other things, tax liens and other governmental charges which are not
delinquent or which are being contested in good faith; certain workmen's,
materialmen's and other liens; certain judgment liens and attachments; certain
easements, leases, reservations or other rights of others (including
governmental entities) in, on, over, and/or across, and laws, regulations and
restrictions affecting, and defects, irregularities, exceptions and limitations
in title to, certain property of the Company; certain leasehold interests;
certain rights and interests of others which relate to common ownership or joint
use of property and liens on the interests of others in such property; certain
non-exclusive rights and interests retained by the Company with respect to
property used or to be used in or in connection with both the businesses in
which the Mortgaged Property is used and any other businesses; and certain other
liens and encumbrances. (See Granting Clauses and Section 101.)
There are excepted from the lien of the 1993 Mortgage, among other things,
cash and securities not paid or delivered to, deposited with or held by the 1993
Mortgage Trustee under the 1993 Mortgage; contracts, leases and other agreements
of all kinds, contract rights, bills, notes and other instruments, accounts
receivable, claims, governmental and other permits, allowances and franchises,
certain intellectual property rights and other intangibles; automobiles, other
vehicles, movable equipment and aircraft; all goods, stock in trade, wares and
merchandise held for sale or lease in the ordinary course of business;
materials, supplies and other personal property consumable in the operation of
the Mortgaged Property; fuel, including nuclear fuel, whether or not consumable
in the operation of the Mortgaged Property; all furniture and furnishings;
computers, machinery and telecommunication and other equipment used exclusively
for corporate administrative
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or clerical purposes; coal, ore, gas, oil and other minerals and timber, and all
rights and interests in any such minerals or timber, whether or not such
minerals or timber have been mined or extracted from the land; electric energy,
gas (natural or artificial), steam, water and other products generated,
produced, manufactured, purchased or otherwise acquired by the Company;
leasehold interests held by the Company as lessee; and all property that is
located outside of the State of Colorado. (See "Excepted Property".)
Without the consent of the Holders, the Company and the 1993 Mortgage
Trustee may enter into supplemental indentures in order to subject to the lien
of the 1993 Mortgage additional property, whether or not used or to be used in
or in connection with the Electric Utility Business (including property which
would otherwise be excepted from such lien). (See Section 1401.) Such property
would thereupon constitute Property Additions (so long as it would otherwise
qualify as Property Additions as described below) and be available as a basis
for the issuance of Mortgage Securities. (See "Issuance of Additional Mortgage
Securities".)
The 1993 Mortgage contains provisions subjecting to the lien thereof after-
acquired property used or to be used in or in connection with the Electric
Utility Business, subject to the prior lien of the 1939 Mortgage (for as long as
such prior lien is in effect). These provisions are limited in the case of
consolidation or merger (whether or not the Company is the surviving
corporation) or transfer of the Mortgaged Property as, or substantially as, an
entirety. In the event of consolidation or merger or the transfer of the
Mortgaged Property as or substantially as an entirety, the 1993 Mortgage will
not be required to be a lien upon any of the properties then owned or thereafter
acquired by the successor corporation except properties acquired from the
Company in or as a result of such transaction and improvements, extensions and
additions to such properties and renewals, replacements and substitutions of or
for any part or parts of such properties. (See Article Thirteen and
"Consolidation, Merger, etc.") In addition, after-acquired property may be
subject to liens existing or placed thereon at the time of acquisition thereof,
including, but not limited to, purchase money liens and the lien of any Class A
Mortgage.
The 1993 Mortgage provides that the 1993 Mortgage Trustee will have a lien,
prior to the lien on behalf of the holders of Mortgage Securities, upon the
Mortgaged Property for the payment of its reasonable compensation and expenses
and for indemnity against certain liabilities. (See Section 1107.)
ISSUANCE OF ADDITIONAL MORTGAGE SECURITIES: The aggregate principal amount
of Mortgage Securities which may be authenticated and delivered under the 1993
Mortgage is unlimited. (See Section 301.) Mortgage Securities of any series may
be issued from time to time on the basis of, and in an aggregate principal
amount not exceeding:
(a) the aggregate principal amount of Class A Bonds issued and delivered to the
1993 Mortgage Trustee;
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(b) 70% of the Cost or Fair Value to the Company (whichever is less) of
Property Additions (as described below) which do not constitute Funded
Property (generally, Property Additions which have been (i) made the basis
of the authentication and delivery of Mortgage Securities, the release of
Mortgaged Property or cash withdrawals; (ii) substituted for retired
property or (iii) used as the basis of a credit against, or otherwise in
satisfaction of, any sinking, improvement, maintenance, replacement or
similar fund, provided that Mortgage Securities of the series or tranche to
which such fund relates remain Outstanding) after certain deductions and
additions, primarily including adjustments to offset property retirements;
(c) the aggregate principal amount of Retired Securities (which consist of
Mortgage Securities no longer outstanding under the 1993 Mortgage which
have not been used for certain other purposes under the 1993 Mortgage and
which have not been paid, redeemed or otherwise retired by the application
of Funded Cash), but if Class A Bonds had been made the basis for the
authentication and delivery of such Retired Securities, only if such
Retired Securities became Retired Securities after the discharge of the
related Class A Mortgage; and
(d) an amount of cash deposited with the 1993 Mortgage Trustee.
(See Article Four.)
In general, the issuance of Mortgage Securities is subject to the Adjusted
Net Earnings of the Company for 12 consecutive months within the preceding 18
months being at least twice the Annual Interest Requirements on all Mortgage
Securities at the time outstanding, new Mortgage Securities then applied for,
all outstanding Class A Bonds other than Class A Bonds held by the 1993 Mortgage
Trustee under the 1993 Mortgage, and all other indebtedness (with certain
exceptions) secured by a lien prior to the lien of the 1993 Mortgage, except
that no such net earnings requirement need be met if the additional Mortgage
Securities to be issued are to have no Stated Interest Rate prior to Maturity.
Adjusted Net Earnings are calculated before, among other things, provisions for
income taxes; depreciation or amortization of property; interest and
amortization of debt discount and expense; any non-recurring charge to income or
retained earnings of whatever kind or nature (including without limitation the
recognition of expense due to the non-recoverability of investment or expense),
whether or not recorded as a non-recurring item in the Company's books of
account; and any refund of revenues previously collected or accrued by the
Company subject to possible refund. The calculation of Adjusted Net Earnings
also does not, or, in the case of losses or expense, is not required to, include
profits or losses from the sale or other disposition of property, or non-
recurring items of revenue, income or expense of any kind or nature. (See
Sections 103 and 401.)
The Company is not required to satisfy the net earnings requirement prior
to issuance of Mortgage Securities (i) as provided in (a) above if the Class A
Bonds issued and delivered to the 1993 Mortgage Trustee as the basis for such
issuance have been authenticated and delivered under the related Class A
Mortgage on the basis of retired
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Class A Bonds or (ii) as provided in (c) above. In general, the interest
requirement with respect to variable interest rate indebtedness, if any, is
determined with reference to the rate or rates in effect on the date immediately
preceding such determination or the rate to be in effect upon initial
authentication. With respect to Mortgage Securities of a series subject to a
Periodic Offering (such as a medium-term note program), the 1993 Mortgage
Trustee will be entitled to receive a certificate evidencing compliance with the
net earnings requirements only once, at or prior to the time of the first
authentication and delivery of the Mortgage Securities of such series. (See
Article Four.)
Property Additions generally include any property which is owned by the
Company and is subject to the lien of the 1993 Mortgage except (with certain
exceptions) goodwill, going concern value rights or intangible property, or any
property the cost of acquisition or construction of which is properly chargeable
to an operating expense account of the Company. (See Section 104.)
Unless otherwise provided in the applicable Prospectus Supplement or a
supplement thereto, until the 1939 Mortgage has been discharged, the Company
will issue the New Bonds on the basis of Class A Bonds issued under its 1939
Mortgage.
RELEASE OF PROPERTY: Unless an Event of Default has occurred and is
continuing, the Company may obtain the release from the lien of the 1993
Mortgage of any Funded Property, except for cash held by the 1993 Mortgage
Trustee, upon delivery to the 1993 Mortgage Trustee of cash equal in amount to
the amount, if any, that the Cost of the property to be released (or, if less,
the Fair Value to the Company of such property at the time it became Funded
Property) exceeds the aggregate of:
(a) the aggregate principal amount, subject to certain limitations, of
obligations delivered to the 1993 Mortgage Trustee which are secured by
purchase money liens upon the property to be released;
(b) the Cost or Fair Value to the Company (whichever is less) of certified
Property Additions not constituting Funded Property after certain
deductions and additions, primarily including adjustments to offset
property retirements (except that such adjustments need not be made if such
Property Additions were acquired or made within the 90-day period preceding
the release);
(c) an amount equal to 10/7ths of the principal amount of Mortgage Securities
the Company would be entitled to issue on the basis of Retired Securities
(with such entitlement to issue such principal amount of Mortgage
Securities being waived by operation of such release);
(d) an amount equal to 10/7ths of the principal amount of Outstanding Mortgage
Securities delivered to the 1993 Mortgage Trustee (with such Mortgage
Securities to be canceled by the 1993 Mortgage Trustee);
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(e) an amount of cash and/or the aggregate principal amount, subject to certain
limitations, of obligations secured by purchase money liens upon the
property to be released, which in either case is evidenced to the 1993
Mortgage Trustee by a certificate of the trustee or other holder of a lien
prior to the lien of the 1993 Mortgage to have been received by such
trustee or such other holder in accordance with the provisions of such lien
in consideration for the release of such property or any part thereof from
such lien; and
(f) any taxes and expenses incidental to any sale, exchange, dedication or
other disposition of the property to be released.
Property which is not Funded Property may generally be released from the
lien of the 1993 Mortgage without depositing any cash or property with the 1993
Mortgage Trustee as long as (a) the aggregate amount of Cost or Fair Value to
the Company (whichever is less) of all Property Additions which do not
constitute Funded Property (excluding the property to be released) after certain
deductions and additions, primarily including adjustments to offset property
retirements, is not less than zero or (b) the Cost or Fair Value (whichever is
less) of property to be released does not exceed the aggregate amount of the
Cost or Fair Value to the Company (whichever is less) of Property Additions
acquired or made within the 90-day period preceding the release.
The 1993 Mortgage provides simplified procedures for the release of
property which has been released from the lien of a Class A Mortgage, minor
properties and property taken by eminent domain, and provides for dispositions
of certain obsolete property and grants or surrender of certain rights without
any release or consent by the 1993 Mortgage Trustee.
If any property released from the lien of the 1993 Mortgage continues to be
owned by the Company after such release, the 1993 Mortgage will not become a
lien on any improvement, extension or addition to such property or renewals,
replacements or substitutions of or for any part or parts of such property. (See
Article Eight.)
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WITHDRAWAL OF CASH: Unless an Event of Default has occurred and is
continuing and subject to certain limitations, cash held by the 1993 Mortgage
Trustee may
(a) be withdrawn by the Company
(i) to the extent of the Cost or Fair Value to the Company (whichever is less)
of Property Additions not constituting Funded Property, after certain
deductions and additions, primarily including adjustments to offset
retirements (except that such adjustments need not be made if such
Property Additions were acquired or made within the 90-day period
preceding the release) or
(ii) in an amount equal to 10/7ths of the aggregate principal amount of
Mortgage Securities that the Company would be entitled to issue on the
basis of Retired Securities (with the entitlement to such issuance being
waived by operation of such withdrawal) or
(iii) in an amount equal to 10/7ths of the aggregate principal amount of any
Outstanding Mortgage Securities delivered to the 1993 Mortgage Trustee, or
(b) upon the request of the Company, be applied to (i) the purchase of
Mortgage Securities (at prices not exceeding 10/7ths of the principal
amount thereof) or (ii) the payment (or provision therefor for the
satisfaction and discharge of any Mortgage Securities) at Stated Maturity
of any Mortgage Securities or the redemption (or similar provision
therefor) of any Mortgage Securities which are redeemable (with any
Mortgage Securities received by the 1993 Mortgage Trustee pursuant to
these provisions being canceled by the 1993 Mortgage Trustee) (see Section
806);
provided, however, that cash deposited with the 1993 Mortgage Trustee as the
basis for the authentication and delivery of Mortgage Securities, as well as
cash representing a payment of principal of Class A Bonds, may only be withdrawn
in an amount equal to the aggregate principal amount of Mortgage Securities the
Company would be entitled to issue on any basis (with the entitlement to such
issuance being waived by operation of such withdrawal), or may, upon the request
of the Company, be applied to the purchase, redemption or payment of Mortgage
Securities at prices not exceeding, in the aggregate, the principal amount
thereof. (See Sections 405 and 702.)
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CONSOLIDATION, MERGER, ETC.: The Company may not consolidate with or merge
into any other corporation or convey, otherwise transfer or lease the Mortgaged
Property as or substantially as an entirety to any Person unless (a) such
transaction is on such terms as will fully preserve the lien and security of the
1993 Mortgage and the rights and powers of the 1993 Mortgage Trustee and the
Holders; (b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or other transfer,
or which leases, the Mortgaged Property as, or substantially as, an entirety is
a corporation organized and existing under the laws of the United States of
America or any State or Territory thereof or the District of Columbia, and such
corporation executes and delivers to the 1993 Mortgage Trustee a supplemental
indenture which contains an assumption by such corporation of the due and
punctual payment of the principal of and premium, if any, and interest, if any,
on the Mortgage Securities and the performance of all of the covenants and
conditions of the Company under the 1993 Mortgage and which contains a grant,
conveyance, transfer and mortgage by such corporation confirming the lien of the
1993 Mortgage on the Mortgaged Property and subjecting to such lien all property
thereafter acquired by such corporation which shall constitute an improvement,
extension or addition to the Mortgaged Property or a renewal, replacement or
substitution of or for any part thereof, and, at the election of such
corporation, subjecting to the lien of the 1993 Mortgage such other property
then owned or thereafter acquired by such corporation as such corporation shall
specify; and (c) in the case of a lease, such lease is made expressly subject to
termination by the Company or by the 1993 Mortgage Trustee at any time during
the continuance of an Event of Default. (See Section 1301.)
MODIFICATION OF 1993 MORTGAGE: Without the consent of any Holders, the
Company and the 1993 Mortgage Trustee may enter into one or more supplemental
indentures for any of the following purposes:
(a) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company in the
1993 Mortgage and in the Mortgage Securities; or
(b) to add one or more covenants of the Company or other provisions for the
benefit of all Holders or for the benefit of the Holders of, or to remain
in effect only so long as there shall be outstanding, Mortgage Securities
of one or more specified series, or one or more tranches thereof, or to
surrender any right or power conferred upon the Company by the 1993
Mortgage; or
(c) to correct or amplify the description of any property at any time subject
to the lien of the 1993 Mortgage; or to better assure, convey and confirm
to the 1993 Mortgage Trustee any property subject or required to be
subjected to the lien of the 1993 Mortgage; or to subject to the lien of
the 1993 Mortgage additional property (including property of others), to
specify any additional Permitted Liens with respect to such additional
property and to modify the provisions in the 1993 Mortgage for dispositions
of certain types of property without release in order to specify any
additional items with respect to such additional property; or
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(d) to change or eliminate any provision of the 1993 Mortgage or to add any new
provision to the 1993 Mortgage, provided that if such change, elimination
or addition adversely affects the interests of the Holders of the Mortgage
Securities of any series or tranche in any material respect, such change,
elimination or addition will become effective with respect to such series
or tranche only when no Mortgage Security of such series or tranche remains
outstanding under the 1993 Mortgage; or
(e) to establish the form or terms of the Mortgage Securities of any series or
tranche as permitted by the 1993 Mortgage; or
(f) to provide for the authentication and delivery of bearer securities and
coupons appertaining thereto representing interest, if any, thereon and for
the procedures for the registration, exchange and replacement thereof and
for the giving of notice to, and the solicitation of the vote or consent
of, the holders thereof, and for any and all other matters incidental
thereto; or
(g) to evidence and provide for the acceptance of appointment by a successor
trustee or by a co-trustee or separate trustee; or
(h) to provide for the procedures required to permit the Company to use a non-
certificated system of registration for all, or any series or tranche of,
the Mortgage Securities; or
(i) to change any place or places where (i) the principal of and premium, if
any, and interest, if any, on all or any series of Mortgage Securities, or
any tranche thereof, will be payable, (ii) all or any series of Mortgage
Securities, or any tranche thereof, may be surrendered for registration of
transfer, (iii) all or any series of Mortgage Securities, or any tranche
thereof, may be surrendered for exchange and (iv) notices and demands to or
upon the Company in respect of all or any series of Mortgage Securities, or
any tranche thereof, and the 1993 Mortgage may be served; or
(j) to cure any ambiguity, to correct or supplement any provision therein which
may be defective or inconsistent with any other provision therein, or to
make any other changes to the provisions thereof or to add other provisions
with respect to matters and questions arising under the 1993 Mortgage, so
long as such other changes or additions do not adversely affect the
interests of the Holders of Mortgage Securities of any series or tranche in
any material respect.
(See Section 1401.)
Without limiting the generality of the foregoing, if the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date
of the Original 1993 Mortgage in such a way as to require changes to the 1993
Mortgage or the incorporation therein of additional provisions or so as to
permit changes to, or the elimination of,
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provisions which, at the date of the Original 1993 Mortgage or at any time
thereafter, were required by the Trust Indenture Act to be contained in the 1993
Mortgage, the 1993 Mortgage will be deemed to have been amended so as to conform
to such amendment or to effect such changes or elimination, and the Company and
the 1993 Mortgage Trustee may, without the consent of any Holders, enter into
one or more supplemental indentures to evidence or effect such amendment. (See
Section 1401.)
Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the Mortgage Securities of all series
then Outstanding, considered as one class, is required for the purpose of adding
any provisions to, or changing in any manner, or eliminating any of the
provisions of, the 1993 Mortgage pursuant to one or more supplemental
indentures; provided, however, that if less than all of the series of Mortgage
Securities Outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the Holders of a majority in aggregate
principal amount of Outstanding Mortgage Securities of all series so directly
affected, considered as one class, will be required; and provided, further, that
if the Mortgage Securities of any series have been issued in more than one
tranche and if the proposed supplemental indenture directly affects the rights
of the Holders of one or more, but less than all, of such tranches, then the
consent only of the Holders of a majority in aggregate principal amount of the
Outstanding Mortgage Securities of all tranches so directly affected, considered
as one class, will be required; and provided, further, that no such amendment or
modification may (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Mortgage Security, or reduce the
principal amount thereof or the rate of interest thereon (or the amount of any
installment of interest thereon), or change the method of calculating such rate,
or reduce any premium payable upon the redemption thereof, or reduce the amount
of the principal of any Discount Security that would be due and payable upon a
declaration of acceleration of Maturity, or change the coin or currency (or
other property) in which any Mortgage Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity of any Mortgage Security (or,
in the case of redemption, on or after the redemption date) without, in any such
case, the consent of the Holder of such Mortgage Security; (b) permit the
creation of any lien not otherwise permitted by the 1993 Mortgage ranking prior
to the lien of the 1993 Mortgage with respect to all or substantially all of the
Mortgaged Property or terminate the lien of the 1993 Mortgage on all or
substantially all of the Mortgaged Property, or deprive the Holders of the
benefit of the lien of the 1993 Mortgage, without, in any such case, the consent
of the Holders of all Mortgage Securities then Outstanding; (c) reduce the
percentage in principal amount of the Outstanding Mortgage Securities of any
series, or any tranche thereof, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with any provision of the 1993 Mortgage or
of any default thereunder and its consequences, or reduce the requirements for
quorum or voting, without, in any such case, the consent of the Holder of each
Outstanding Mortgage Security of such series or tranche; or (d) modify certain
of the provisions of the 1993 Mortgage relating to supplemental indentures,
waivers of certain covenants and waivers of past defaults with respect to the
Mortgage Securities of any series, or any tranche
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thereof, without the consent of the Holder of each Outstanding Mortgage Security
of such series or tranche. A supplemental indenture which changes or eliminates
any covenant or other provision of the 1993 Mortgage which has expressly been
included solely for the benefit of the Holders of, or which is to remain in
effect only so long as there shall be Outstanding Mortgage Securities of one or
more specified series, or one or more tranches thereof, or modifies the rights
of the Holders of Mortgage Securities of such series or tranches with respect to
such covenant or other provision, will be deemed not to affect the rights under
the 1993 Mortgage of the Holders of the Mortgage Securities of any other series
or tranche. (See Section 1402.)
VOTING OF CLASS A BONDS: The 1993 Mortgage provides that the 1993
Mortgage Trustee will, as holder of Class A Bonds issued under the 1939 Mortgage
as the basis for the issuance of Mortgage Securities, attend such meetings of
bondholders under the related Class A Mortgage, or deliver its proxy in
connection therewith, as relate to matters with respect to which it is entitled
to vote or consent. The 1993 Mortgage provides that, so long as no Event of
Default as defined in the 1993 Mortgage has occurred and is continuing, the 1993
Mortgage Trustee will, as holder of such Class A Bonds (a) vote in favor of the
amendments and modifications to the 1939 Mortgage described under "DESCRIPTION
OF THE 1939 MORTGAGE -- Voting of Class A Bonds Issued Under the 1939 Mortgage",
and (b) with respect to any amendments or modifications to any Class A Mortgage
other than those amendments or modifications referred to in (a), vote all Class
A Bonds Outstanding under such Class A Mortgage then held by it, or consent with
respect thereto, proportionately with the vote or consent of holders of all
other Class A Bonds Outstanding under such Class A Mortgage the holders of which
are eligible to vote or consent, as evidenced by a certificate delivered by the
trustee under such Class A Mortgage; provided, however, that the 1993 Mortgage
Trustee will not vote in favor of, or consent to, any amendment or modification
of a Class A Mortgage which, if it were an amendment or modification of the 1993
Mortgage, would require the consent of Holders of Mortgage Securities as
described under "Modification of the 1993 Mortgage", without the prior consent
of Holders of Mortgage Securities which would be required for such an amendment
or modification of the 1993 Mortgage. (See Section 705.)
WAIVER: The Holders of at least a majority in aggregate principal amount
of all Mortgage Securities may waive the Company's obligations to comply with
certain covenants, including the covenants to maintain its corporate existence
and properties, pay taxes and discharge liens, maintain certain insurance and
make such recordings and filings as are necessary to protect the security of the
Holders and the rights of the 1993 Mortgage Trustee and the covenant described
above with respect to merger, consolidation or the transfer or lease of the
Mortgaged Property as, or substantially as, an entirety, provided that such
waiver occurs before the time such compliance is required. The Holders of at
least a majority of the aggregate principal amount of Outstanding Mortgage
Securities of all affected series or tranches, considered as one class, may
waive, before the time for such compliance, compliance with any covenant
specified with respect to Mortgage Securities of such series or tranches. (See
Section 609.)
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EVENTS OF DEFAULT: Each of the following events constitutes an Event of
Default under the 1993 Mortgage:
(a) failure to pay interest on any Mortgage Security within 60 days after the
same becomes due;
(b) failure to pay principal of or premium, if any, on any Mortgage Security
within 3 business days after the Maturity thereof;
(c) failure to perform or breach of any covenant or warranty of the Company
contained in the 1993 Mortgage (other than a covenant or warranty a default
in the performance of which or breach of which is dealt with elsewhere
under this paragraph) for a period of 90 days after there has been given to
the Company by the 1993 Mortgage Trustee, or to the Company and the 1993
Mortgage Trustee by the Holders of at least 33% in principal amount of
Outstanding Mortgage Securities, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default", unless the 1993 Mortgage Trustee, or the 1993 Mortgage
Trustee and the Holders of a principal amount of Mortgage Securities not
less than the principal amount of Mortgage Securities the Holders of which
gave such notice, as the case may be, agree in writing to an extension of
such period prior to its expiration; provided, however, that the 1993
Mortgage Trustee, or the 1993 Mortgage Trustee and such Holders, as the
case may be, will be deemed to have agreed to an extension of such period
if corrective action has been initiated by the Company within such period
and is being diligently pursued;
(d) certain events relating to reorganization, bankruptcy and insolvency of the
Company or appointment of a receiver or trustee for its property; and
(e) the occurrence of a matured event of default under any Class A Mortgage
(other than any such matured event of default which is of similar kind or
character to the Event of Default described in (c) above and which has not
resulted in the acceleration of the Class A Bonds Outstanding under such
Class A Mortgage); provided that the waiver or cure of any such event of
default and the rescission and annulment of the consequences thereof shall
constitute a waiver of the corresponding Event of Default under the 1993
Mortgage and a rescission and annulment of the consequences thereof. (See
Section 1001.)
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REMEDIES: If an Event of Default occurs and is continuing, then the 1993
Mortgage Trustee or the Holders of not less than 33% in principal amount of
Mortgage Securities then Outstanding may declare the principal amount (or if the
Mortgage Securities are Discount Securities, such portion of the principal
amount of such Discount Securities as may be provided for pursuant to the terms
of the 1993 Mortgage) of all of the Mortgage Securities then Outstanding,
together with premium, if any, and accrued interest, if any, thereon to be
immediately due and payable. At any time after such declaration of acceleration
of the Mortgage Securities then Outstanding, but before the sale of any of the
Mortgaged Property and before a judgment or decree for payment of money shall
have been obtained by the 1993 Mortgage Trustee as provided in the 1993
Mortgage, the Event or Events of Default giving rise to such declaration of
acceleration will, without further act, be deemed to have been waived, and such
declaration and its consequences will, without further act, be deemed to have
been rescinded and annulled, if
(a) the Company has paid or deposited with the 1993 Mortgage Trustee
a sum sufficient to pay:
(i) all overdue interest, if any, on all Mortgage
Securities then Outstanding;
(ii) the principal of and premium, if any, on any Mortgage
Securities then Outstanding which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Mortgage Securities; and
(iii) all amounts due to the 1993 Mortgage Trustee as
compensation and reimbursement as provided in the 1993 Mortgage; and
(b) any other Event or Events of Default, other than the non-payment
of the principal of Mortgage Securities which shall have become due solely
by such declaration of acceleration, shall have been cured or waived as
provided in the 1993 Mortgage. (See Sections 1002 and 1017.)
The 1993 Mortgage provides that, under certain circumstances and to the
extent permitted by law, if an Event of Default occurs and is continuing, the
1993 Mortgage Trustee has the power to take possession of, and to hold, operate
and manage, the Mortgaged Property or, with or without entry, sell the Mortgaged
Property. If the Mortgaged Property is sold, whether by the 1993 Mortgage
Trustee or pursuant to judicial proceedings, the principal of the Outstanding
Mortgage Securities, if not previously due, will become immediately due,
together with premium, if any, and any accrued interest. (See Sections 1003,
1004 and 1005.)
If an Event of Default occurs and is continuing, the Holders of a majority
in principal amount of the Mortgage Securities then Outstanding will have the
right to direct the time, method and place of conducting any proceedings for any
remedy available to the 1993
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Mortgage Trustee or exercising any trust or power conferred on the 1993 Mortgage
Trustee, provided that (a) such direction does not conflict with any rule of law
or with the 1993 Mortgage, and could not involve the 1993 Mortgage Trustee in
personal liability in circumstances where indemnity would not, in the 1993
Mortgage Trustee's sole discretion, be adequate and (b) the 1993 Mortgage
Trustee may take any other action deemed proper by the 1993 Mortgage Trustee
which is not inconsistent with such direction. (See Section 1016.)
The 1993 Mortgage provides that no Holder of any Mortgage Security will
have any right to institute any proceeding, judicial or otherwise, with respect
to the 1993 Mortgage or for the appointment of a receiver or for any other
remedy thereunder unless (a) such Holder has previously given to the 1993
Mortgage Trustee written notice of a continuing Event of Default; (b) the
Holders of not less than a majority in aggregate principal amount of the
Mortgage Securities then Outstanding have made written request to the 1993
Mortgage Trustee to institute proceedings in respect of such Event of Default
and have offered the 1993 Mortgage Trustee reasonable indemnity against costs
and liabilities to be incurred in complying with such request; and (c) for 60
days after receipt of such notice, the 1993 Mortgage Trustee has failed to
institute any such proceeding and no direction inconsistent with such request
has been given to the 1993 Mortgage Trustee during such 60-day period by the
Holders of a majority in aggregate principal amount of Mortgage Securities then
Outstanding. Furthermore, no Holder will be entitled to institute any such
action if and to the extent that such action would disturb or prejudice the
rights of other Holders. (See Section 1011.) Notwithstanding that the right of
a Holder to institute a proceeding with respect to the 1993 Mortgage is subject
to certain conditions precedent, each Holder of a Mortgage Security has the
right, which is absolute and unconditional, to receive payment of the principal
of and premium, if any, and interest, if any, on such Mortgage Security when due
and to institute suit for the enforcement of any such payment, and such rights
may not be impaired without the consent of such Holder. (See Section 1012.)
The 1993 Mortgage provides that the 1993 Mortgage Trustee give the Holders
notice of any default under the 1993 Mortgage to the extent required by the
Trust Indenture Act, unless such default shall have been cured or waived, except
that no such notice to Holders of a default of the character described in clause
(c) under "Events of Default" may be given until at least 75 days after the
occurrence thereof. For purposes of the preceding sentence, the term "default"
means any event which is, or after notice or lapse of time, or both, would
become, an Event of Default. (See Section 1102.) The Trust Indenture Act
currently permits the 1993 Mortgage Trustee to withhold notices of default
(except for certain payment defaults) if the 1993 Mortgage Trustee in good faith
determines the withholding of such notice to be in the interests of the Holders.
As a condition precedent to certain actions by the 1993 Mortgage Trustee in
the enforcement of the lien of the 1993 Mortgage and institution of action on
the Mortgage Securities, the 1993 Mortgage Trustee may require adequate
indemnity against costs, expenses and liabilities to be incurred in connection
therewith. (See Sections 1011 and 1101.)
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In addition to every other right and remedy provided in the 1993 Mortgage,
the 1993 Mortgage Trustee may exercise any right or remedy available to the 1993
Mortgage Trustee in its capacity as owner and holder of Class A Bonds which
arises as a result of a default or matured event of default under any Class A
Mortgage, whether or not an Event of Default under the 1993 Mortgage has
occurred and is continuing. (See Section 1020.)
DEFEASANCE: Any Mortgage Security or Securities, or any portion of the
principal amount thereof, will be deemed to have been paid for purposes of the
1993 Mortgage, and, at the Company's election, the entire indebtedness of the
Company in respect thereof will be deemed to have been satisfied and discharged,
if there has been irrevocably deposited with the 1993 Mortgage Trustee or any
Paying Agent (other than the Company), in trust: (a) money (including Funded
Cash not otherwise applied pursuant to the 1993 Mortgage) in an amount which
will be sufficient; or (b) Eligible Obligations (as described below) which do
not contain provisions permitting the redemption or other prepayment thereof at
the option of the issuer thereof, the principal of and the interest on which
when due, without any regard to reinvestment thereof, will provide monies which,
together with the money, if any, deposited with or held by the 1993 Mortgage
Trustee or such Paying Agent, will be sufficient; or (c) a combination of (a)
and (b) which will be sufficient to pay when due the principal of and premium,
if any, and interest, if any, due and to become due on such Mortgage Security or
Securities or portions thereof. (See Section 901.) For this purpose, Eligible
Obligations include direct obligations of, or obligations unconditionally
guaranteed by, the United States of America entitled to the benefit of the full
faith and credit thereof, and certificates, depositary receipts or other
instruments which evidence a direct ownership interest in such obligations or in
any specific interest or principal payments due in respect thereof.
It is possible that for Federal income tax purposes any deposit
contemplated in the preceding paragraph could be treated as a taxable exchange
of the related Mortgage Securities for an issue of obligations of the trust or a
direct interest in the cash and securities held in the trust. In that case,
Holders of such Mortgage Securities would recognize gain or loss as if the trust
obligations or the cash or securities deposited, as the case may be, had
actually been received by them in exchange for their Mortgage Securities. Such
gain or loss, generally, would be capital in nature to Holders for whom the
Mortgage Securities are held as capital assets and any deductions for losses
would be subject to certain limitations. Such Holders thereafter would be
required to include in income a share of the income, gain or loss of the trust
or the income from the securities held in trust, as the case may be. The amount
so required to be included in income could be different from the amount that
would be includible in the absence of such deposit. Prospective investors are
urged to consult their own tax advisors as to the specific consequences to them
of such deposit.
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RESIGNATION OF THE 1993 MORTGAGE TRUSTEE: The 1993 Mortgage Trustee may
resign at any time by giving written notice thereof to the Company or may be
removed at any time by Act of the Holders of a majority in principal amount of
Mortgage Securities then Outstanding delivered to the 1993 Mortgage Trustee and
the Company. No resignation or removal of the 1993 Mortgage Trustee and no
appointment of a successor trustee will become effective until the acceptance of
appointment by a successor trustee in accordance with the requirements of the
1993 Mortgage. So long as no Event of Default or event which, after notice or
lapse of time, or both, would become an Event of Default has occurred and is
continuing, if the Company has delivered to the 1993 Mortgage Trustee a
resolution of its Board of Directors appointing a successor trustee and such
successor has accepted such appointment in accordance with the terms of the 1993
Mortgage, the 1993 Mortgage Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in accordance with
the 1993 Mortgage. (See Section 1110.)
EVIDENCE TO BE FURNISHED TO THE 1993 MORTGAGE TRUSTEE: Compliance with
1993 Mortgage provisions is evidenced by written statements of Company officers
or persons selected or paid by the Company. In certain cases, opinions of
counsel and certification of an engineer, accountant, appraiser or other expert
(who in some cases must be independent) must be furnished. In addition, the
1993 Mortgage requires that the Company give the 1993 Mortgage Trustee, not less
often than annually, a brief statement as to the Company's compliance with the
conditions and covenants under the 1993 Mortgage.
CONCERNING THE 1993 MORTGAGE TRUSTEE: The Company conducts banking
transactions with affiliates of the 1993 Mortgage Trustee in the normal course
of the Company's business and uses the 1993 Mortgage Trustee or its affiliates
as trustee for various debt issues.
DESCRIPTION OF THE 1939 MORTGAGE
GENERAL: The summaries under this heading do not purport to be complete
and are subject to the detailed provisions of the 1939 Mortgage, a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus is
a part. Capitalized terms used under this heading which are not otherwise
defined in this Prospectus shall have the meanings ascribed thereto in the 1939
Mortgage. Wherever particular provisions or terms defined therein are referred
to, such provisions or definitions are incorporated by reference as part of the
statements made herein and such statements are qualified in their entirety by
such reference. References to article and section numbers herein, unless
otherwise indicated, are references to articles and section numbers of the
Original 1939 Mortgage.
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SECURITY. Class A Bonds issued under the 1939 Mortgage will rank pari
passu, except as to any sinking fund or similar fund provided for a particular
series, with all bonds at any time outstanding under the 1939 Mortgage. In the
opinion of counsel for the Company (see "EXPERTS"), the 1939 Mortgage
constitutes a first mortgage lien on the property specifically or generally
described therein as subject to the lien thereof, except such property as may
have been disposed of or released from the lien thereof in accordance with the
terms thereof, subject to no liens prior to the lien of the 1939 Mortgage other
than Permitted Encumbrances, as defined therein; and the 1939 Mortgage by its
terms effectively subjects to the lien thereof all property (except property of
the kinds specifically excepted from the lien thereof) acquired by the Company
after the date of the execution and delivery thereof, subject to Permitted
Encumbrances, to any lien thereon existing, and to any liens for unpaid portions
of the purchase money placed thereon, at the time of such acquisition, and also
subject to certain limitations in the case of consolidation, merger or sale of
substantially all the mortgaged property. The principal properties subject to
the lien of the 1939 Mortgage are the electric and gas properties owned by the
Company and securities of certain subsidiaries. (See Granting and Habendum
Clauses, Sections 2 and 3 of Article I, and Section 3 of Article XI of the 1939
Mortgage.)
The 1939 Mortgage provides that the 1939 Mortgage Trustee shall have a lien
prior to the bonds on the mortgaged property for payment of its compensation,
expenses and disbursements and for indemnity against certain liabilities. (See
Section 10 of Article XII of the 1939 Mortgage.)
ISSUANCE OF ADDITIONAL BONDS UNDER THE 1939 MORTGAGE. Additional bonds may
be issued under the 1939 Mortgage in a principal amount equal to (a) 60% of net
property additions (as defined in the 1939 Mortgage) acquired or constructed
within five years of certification to the 1939 Mortgage Trustee, (b) the
principal amount of certain retired bonds or prior lien bonds or (c) deposited
cash (in certain cases 60% thereof). See "Voting of Class A Bonds Issued Under
the 1939 Mortgage".
No bonds may be issued under the 1939 Mortgage, as provided in clauses (a)
and (c) above, unless the net earnings of the Company (as defined in Section 5
of Article I of the 1939 Mortgage and as discussed below) are at least 2-1/2
times the annual interest on all bonds issued and outstanding under the 1939
Mortgage, including the bonds applied for (but excluding any bonds to be paid,
retired or redeemed with the proceeds of the bonds applied for), and
indebtedness secured by prior liens. Such net earnings test generally need not
be satisfied prior to the issuance of bonds as provided in clause (b) above
unless (x) the new bonds are issued more than two years prior to the stated
maturity of the retired bonds and the new bonds bear a greater rate of interest
than the retired bonds or (y) the new bonds are issued in respect of retired
bonds, the interest charges on which have been excluded from any net earnings
certificate filed with the 1939 Mortgage Trustee since the retirement of such
bonds. (See Article III of the 1939 Mortgage.) See "Voting of Class A Bonds
Issued Under the 1939 Mortgage".
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Cash deposited under clause (c) above may be withdrawn by the Company in an
amount equal to the principal amounts of bonds issuable pursuant to clauses (a)
and (b) above (in certain cases 166-2/3% thereof) without regard to earnings or
may be applied to the purchase or redemption of bonds of one or more series
selected by the Company. (See Sections 8, 9 and 10 of Article III of the 1939
Mortgage.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
Net earnings are computed before provision for depreciation and
amortization of property, income and profits taxes (as defined in the 1939
Mortgage), interest on any indebtedness and amortization of debt discount and
expense and do not take into account any profits or losses from the sale or
disposal of capital assets or securities. (See Section 5 of Article I of the
1939 Mortgage.)
Property additions under the 1939 Mortgage consist of property used or
useful in the electric, gas or steam business (with certain exceptions) acquired
or constructed by the Company within five years next preceding the certification
thereof to the 1939 Mortgage Trustee. (See Section 4 of Article I of the 1939
Mortgage.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
The approximate amount of net property additions as of March 31, 1996, and
the amount of retired bonds as of September 30, 1996, available for use as the
basis for the issuance of Class A Bonds under the 1939 Mortgage, subject to the
net earnings restrictions discussed above, were $373,263,821 and $968,180,000,
respectively. The Company will determine, at the time of each issuance of Class
A Bonds under the 1939 Mortgage which are to be the basis for the issuance of
New Bonds, whether such Class A Bonds will be issued upon the basis of property
additions or retired bonds. As of September 30, 1996, $1,144,917,000 in
aggregate principal amount of bonds were outstanding under the 1939 Mortgage,
$472,167,000 aggregate principal amount of which was held by the 1993 Mortgage
Trustee as security for outstanding Mortgage Securities under the 1993 Mortgage.
The 1939 Mortgage contains restrictions on (a) the acquisition of property
securing prior lien indebtedness in excess of 60% of the fair value of the
property and (b) the issuance of bonds, withdrawal of cash or release of
property on the basis of property subject to prior lien. Prior lien
indebtedness secured by property theretofore acquired may not be increased
unless the evidence thereof is pledged with the 1939 Mortgage Trustee. (See
Section 4 of Article I and Sections 15, 17 and 19 of Article IV of the 1939
Mortgage.) See "Voting of Class A Bonds Issued Under the 1939 Mortgage".
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MAINTENANCE AND REPLACEMENT FUND FOR BONDS OUTSTANDING UNDER THE 1939
MORTGAGE: Although there will be no provision for a maintenance and replacement
fund with respect to Class A Bonds issued under the 1939 Mortgage as the basis
for the issuance of New Bonds, the Company has covenanted, with respect to
various series of outstanding bonds issued under the 1939 Mortgage maturing
through July 1, 1998, that, so long as any bond of such series remains
outstanding, the Company will, for each calendar year (herein called the
"accounting period"), pay to the 1939 Mortgage Trustee, as a Maintenance and
Replacement fund, an amount in cash not less than the sum of 15% of the gross
electric operating revenues and 10% of the gross gas and steam operating
revenues (as defined in the 1939 Mortgage, which, among other things, provides
for the deduction therefrom of the cost of purchased electric current, gas and
steam) derived from the mortgaged property during the accounting period, less,
however, the following optional credits: (a) expenditures during the accounting
period for repairs and maintenance of the mortgaged property; (b) the cost of
property additions during the accounting period deemed to renew or replace
retired or abandoned property, subject to adjustment for any outstanding prior
lien bonds secured by such property additions; (c) the principal amount of all
bonds and/or 166-2/3% of the principal amount of all prior lien bonds, retired
or redeemed and for which no bonds have been issued, credit taken or cash
withdrawn under the 1939 Mortgage; and (d) net property additions to the extent
of 100% thereof. Cash so deposited may be applied to the purchase or redemption
of such bonds as the Company may designate, which by their terms are redeemable
prior to maturity (including any of the Class A Bonds issued under the 1939
Mortgage that are so redeemable and that were issued as the basis for the
issuance of Bonds) at a price not exceeding the then current redemption price as
set forth in the relevant supplemental indenture and the accrued interest on
such bonds, or may be withdrawn upon the basis of certain property additions or
certain retired bonds or prior lien bonds. (See Section 8 of Article IV of the
1939 Mortgage and Article Two of certain supplemental indentures.) See "Voting
of Class A Bonds Issued Under the 1939 Mortgage".
The series of outstanding bonds which contain maintenance and replacement
fund covenants mature through July 1, 1998, but may be redeemed prior to their
stated maturity. The Company does not anticipate issuing any additional series
of bonds under the 1939 Mortgage which will contain such covenants. The Company
will no longer be bound by such covenants after all the bonds of such series
have been retired.
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MODIFICATION OF THE 1939 MORTGAGE: The 1939 Mortgage and the rights of
bondholders thereunder may be modified with the consent of the Company, and of
the 1939 Mortgage Trustee if deemed affected, and the consent of the holders of
not less than 75% in principal amount of the bonds then outstanding, or of not
less than 75% in principal amount of the outstanding bonds of any one or more
series which may be affected by any such modification; except that the
bondholders, without the consent of the holder of each bond affected, have no
power to (a) extend the time of payment of the principal of or interest on any
bonds; (b) reduce the principal amount thereof or the rate of interest thereon,
or otherwise modify the terms of payment of principal or interest; (c) permit
the creation of any lien ranking prior to or on a parity with the lien of the
1939 Mortgage with respect to any of the mortgaged property; (d) deprive any
nonassenting bondholder of a lien upon the mortgaged property for the security
of his/her bonds; or (e) reduce the percentage of bondholders authorized to take
such action. (See Article XIV of the 1939 Mortgage.) The Company has reserved
the right to amend the 1939 Mortgage without any consent or other action by
holders of any series of bonds created after October 31, 1975 (including Class A
Bonds issued under the 1939 Mortgage as the basis for the issuance of New
Bonds) to reduce the required consent of bondholders described above from 75% to
60%. (See Article Five of the Supplemental Indenture dated as of November 1,
1977.)
VOTING OF CLASS A BONDS ISSUED UNDER THE 1939 MORTGAGE: The 1993 Mortgage
provides that, so long as no Event of Default as defined in the 1993 Mortgage
has occurred and is continuing thereunder, the 1993 Mortgage Trustee will, as
holder of Class A Bonds issued under the 1939 Mortgage and delivered as the
basis for the issuance of Bonds,
(a) vote or consent in favor of amendments or modifications to the
1939 Mortgage of substantially the same tenor and effect as follows:
(i) to expand the definition of property additions to
eliminate geographical restrictions to certain states and allow the
inclusion of properties located anywhere in the United States, Canada
and Mexico, or their coastal waters; to include space satellites and
stations, solar power satellites and other analogous facilities; to
include nuclear fuel and other analogous devices or substances and to
establish other provisions as to such fuel; to include properties
located on leased real property, subject to certain limitations; to
include goodwill when acquired with a public utility system, subject
to certain limitations; and to delete the requirement that property
additions have been acquired or constructed within five years;
(ii) to remove the requirement that certificates delivered
to the 1939 Mortgage Trustee be verified;
(iii) to liberalize the requirements for publication of
notices of redemption and other notices;
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(iv) to eliminate the maintenance and replacement fund or,
in the alternative,
(A) to change the amount of cash deliverable to the
1939 Mortgage Trustee to the lower of (x) 10% of the combined
electric, gas and steam gross operating revenues of the Company
or (y) 2% of the cost of the depreciable property of the Company,
less the accumulated provision for depreciation; and
(B) to change the definition of gross operating
revenues to deduct the cost of fuel used to provide electric, gas
and steam services;
(v) to change the opinion of counsel required to be
delivered upon the certification of property additions to delete the
requirement that the Company have all necessary permission from
governmental authorities to use and operate such property additions;
(vi) to specifically allow the inclusion of earnings
collected subject to refund in net earnings for purposes of the
interest coverage requirement for the issuance of bonds;
(vii) to specifically permit the debt component, in addition
to the equity component, of the allowance for funds used during
construction to be included in net earnings for purposes of the
interest coverage requirement for the issuance of bonds;
(viii) (A) to reduce the interest coverage requirement for
the issuance of bonds to 2 times from 2-1/2 times
annual interest charges on outstanding bonds,
including bonds applied for, and prior lien
indebtedness; or, in the alternative,
(B) to change such coverage requirement to a
requirement that net earnings be at least equal to
either (x) 2 (or any higher amount) times annual
interest charges on, or (y) 15% (or any higher
percentage) of the aggregate principal amount of,
outstanding bonds, including the bonds applied for,
and prior lien indebtedness;
(ix) to remove the restrictions on acquiring property
subject to a prior lien (retaining, however, the restrictions on
certifying such property as property additions);
(x) to raise the minimum dollar amount of fire and other
losses that must be payable to the 1939 Mortgage Trustee from $50,000
to 3% (or any higher percentage) of the principal amount of
outstanding bonds; and to
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specifically permit the Company to carry insurance policies with
deductible provisions equal to 3% (or any higher percentage) of the
principal amount of outstanding bonds or any higher deductible amount
usually contained in the policies of other companies owning and
operating similar properties;
(xi) to delete the covenant of the Company to "observe and
conform to all valid requirements of any governmental authority
relative to any of the mortgaged property";
(xii) to delete the requirement that the 1939 Mortgage
Trustee be located in New York, New York and that the Company maintain
an office in New York, New York, to make payments on bonds and
register transfers thereof;
(xiii) to modify the special release provision of the 1939
Mortgage to increase the amount of the aggregate value of property
which may be released from the lien of the 1939 Mortgage within any
period of 12 consecutive calendar months without compliance with all
the conditions of the general release provision from $25,000 to (A)
the greater of $25,000 or 1% of the aggregate principal amount of
outstanding bonds or (B) the greater of $10,000,000 or 3% of the
aggregate principal amount of outstanding bonds (or any lower amount
or percentage);
(xiv) to permit bonds to be issued under the 1939 Mortgage
in a principal amount equal to 70% of net property additions instead
of 60% and to make correlative changes in provisions relating to,
among other things, the release of property from the lien of the 1939
Mortgage, the withdrawal of cash held by the 1939 Mortgage Trustee,
the acquisition and use under the 1939 Mortgage of property securing
prior lien indebtedness, and the use of retired prior lien bonds; and
(xv) to modify the definition of all defaults under the
1939 Mortgage to be substantially identical to the Events of Default
under the 1993 Mortgage; and
(b) with respect to any amendments or modifications to the 1939
Mortgage other than those referred to in (a) above, vote all Class A Bonds
Outstanding under the 1939 Mortgage then held by it, or consent with
respect thereto, in the manner as described under "DESCRIPTION OF THE NEW
BONDS -- Voting of Class A Bonds". (See Section 705 of the 1993 Mortgage.)
The Company has reserved the right to make any or all of the modifications
to the 1939 Mortgage described in (a)(i) through (a)(xiii)(A) above without
consent or other action of the holders of certain outstanding series of bonds
previously issued under the 1939 Mortgage (not including the Class A Bonds
issued thereunder as the basis of the issuance of
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Mortgage Securities) aggregating $433,500,000 in principal amount. (See Article
Three of the Supplemental Indenture dated as of March 1, 1980 and Article Four
of the Supplemental Indentures dated as of July 1, 1990, December 1, 1990, and
March 1, 1992, respectively.)
The indentures under which certain pollution control revenue bonds of
Morgan County, Colorado and Adams County, Colorado were issued provide that the
trustees thereunder, as holders of bonds issued under the 1939 Mortgage having a
principal amount of $156,750,000 in the aggregate, shall vote in favor of, or
consent with respect to, any or all of the possible modifications described in
(a)(i) through (a)(xiii)(A) above.
DEFAULT UNDER THE 1939 MORTGAGE: An event of default under the 1939
Mortgage includes a failure to pay interest on any bond, or to pay a sinking
fund installment, for 60 days after such payment becomes due, a failure to pay
the principal of or premium, if any, on any bond when the same becomes due, a
default with respect to the payment of principal of or interest on any prior
lien bonds, a failure to perform any other covenant in the 1939 Mortgage for 90
days after notice given to the Company by the 1939 Mortgage Trustee or by the
holders of 10% in principal amount of outstanding bonds, certain events in
bankruptcy, and an Event of Default under the 1993 Mortgage and/or certain
matured events of default under any other Class A Mortgage. (See Section 1 of
Article VIII of the 1939 Mortgage and Article Five of the Supplemental Indenture
dated as of November 1, 1993 creating the First Mortgage Bonds, Collateral
Series A.) The 1939 Mortgage Trustee may withhold notice of default (except
default in the payment of principal of or premium, if any, or interest on the
bonds or in the payment of a sinking fund installment) if it determines such
withholding to be in the interests of the bondholders. (See Section 2 of
Article VIII of the 1939 Mortgage.) The Company is required to report annually
to the 1939 Mortgage Trustee as to compliance with the covenants contained in
the 1939 Mortgage. (See Section 24 of Article IV of the 1939 Mortgage.)
Upon the occurrence of a default under the 1939 Mortgage, the 1939 Mortgage
Trustee or the holders of 25% in principal amount of outstanding bonds may
declare the principal of and interest accrued on all outstanding bonds due and
payable immediately; provided, however, that if such default has been cured, (a)
the holders of a majority in principal amount of outstanding bonds may annul
such declaration or (b) if, in making such declaration, the 1939 Mortgage
Trustee shall have acted without a direction from the holders of a majority in
principal amount of outstanding bonds, or if such declaration was made by the
holders of 25% in principal amount of outstanding bonds and the holders of a
majority in principal amount of outstanding bonds shall not have theretofore
delivered a written notice to the contrary, then such declaration shall ipso
facto be deemed to be annulled. (See Section 1 of Article VIII of the 1939
Mortgage.)
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ACTION BY 1939 MORTGAGE TRUSTEE: Except as otherwise provided in the 1939
Mortgage, the holders of a majority in principal amount of bonds outstanding
under the 1939 Mortgage have the right to require the 1939 Mortgage Trustee to
enforce the lien of the 1939 Mortgage and direct the time, method and place of
conducting any proceedings for any remedy available to the 1939 Mortgage Trustee
under the 1939 Mortgage. (See Section 15 of Article VIII of the 1939 Mortgage.)
No holder of bonds outstanding under the 1939 Mortgage has the right to enforce
the lien of the 1939 Mortgage without giving to the 1939 Mortgage Trustee
written notice of default and unless the holders of a majority in principal
amount of outstanding bonds shall have requested the 1939 Mortgage Trustee to
act and have offered the 1939 Mortgage Trustee security and indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred
thereby and the 1939 Mortgage Trustee shall have failed to take action within 60
days. (See Section 16 of Article VIII of the 1939 Mortgage.)
CONCERNING THE 1939 MORTGAGE TRUSTEE: The Company conducts banking
transactions with affiliates of the 1939 Mortgage Trustee in the normal course
of the Company's business and uses the 1939 Mortgage Trustee or its affiliates
as trustee for various debt issues.
LEGAL OPINIONS
The validity of the New Bonds will be passed upon for the Company by
LeBoeuf, Lamb, Greene, & MacRae, L.L.P., a limited liability partnership
including professional corporations, Denver, Colorado and New York, New York
and for any underwriters, agents or dealers by Brown & Wood LLP, New York, New
York. All legal matters pertaining to titles and the respective liens of the
1993 Mortgage and the 1939 Mortgage will be passed upon only by LeBoeuf, Lamb,
Greene, & MacRae, L.L.P. In giving its opinion, Brown & Wood LLP may rely as to
all matters of Colorado law upon the opinion of LeBoeuf, Lamb, Greene, & MacRae,
L.L.P.
EXPERTS
Reference is made to the Incorporated Documents for specification of
certain information incorporated herein by reference upon the authority of
experts. In addition, the statements made in "DESCRIPTION OF THE NEW BONDS --
Security" and "DESCRIPTION OF THE 1939 MORTGAGE", insofar as they are, or refer
to, statements of law or legal conclusions, have been prepared or reviewed by
LeBoeuf, Lamb, Greene, & MacRae, L.L.P., a limited liability partnership
including professional corporations, counsel for the Company, and have been set
forth herein on the authority of said firm as experts.
PLAN OF DISTRIBUTION
The Company may sell each type and series of New Bonds as applicable in any
of three ways: (i) directly to a limited number of institutional purchasers or
to a single purchaser, (ii) through agents or (iii) through underwriters or
dealers. The Prospectus
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Supplement relating to each series of New Bonds will set forth the terms of the
offering of such New Bonds, including the name or names of any such agents,
underwriters or dealers; the purchase price of such New Bonds and the net
proceeds to the Company from such sale; any underwriting discounts and other
items constituting underwriters' compensation; the initial public offering
price; and any discounts or concessions allowed or reallowed or paid to dealers.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in any sale of a series of New Bonds, such New
Bonds will be acquired by such underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Unless otherwise set forth in the Prospectus Supplement
relating to a series of New Bonds, the obligations of any underwriter or
underwriters to purchase such New Bonds will be subject to certain conditions
precedent and such underwriter or underwriters will be obligated to purchase all
of such New Bonds if any are purchased, except that, in certain cases involving
a default by one or more underwriters, less than all of such New Bonds may be
purchased.
If an agent of the Company is used in any sale of a series of New Bonds,
any commission payable by the Company to such agent will be set forth in the
Prospectus Supplement relating to such series of New Bonds. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of
the New Bonds may be deemed to be underwriters, and any discount or commissions
received by them on the sale or resale of New Bonds may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended (the "1933 Act"). Agents, underwriters and dealers may be entitled
under agreements entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the 1933 Act.
33
<PAGE>
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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, THE APPLICABLE
PRICING SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING 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 AGENT. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT, THE
APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER 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>
Recent Developments........................................................ S-2
Application of Proceeds.................................................... S-3
Supplemental Description of the Notes...................................... S-3
Plan of Distribution....................................................... S-8
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 2
The Company................................................................ 3
Ratio of Consolidated Earnings to Consolidated Fixed Charges............... 4
Application of Proceeds.................................................... 4
Description of the New Bonds............................................... 4
Description of the 1939 Mortgage........................................... 24
Legal Opinions............................................................. 32
Experts.................................................................... 32
Plan of Distribution....................................................... 32
</TABLE>
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$150,000,000
[LOGO OF PUBLIC SERVICE COMPANY OF COLORADO APPEARS HERE]
SECURED MEDIUM-TERM NOTES, SERIES C (BEING A SERIES OF FIRST COLLATERAL TRUST
BONDS)
DUE FROM NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE
_______________
PROSPECTUS SUPPLEMENT
_______________
MERRILL LYNCH & CO.
February 26, 1997
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