PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 8, 1993)
600,000 SHARES
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
6.75% CUMULATIVE PREFERRED STOCK--$25 PAR
------------------------
The New Preferred Stock--$25 Par may not be redeemed prior to February 1,
1999. Thereafter, the New Preferred Stock--$25 Par may be redeemed at the option
of the Company upon not less than 30 days' notice at any time at $25.00 per
share, plus accumulated dividends.
The ability of corporate holders of the New Preferred Stock--$25 Par to
claim a dividends received deduction for Federal income tax purposes with
respect to dividends paid on the New Preferred Stock-- $25 Par will be limited
as provided in Section 244(a) of the Internal Revenue Code of 1986, as amended.
See "Certain Terms of the New Preferred Stock--$25 Par--Federal Income
Tax-Dividends Received Deduction."
Application will be made to list the New Preferred Stock--$25 Par on the
New York Stock Exchange. Listing will be subject to meeting the requirements of
such Exchange including those relating to distribution.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE> <CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Share.................................... $25.00 $.68 $24.32
Total........................................ $15,000,000 $408,000 $14,592,000
</TABLE>
(1) Plus accumulated dividends, if any, from February 3, 1994.
(2) Before deducting expenses payable by the Company estimated at $50,000.
------------------------
The New Preferred Stock--$25 Par is offered by the Underwriter, subject to
prior sale, when, as and if issued by the Company and accepted by the
Underwriter and subject to certain other conditions. The Underwriter reserves
the right to withdraw, cancel or modify such offer and to reject orders in whole
or in part. It is expected that delivery of the New Preferred Stock--$25 Par
will be made in New York, New York on or about February 3, 1994.
------------------------
KIDDER, PEABODY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is January 27, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW PREFERRED
STOCK--$25 PAR OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
------------------------
Public Service Electric and Gas Company ("Company") is offering with this
Prospectus Supplement and accompanying Prospectus 600,000 shares of its 6.75%
Cumulative Preferred Stock--$25 Par ("New Preferred Stock--$25 Par"). The
Company is also offering 600,000 shares of its 6.92% Cumulative Preferred Stock
(Par Value $100 per share). At the same time, The Pollution Control Financing
Authority of Salem County (New Jersey) is offering $50,000,000 principal amount
of its Pollution Control Revenue Bonds, 1994 Series A (Public Service Electric
and Gas Company Project), to be secured and serviced by a like principal amount
of the Company's First and Refunding Mortgage Bonds, Pollution Control Series O.
Each offering is a separate transaction and is not contingent on any other
offering.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Securities
and Exchange Commission are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1992, filed pursuant to the Securities Exchange Act of 1934
("1934 Act").
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993, June 30, 1993 and September 30, 1993, filed pursuant to the
1934 Act.
3. The Company's Current Reports on Form 8-K dated March 25, 1993, May
27, 1993, June 9, 1993, December 1, 1993 and January 21, 1994, filed
pursuant to the 1934 Act.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of
the New Preferred Stock--$25 Par offered hereby shall be deemed to be
incorporated by reference in this Prospectus Supplement and Prospectus and to be
a part hereof from the date of filing of such documents.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon written or oral request of such person, a copy of any or all of the
documents referred to above which have been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents not specifically
incorporated by reference herein. Requests for such copies should be directed to
the Director--Investor Relations, Public Service Electric and Gas Company, 80
Park Plaza, T6B, P.O. Box 570, Newark, New Jersey 07101 (telephone (201)
430-6503).
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the New Preferred Stock--$25 Par will be
used by the Company to redeem all of the outstanding 150,000 shares of its 8.08%
Cumulative Preferred Stock (Par Value $100 per share) called for redemption on
March 1, 1994.
COVERAGE RATIOS
The Company's Ratios of Earnings to Fixed Charges plus Preferred Stock
Dividend Requirements for each of the years indicated are as follows:
<TABLE>
YEAR ENDED DECEMBER 31,
<S> <C> <C> <C> <C>
- -----------------------------------------------------
1989 1990 1991 1992 1993
- --------- --------- --------- --------- ---------
2.88 2.79 2.86 2.43 2.89
</TABLE>
The Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend
Requirements represent, on a pre-tax basis, the number of times Earnings cover
Fixed Charges plus Preferred Stock Dividend Requirements. Earnings consist of
net income, to which have been added fixed charges and taxes based on income of
the Company and its subsidiaries. Fixed Charges consist of interest charges and
an interest factor in rentals. Preferred Stock Dividend Requirements represent
the pre-tax earnings necessary to pay such dividends, computed at the effective
tax rates for the applicable periods.
CERTAIN TERMS OF THE NEW PREFERRED STOCK--$25 PAR
The following supplemental information concerning the New Preferred
Stock--$25 Par should be read in conjunction with the statements under
"Description of the New Preferred Stock" in the accompanying Prospectus.
DIVIDEND RIGHTS
The holders of the New Preferred Stock--$25 Par are entitled to receive,
when and as declared by the Company's board of directors, cash dividends at the
annual rate set forth on the cover of this Prospectus Supplement, and no more,
cumulative and payable initially for the period from February 3, 1994 through
March 31, 1994, and thereafter quarterly with respect to each calendar quarterly
period, on or before the last day of each March, June, September and December.
No dividends may be paid on stock of the Company except out of its earned
surplus.
REDEMPTION PROVISIONS
All or any of the shares of the New Preferred Stock--$25 Par may be
redeemed at the option of the Company upon not less than 30 days' notice at any
time upon payment in cash of $25.00 per share, plus an amount equal to all
accumulated and unpaid dividends thereon to the date of redemption, whether or
not such dividends shall have been earned or declared; provided, however, that
prior to February 1, 1999 none of the shares of the New Preferred Stock--$25 Par
may be redeemed.
OTHER PROVISIONS
The holders of preferred stock are not entitled to any pre-emptive or other
subscription rights. No sinking fund is provided for the New Preferred
Stock--$25 Par.
The shares of the New Preferred Stock--$25 Par, when duly issued and paid
for in accordance with the Purchase Agreement hereinafter mentioned, will be
fully paid and non-assessable.
S-3
<PAGE>
FEDERAL INCOME TAX--DIVIDENDS RECEIVED DEDUCTION
The New Preferred Stock--$25 Par constitutes "preferred stock" and is being
issued to redeem the Company's 8.08% Cumulative Preferred Stock (Par Value $100
per share) which also constitutes "preferred stock" and was issued to refund
First and Refunding Mortgage Bonds of the Company issued prior to October 1,
1942. Therefore, the following Federal income tax consequences shall apply to an
investment in the New Preferred Stock--$25 Par.
In the opinion of Ivins, Philips & Barker, Chartered, of Washington, D.C.,
special tax counsel for the Company, the ability of corporate holders of the New
Preferred Stock--$25 Par to claim a dividends received deduction for Federal
income tax purposes will be governed by Section 244(a) of the Internal Revenue
Code of 1986, as amended ("Code"). Section 244(a) of the Code provides that a
corporate recipient shall be allowed a dividends received deduction equal to 70%
of the excess of (a) the amount of the dividend received with respect to the New
Preferred Stock--$25 Par, over (b) the amount derived by multiplying the amount
of such dividend received by a fraction, the numerator of which is 14%, and the
denominator of which is the highest rate of corporate income tax specified in
Section 11(b) of the Code.
PENNSYLVANIA PERSONAL PROPERTY TAX
In the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia,
Pennsylvania, Pennsylvania counsel to the Company, the New Preferred Stock--$25
Par is exempt under Pennsylvania law, as presently in effect, from all personal
property taxes in Pennsylvania.
------------------------
Transfer agents for the New Preferred Stock--$25 Par are the transfer
clerks at the office of the Company, 80 Park Plaza, P.O. Box 570, Newark, NJ
07101 and First Chicago Trust Company of New York, 30 West Broadway, New York,
NY 10007. Registrars for the New Preferred Stock--$25 Par are First Fidelity
Bank, National Association, 765 Broad Street, Newark, NJ 07101 and First Chicago
Trust Company of New York, 30 West Broadway, New York, NY 10007.
UNDERWRITING
The Company has agreed to sell to Kidder, Peabody & Co. Incorporated (the
"Underwriter"), and the Underwriter has agreed to purchase, all of the shares of
New Preferred Stock--$25 Par at $24.32 per share. The Purchase Agreement
provides that the obligations of the Underwriter are subject to certain
conditions as therein set forth.
The Company has been advised by the Underwriter that it proposes initially
to offer the New Preferred Stock--$25 Par to the public at the offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $.60 per share. The
Underwriter may allow and such dealers may reallow a discount not in excess of
$.25 per share to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
There is presently no trading market for the New Preferred Stock--$25 Par
and there is no assurance that a market will develop. Although it is under no
obligation to do so, the Underwriter presently intends to act as a market maker
for the New Preferred Stock--$25 Par in the secondary trading market and may
discontinue market making at any time without notice.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including certain liabilities under the Securities Act of 1933, as
amended.
S-4
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CUMULATIVE PREFERRED STOCK-$25 PAR
---------------------
This Prospectus is to be used by Public Service Electric and Gas Company
(the "Company") in connection with its sale from time to time in one or more
series of not more than 10,000,000 shares of its Cumulative Preferred Stock-$25
Par. Such new Cumulative Preferred Stock will be offered for sale pursuant to
the competitive bidding procedures set forth in the Company's Terms and
Conditions Relating to Bids for such new Cumulative Preferred Stock, copies of
which are available from the Company. The bids are to specify the dividend rate
for the new Cumulative Preferred Stock, the purchase price and the compensation
per share to be paid by the Company to the Underwriters. The number of shares of
such new Cumulative Preferred Stock to be issued after a bidding therefor is
referred to herein as the "New Preferred Stock."
Pursuant to said Terms and Conditions Relating to Bids, at least
twenty-four hours prior to the time designated for the opening of bids by the
Company, the Company will notify prospective bidders or, in the case of a group
of bidders, the representative of the group, in writing of (1) the date and time
for the receipt of bids, (2) whether bids will be received in writing, by
telephone confirmed in writing, or either in writing or by telephone confirmed
in writing, (3) the number of shares of New Preferred Stock, (4) the minimum and
maximum prices per share which may be specified in the bid as the purchase price
for the New Preferred Stock, (5) the terms and conditions upon which the New
Preferred Stock may be redeemed, (6) the date from which dividends on the New
Preferred Stock will be cumulative and (7) such other provisions as may be
necessary or desirable to establish the terms and conditions of the New
Preferred Stock and the terms of bidding therefor. Thereafter, the Company may
also notify such bidders or representative, orally, confirmed in writing, not
less than 30 minutes prior to the time designated for receiving bids, of any
reduced number of shares of New Preferred Stock for which the Company may elect
to receive bids.
In certain cases, the ability of corporate holders of the New Preferred
Stock to claim a dividends received deduction for Federal income tax purposes
with respect to dividends paid on the New Preferred Stock will be limited as
provided in Section 244(a) of the Internal Revenue Code of 1986, as amended. See
"Description of the New Preferred Stock--Federal Income Tax-Dividends Received
Deduction"
The specific designation, purchase price, dividend payments, and redemption
or other particular terms of the New Preferred Stock will be set forth in an
accompanying Prospectus Supplement.
---------------------
In the opinion of Ballard Spahr Andrews & Ingersoll, Pennsylvania Counsel
for the Company, the New Preferred Stock is exempt under Pennsylvania law, as
presently in effect, from all personal property taxes in Pennsylvania.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 8, 1993.
<PAGE>
AVAILABLE INFORMATION
Public Service Electric and Gas Company (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "1934
Act") and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. and at
its regional offices at 500 West Madison Street, Chicago, Illinois and Seven
World Trade Center, New York, New York. Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. Such material can
also be inspected at the New York Stock Exchange, Inc. where certain of the
Company's securities are listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1992, filed pursuant to the 1934 Act.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993, June 30, 1993 and September 30, 1993, filed pursuant to the
1934 Act.
3. The Company's Current Reports on Form 8-K dated March 25, 1993, May
27, 1993, June 9, 1993 and December 1, 1993, filed pursuant to the 1934
Act.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of
the New Preferred Stock offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statements contained in a document incorporated or deemed to
be incorporated by reference herein shall be modified or superseded for the
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or in the accompanying Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon written or oral request of such person, a copy of any or all of the
documents referred to above which have been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents not specifically
incorporated by reference herein. Requests for such copies should be directed to
the Director--Investor Relations, Public Service Electric and Gas Company, 80
Park Plaza, T6B, P.O. Box 570, Newark, New Jersey 07101 (telephone (201)
430-6503).
2
<PAGE>
THE COMPANY
The Company is an operating public utility company providing electric and
gas service in areas of New Jersey in which about 70% of the State's population
resides. The Company is the principal subsidiary of Public Service Enterprise
Group Incorporated ("Enterprise"), which owns all of the Company's common stock.
The Company's service area is a corridor of approximately 2,600 square
miles running diagonally across the State of New Jersey from Bergen County in
the northeast to an area below Camden in the southwest. The territory is heavily
populated and includes New Jersey's six largest cities and many residential
communities as well as commercial and industrial areas. The Company's executive
offices are located at 80 Park Plaza, P.O. Box 570, Newark, New Jersey
07101-0570 (telephone (201) 430-7000).
USE OF PROCEEDS
The net proceeds from the sale of the New Preferred Stock will be added to
the general funds of the Company and will be used for general corporate
purposes, including the refunding and redemption of certain of its higher cost
redeemable preferred stock, the payment of construction expenditures and the
reimbursement of its treasury of funds expended therefor and/or the payment of
its short-term obligations incurred for such purposes.
COVERAGE RATIOS
The Company's Ratios of Earnings to Fixed Charges plus Preferred Stock
Dividend Requirements for each of the years indicated is as follows:
<TABLE> <CAPTION>
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------- TWELVE MONTHS ENDED
1988 1989 1990 1991 1992 SEPTEMBER 30, 1993
- ----------- --------- --------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
2.87 2.88 2.79 2.86 2.43 2.83
</TABLE>
The Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend
Requirements represent, on a pre-tax basis, the number of times Earnings cover
Fixed Charges plus Preferred Stock Dividend Requirements. Earnings consist of
net income, to which have been added fixed charges and taxes based on income of
the Company and its subsidiaries. Fixed Charges consist of interest charges and
an interest factor in rentals. Preferred Stock Dividend Requirements represent
the pre-tax earnings necessary to pay such dividends, computed at the effective
tax rates for the applicable periods.
3
<PAGE>
DESCRIPTION OF THE NEW PREFERRED STOCK
The following statement briefly summarizes certain provisions of Articles
IV and V of the Company's Restated Certificate of Incorporation, as amended, and
as proposed to be amended to create the New Preferred Stock, copies of which
Restated Certificate of Incorporation and amendments thereto (hereinafter called
the "Charter"), and the proposed amendment creating the New Preferred Stock, are
filed as Exhibits 3a(1) through 3a(5) to the registration statement of which
this Prospectus is a part (the "Registration Statement"). For a complete
statement of such provisions reference is made to such exhibits, and to the
particular Articles and Subdivisions of the Charter, hereinafter referred to,
and the following statement is qualified in its entirety by such reference.
The Charter authorizes the issuance of two classes of preferred stock
(hereinafter collectively called the "preferred stock") consisting of 7,500,000
shares of Preferred Stock having a par value of $100 per share (hereinafter
called "Preferred Stock ($100 Par)") and 10,000,000 shares of Preferred
Stock-$25 Par. All shares of Preferred Stock ($100 Par) and Preferred Stock-$25
Par which are redeemed by the Company are cancelled and, upon such cancellation,
are restored to the status of authorized but unissued shares, not classified as
to series. The Preferred Stock ($100 Par) and the Preferred Stock-$25 Par rank
equally with respect to dividends and distribution of assets upon liquidation or
dissolution of the Company. All series of each class of preferred stock rank
equally with all other series of the same class, and all series of the same
class must be alike in all respects, except for variations and differences
between series as to rate of dividends, redemption provisions, amounts payable
upon liquidation or dissolution, any sinking fund and any conversion rights, all
as determined by the Company's Board of Directors. If any dividends or the
amounts payable on liquidation or dissolution of the Company are not paid in
full upon all shares of preferred stock, all shares of preferred stock shall
participate ratably, as to the payment of dividends, in proportion to the sums
which would be payable thereon if all dividends thereon were paid in full, and,
in case of liquidation or dissolution of the Company, in proportion to the sums
which would be payable on such liquidation or dissolution if all sums payable
thereon to holders of all shares of preferred stock were discharged in full.
As of September 30, 1993, there were 5,799,942 shares of Preferred Stock
($100 Par) and no shares of Preferred Stock-$25 Par issued and outstanding.
DIVIDEND RIGHTS
See the accompanying Prospectus Supplement.
So long as any shares of preferred stock are outstanding, no dividend
(other than dividends payable in shares of common stock) may be paid on or set
apart for the common stock, nor may any shares thereof be purchased, redeemed or
otherwise acquired for value by the Company or any subsidiary, unless (i) the
Company is not in arrears in respect of any dividends on, or sinking fund for
any series of, preferred stock; (ii) full dividends on all outstanding shares of
preferred stock for the then current quarterly dividend period have been
declared and set apart; and (iii) after giving effect to the payment of such
dividend or such purchase, redemption or other acquisition, the capital of the
Company represented by its common stock, plus its surplus, exceeds the aggregate
of the amounts payable on involuntary liquidation or dissolution of the Company
in respect of all shares of preferred stock then outstanding.
No dividends may be paid on stock of the Company except out of its earned
surplus.
4
<PAGE>
VOTING RIGHTS
If dividends upon any shares of preferred stock are in arrears in an amount
at least equal to the annual dividend thereon, the holders of preferred stock,
voting separately as a single class, are entitled to elect a majority of the
Company's Board of Directors. Such voting rights of the holders of preferred
stock to elect directors shall continue until all accumulated and unpaid
dividends thereon have been paid, whereupon all such voting rights shall cease,
subject to being again revived from time to time. Stockholders of all classes,
including holders of preferred stock when entitled to vote, are entitled to
cumulative voting in the election of directors.
Without the consent of the holders of two-thirds of the preferred stock
then outstanding, voting as a single class, the Company may not issue preferred
stock unless (1) net earnings of the Company available for the payment of
interest charges, after provisions for all taxes, for any 12 consecutive months
out of the 15 preceding months, shall have been at least 1 1/2 times the
aggregate of the annual interest requirements on its indebtedness to be
outstanding immediately after the issuance of such shares and the annual
dividend requirements on all preferred stock to be then outstanding, and (2) the
capital of the Company represented by its common stock, plus its surplus, shall
exceed the aggregate of the amounts payable on involuntary liquidation or
dissolution of the Company in respect of all shares of its preferred stock to be
outstanding immediately after the issuance of such additional shares.
When voting as a single class the holders of Preferred Stock ($100 Par) are
entitled to one vote per share, and the holders of Preferred Stock-$25 Par are
entitled to 1/4 vote per share.
Without the consent of the holders of two-thirds of each class of
outstanding preferred stock, the Company may not adopt any amendment to the
Charter which would (1) create or authorize any class of stock ranking prior to
or equally with such class as to dividends or distribution of assets on
liquidation or dissolution of the Company, or (2) adversely affect the rights or
preferences of the holders of any shares of such class, provided, that if any
such amendment adversely affects less than all series of such class only the
consent of the holders of two-thirds of each series so affected is required, and
that no consent of the holders of either class of preferred stock is required
for increasing the amount of authorized preferred stock.
Without the consent of the holders of a majority of each class of
outstanding preferred stock, the Company may not consolidate or merge with or
into any other corporation unless none of the rights or preferences of the
holders of such class will be adversely affected thereby, and unless the
corporation resulting therefrom will have outstanding immediately thereafter no
stock, except the preferred stock, ranking prior to or equally with such class
as to dividends or distribution of assets on liquidation or dissolution of the
Company.
Except as otherwise required by law, the holders of the common stock have
all other voting rights in the Company. Public Service Enterprise Group
Incorporated is the owner of all of the outstanding common stock of the Company.
LIQUIDATION RIGHTS
On liquidation or dissolution of the Company (not including a consolidation
or merger to which the Company is a party), before any payment or distribution
is made to the holders of the common stock, the holder of each share of
preferred stock of each series is entitled to be paid (1) if such liquidation or
dissolution be involuntary, the par value thereof, or, (2) if such liquidation
or dissolution be voluntary,
5
<PAGE>
the amount established by the Board of Directors in respect of the shares of
such series, which in the case of each outstanding series is the optional
redemption price then in effect, plus in each case an amount equal to all
accumulated and unpaid dividends thereon to the date of such payment, whether or
not such dividends shall have been earned or declared, and no more.
REDEMPTION AND SINKING FUND PROVISIONS (IF ANY)
See the accompanying Prospectus Supplement for details of the redemption
and sinking fund provisions (if any) applicable to the New Preferred Stock.
OTHER PROVISIONS
The holders of preferred stock are not entitled to any pre-emptive or other
subscription rights.
The shares of the New Preferred Stock, when duly issued and paid for in
accordance with the Purchase Agreement hereinafter mentioned, will be fully paid
and non-assessable.
FEDERAL INCOME TAX--DIVIDENDS RECEIVED DEDUCTION
The Company presently has outstanding 150,000 shares of its 8.08%
Cumulative Preferred Stock (Par Value $100 per share). This series of preferred
stock is what is commonly referred to as "old money" preferred stock since it
was issued to refund or replace bonds of the Company issued prior to October 1,
1942.
In the opinion of Ivins, Phillips and Barker, Chartered, special tax
counsel to the Company, under current Federal income tax law, to the extent that
any of the New Preferred Stock is issued to refund or replace "old money"
preferred stock, the ability of corporate holders of such New Preferred Stock to
claim a dividends received deduction for Federal income tax purposes with
respect to dividends relating thereto will be limited as provided in Section
244(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Generally,
Section 244(a) of the Code limits the dividends received deduction to which a
corporate holder would otherwise be entitled to an amount equal to 70 percent of
the excess of (a) the amount of dividend received over (b) the amount derived by
multiplying the amount of the dividend received by a fraction, the numerator of
which is 14 percent, and the denominator of which is the highest rate of
corporate income tax specified in Section 10(b) of the Code.
See the accompanying Prospectus Supplement for a discussion of use of
proceeds for the New Preferred Stock and for any additional Federal income tax
considerations.
PENNSYLVANIA PERSONAL PROPERTY TAX
In the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA,
Pennsylvania counsel to the Company, the New Preferred Stock is exempt under
Pennsylvania law, as presently in effect, from all personal property taxes in
Pennsylvania.
------------------------
Transfer agents for the New Preferred Stock are the transfer clerks at the
office of the Company, 80 Park Plaza, P.O. Box 570, Newark, NJ 07101 and First
Chicago Trust Company of New York, 30 West Broadway, New York, NY 10007.
Registrars for the New Preferred Stock are First Fidelity Bank, N.A., New
Jersey, 765 Broad Street, Newark, NJ 07101 and First Chicago Trust Company of
New York, 30 West Broadway, New York, NY 10007.
6
<PAGE>
PLAN OF DISTRIBUTION
The Company will sell each series of the New Preferred Stock through the
competitive bidding procedures set forth in the Company's Terms and Conditions
Relating to Bids for the New Preferred Stock ("Terms and Conditions") filed as
Exhibit 1a to the Registration Statement. Notice of the bidding for the New
Preferred Stock will be provided, in accordance with the Terms and Conditions,
to prospective bidders or, in the case of a group of bidders, to the
representative of the group, who have notified the Company that they intend to
submit a bid and wish to be provided notice of the time and date of bidding.
Upon the acceptance of a bid for each series of the New Preferred Stock, a
Purchase Agreement, substantially in the form of Exhibit 1b to the Registration
Statement, will become effective providing for the issuance and sale of such New
Preferred Stock pursuant to a firm commitment underwriting on the terms set
forth therein. The purchase price for each series of the New Preferred Stock and
the proceeds to the Company from such sale and the terms of any re-offering of
such New Preferred Stock, including the name or names of any Underwriters, any
underwriting discounts and other terms constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers will be set forth in an accompanying Prospectus
Supplement. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
The form of Purchase Agreement provides that the consummation of the
purchase of each series of the New Preferred Stock will be subject to certain
conditions precedent and that the Company will indemnify each Underwriter for
certain civil liabilities, including liabilities under the Securities Act of
1933 (the "1933 Act").
LEGAL OPINIONS
The legality of the New Preferred Stock will be passed on for the Company
by R. Edwin Selover, Esq., Senior Vice President and General Counsel, or James
T. Foran, Esq., General Corporate Counsel, of the Company, who may rely on the
opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA, as to matters
of Pennsylvania law. Messrs. Selover and Foran are full-time employees of the
Company. Brown & Wood, of New York, New York, will pass on the legality of the
New Preferred Stock for the Underwriters and may rely on the opinion of Counsel
of the Company as to matters of New Jersey law and on the opinion of Ballard
Spahr Andrews & Ingersoll as to matters of Pennsylvania law.
7
<PAGE>
EXPERTS
Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA, have reviewed the
statement as to exemption of the New Preferred Stock from personal property
taxes in Pennsylvania on the cover page of this Prospectus and under DESCRIPTION
OF THE NEW PREFERRED STOCK--Pennsylvania Personal Property Tax. Such statement,
as to matters of law and legal conclusions, is made in reliance on the authority
of Ballard Spahr Andrews & Ingersoll as experts.
Ivins, Phillips and Barker, Chartered, of Washington, D.C. have reviewed
the statements as to Federal income tax matters on the cover page of this
Prospectus and under DESCRIPTION OF THE NEW PREFERRED STOCK--Federal Income
Tax-Dividends Received Deduction. Such statements, as to matters of law and
legal conclusions, are made in reliance on the authority of Ivins, Phillips and
Barker as experts.
The consolidated financial statements, the consolidated financial statement
schedules and selected financial data incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K have been so incorporated
in reliance on the report of Deloitte & Touche, independent auditors, given upon
the authority of that firm as experts in accounting and auditing.
8
<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
OR THE PROSPECTUS IN CONNECTION WITH THE OFFER
MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference................................... S-2
Use of Proceeds............................... S-3
Coverage Ratios............................... S-3
Certain Terms of the New Preferred Stock--$25
Par........................................... S-3
Underwriting.................................. S-4
PROSPECTUS
Available Information......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company................................... 3
Use of Proceeds............................... 3
Coverage Ratios............................... 3
Description of the New Preferred
Stock....................................... 4
Plan of Distribution.......................... 7
Legal Opinions................................ 7
Experts....................................... 8
LOGO
PSE&G
PUBLIC SERVICE
ELECTRIC AND GAS
COMPANY
600,000 SHARES
6.75% CUMULATIVE
PREFERRED STOCK--$25 PAR
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PROSPECTUS SUPPLEMENT
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KIDDER, PEABODY & CO.
INCORPORATED
JANUARY 27, 1994
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