Filed Pursuant to Rule 424(b)(5)
Registration No. 33-52435
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 2, 1994)
$150,000,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
First and Refunding Mortgage Bonds, 6 1/4% Series WW due 2007
The New Bonds will mature on January 1, 2007 and will bear interest from January
1, 1996, at the rate of 6 1/4% per annum, payable semi-annually on January 1 and
July 1, commencing July 1, 1996. The New Bonds are subject to optional
redemption on not less than 30 days notice either as a whole or in part at any
time at a redemption price equal to the greater of (i) 100% of the principal
amount of the New Bonds and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semi-annual basis at the Treasury Rate plus 10 basis
points. In addition, the New Bonds are subject to mandatory redemption in
certain cases on not less than 30 days notice at 100% of the principal amount
thereof. See "Certain Terms of the New Bonds--Redemption Provisions" herein and
"Description of the New Bonds" in the accompanying Prospectus.
Application will be made to list the New Bonds on the New York Stock Exchange.
Listing will be subject to meeting the requirements of such Exchange, including
those related 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 New Bond...................................... 99.214% .517% 98.697%
Total............................................. $148,821,000 $775,500 $148,045,500
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest from January 1, 1996.
(2) Before deduction of expenses payable by the Company estimated at $135,000.
The New Bonds are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that the New Bonds
will be delivered on or about January 30, 1996.
SALOMON BROTHERS INC
CHASE SECURITIES, INC.
CHEMICAL SECURITIES INC.
DAIWA SECURITIES AMERICA INC.
DILLON, READ & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FIRST UNION CAPITAL MARKETS CORP.
NATWEST CAPITAL MARKETS LIMITED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
The date of this Prospectus Supplement is January 23, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW BONDS
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 $150,000,000 principal amount
of its First and Refunding Mortgage Bonds, 6 1/4% Series WW due 2007 ("New
Bonds"). The Company is also offering $200,000,000 principal amount of its First
and Refunding Mortgage Bonds, 6 3/4% Series VV due 2016 ("Series VV Bonds").
Each offering is a separate transaction and is not contingent on the 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, 1994, 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, 1995, June 30, 1995 and September 30, 1995, filed pursuant to the
1934 Act.
3. The Company's Current Reports on Form 8-K dated June 13, 1995, July
19, 1995, October 17, 1995, December 12, 1995 and January 19, 1996, 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 Bonds shall be deemed to be incorporated by reference in this Prospectus
Supplement and Prospectus and to be a part hereof and thereof 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 Supplement and
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 Supplement and Prospectus, other
than exhibits to such documents not specifically incorporated by reference
therein. 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 Company will apply the net proceeds from the sale of the New Bonds and
Series VV Bonds, together with other funds of the Company, to the defeasance in
substance of the Company's outstanding First and Refunding Mortgage Bonds of the
8 3/4% Series EE due 2021 ("Series EE Bonds") and the 8 3/4% Series HH due 2022
("Series HH Bonds"). Such proceeds and other funds will be used to purchase and
deposit with an escrow agent a portfolio of U.S. Treasury securities with income
and maturity characteristics sufficient to service the outstanding Series EE
Bonds and Series HH Bonds to and including their respective first optional
redemption dates (November 1, 1996 for the Series EE Bonds and February 1, 1997
for the Series HH Bonds). At each such first optional redemption date, the
escrow agent will provide the Trustee (as defined below) with funds sufficient
to pay remaining principal amounts, accrued interest and redemption premiums of
such bonds. There are currently outstanding $192,500,000 aggregate principal
amount of Series EE Bonds and $131,558,000 aggregate principal amount of Series
HH Bonds.
COVERAGE RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated is as follows:
YEARS ENDED DECEMBER 31,
- ----------------------------------------
1991 1992 1993 1994 1995
- ----- ---- ---- ---- ----
3.20 2.70 3.30 3.35 3.24
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. 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.
CERTAIN TERMS OF THE NEW BONDS
The following supplemental information concerning the New Bonds should be
read in conjunction with the statements under "Description of the New Bonds" in
the accompanying Prospectus.
INTEREST, MATURITY AND PAYMENT
The New Bonds will mature on January 1, 2007 and will bear interest at the
rate shown on the cover of this Prospectus Supplement, payable January 1 and
July 1, commencing July 1, 1996. Principal and interest will be payable, and
transfers and exchanges of the New Bonds may be made, at the corporate trust
office of First Chicago Trust Company of New York, in New York, N.Y., or at the
principal corporate trust office of First Union National Bank (formerly, First
Fidelity Bank, National Association) ("Trustee") in Newark, N.J.
REDEMPTION PROVISIONS
The New Bonds are subject to redemption at any time on not less than 30 days
notice by mail prior to maturity either as a whole or in part at the option of
the Company, at a redemption price equal to the greater of (i) 100% of the
principal amount of the New Bonds and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below) plus 10 basis
points, plus accrued interest thereon to the date of redemption.
S-3
<PAGE>
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the New Bonds to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the New Bonds.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such third business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee is unable to obtain four such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations so obtained.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Company and acceptable to the Trustee.
"Reference Treasury Dealer" means a primary U.S. Government Securities
Dealer in New York City (a "Primary Treasury Dealer") selected by the Company
and acceptable to the Trustee.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at or before 5:00 p.m.,
New York City time, on the third business day preceding such redemption date.
In certain cases, the New Bonds will also be subject to mandatory redemption
prior to maturity at any time on not less than 30 days notice by mail (provided
there are no Bonds that can be purchased or redeemed at a lower price and
provided any such redemption is pro rata with all other Bonds with the same
redemption price) by the application of proceeds of released property or certain
other money held by the Trustee upon payment of 100% of the principal amount
thereof. See "Description of the New Bonds--Release and Substitution of
Property" in the accompanying Prospectus.
There will be no sinking or improvement fund for the New Bonds.
S-4
<PAGE>
UNDERWRITING
The Underwriters named below ("Underwriters") have severally agreed to
purchase the respective principal amounts of the New Bonds set forth below
from the Company. The Purchase Agreement provides that the several obligations
of the Underwriters are subject to certain conditions as therein set forth.
The Underwriters will be obligated to purchase all the New Bonds if any New
Bonds are purchased.
PRINCIPAL
NAME AMOUNT
----- ---------
- ------------------------------------------------------------ ------------
Salomon Brothers Inc........................................ $ 15,000,000
Chase Securities, Inc. ..................................... 15,000,000
Chemical Securities Inc. ................................... 15,000,000
Daiwa Securities America Inc. .............................. 15,000,000
Dillon, Read & Co. Inc. .................................... 15,000,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 15,000,000
First Union Capital Markets Corp. .......................... 15,000,000
NatWest Capital Markets Limited............................. 15,000,000
PaineWebber Incorporated.................................... 15,000,000
Prudential Securities Incorporated.......................... 15,000,000
------------
Total............................................... $150,000,000
------------
------------
The Company has been advised by the Underwriters that they propose to
make a public offering of the New Bonds at the public offering price set
forth on the cover page of this Prospectus Supplement; that the Underwriters
may allow to certain dealers a concession from the public offering price not
in excess of.40% of the principal amount; that the Underwriters may allow,
and such dealers may reallow, a concession not in excess of .25% to certain
other dealers; and that after the initial public offering, the public offering
price and concessions may be changed.
The New Bonds are a new issue of securities with no established trading
market. The Underwriters may, but are not obligated to, make a market in the
New Bonds and may discontinue any such market making at any time without
notice. No assurance can be given as to the existence or liquidity of
any trading market for the New Bonds.
Affiliates of certain of the Underwriters have engaged and in the future may
engage in commercial banking transactions with and/or provide commercial banking
services to the Company and its affiliates. In addition, First Union Capital
Markets Corp. is an affiliate of the Trustee.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to certain payments which the Underwriters may be required to make in
respect thereof.
S-5
<PAGE>
PROSPECTUS
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BONDS
-------------------
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 $800,000,000 principal amount of its First and Refunding
Mortgage Bonds. Such First and Refunding Mortgage Bonds will be offered for sale
pursuant to the competitive bidding procedures set forth in the Company's
Statement of Terms and Conditions Relating to Bids for such First and Refunding
Mortgage Bonds, copies of which are available from the Company. The principal
amount of such First and Refunding Mortgage Bonds to be issued after a bidding
therefor is referred to herein as the "New Bonds".
Pursuant to said Terms and Conditions, at least twenty-four hours prior to
the time designated for the opening of bids for each series of New Bonds 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 principal amount of such New Bonds, (4) the series
designation of such New Bonds, (5) the minimum and maximum percentages of
principal amount which may be specified in the bid as the purchase price for the
New Bonds, (6) the term of such New Bonds, which shall not be less than one year
nor more than 40 years, (7) the terms and conditions upon which such New Bonds
may be redeemed, either at the option of the Company, pursuant to any sinking or
improvement fund for the New Bonds, or otherwise, and (8) such other provisions
as may be necessary or desirable to establish the terms and conditions of such
New Bonds 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
principal amount of New Bonds for which the Company may elect to receive bids.
The specific designation, aggregate principal amount, purchase price,
maturity date, times of payment of interest, and redemption or other particular
terms of each series of New Bonds will be set forth in an accompanying
Prospectus Supplement.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------
THE DATE OF THIS PROSPECTUS IS MARCH 2, 1994.
<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, 1993, filed pursuant to the 1934 Act.
2. The Company's Current Report on Form 8-K dated 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 Bonds 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 its 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 the City of 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 Bonds 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 and maturing debt
obligations, the reimbursement of its treasury for funds expended therefor
and/or the payment of its short-term obligations incurred for such purposes.
COVERAGE RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated is as follows:
YEARS ENDED DECEMBER 31,
- ----------------------------------------
1989 1990 1991 1992 1993
- ---- ---- ---- ---- ----
3.21 3.10 3.20 2.70 3.30
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. 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.
DESCRIPTION OF THE NEW BONDS
The New Bonds are to be issued under and secured by the indenture (the
"First and Refunding Mortgage") dated August 1, 1924, between the Company and
First Fidelity Bank, National Association, (formerly Fidelity Union Trust
Company), as Trustee (the "Trustee"), as amended and supplemented by the
eighty-three supplemental indentures now in effect and by the proposed
supplemental indentures to be dated the first day of the month in which each
series of the New Bonds are issued (the "New Supplements") providing for the New
Bonds, which indenture and supplemental indentures are hereinafter collectively
called the "Mortgage" and are filed as Exhibits 4a(1) through 4a(85) to the
Registration Statement. The following statement includes brief summaries of
certain provisions of the Mortgage. For a complete statement of such provisions
reference is made to the above-mentioned Exhibits, and to the particular
Articles and Sections of the First and Refunding Mortgage and of certain
supplements. Bonds issued or issuable under the Mortgage are hereinafter
sometimes called "Bonds". A copy of the Mortgage including a proposed New
Supplement may be inspected at the office of the Trustee at 765 Broad Street,
Newark, New Jersey or at the office of the Securities and Exchange Commission,
450 Fifth Street, N.W., Washington, D.C.
3
<PAGE>
The New Bonds will be issuable only in fully registered form in
denominations of $1,000 and any multiple thereof. The New Bonds will be
transferable, and the several denominations thereof will be exchangeable for New
Bonds of other authorized denominations, upon compliance with the applicable
provisions of the Mortgage. No service charge will be made for any such transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
The Mortgage does not contain any covenant or other provision that
specifically is intended to afford holders of the New Bonds special protection
in the event of a highly leveraged transaction.
INTEREST, MATURITY AND PAYMENT
See the accompanying Prospectus Supplement.
REDEMPTION
See the accompanying Prospectus Supplement.
LIEN AND SECURITY
The New Bonds will be secured by the lien of the Mortgage equally and
proportionately with all other Bonds. The Mortgage is a first lien on all the
property and franchises of the Company now owned or hereafter acquired (except
cash, accounts and bills receivable, merchandise bought, sold or manufactured
for sale in the ordinary course of business, stocks, bonds or other corporate
obligations or securities, other than those now or hereafter specifically
pledged thereunder, not acquired with the proceeds of Bonds) (the effectiveness
of the after-acquired property clause being subject to certain possible
exceptions under New Jersey law which are not regarded by the Company as of
practical importance), subject only (i) to liens for taxes, assessments and
governmental charges and other liens, encumbrances, and rights, none of which
liens, encumbrances or rights, in the opinion of the Company, materially affects
the use of the mortgaged property or the value thereof as security for the
Bonds, (ii) to the lien of the Trustee for compensation, expenses and indemnity
to which it may be entitled under the Mortgage, and (iii) as to after-acquired
property, to encumbrances, if any, existing thereon at the time of acquisition.
Under New Jersey law, the State of New Jersey owns in fee simple for the
benefit of the public schools all lands now or formerly flowed by the tide up to
the mean high-water line, unless it has made a valid conveyance of its interest
in such property. In 1981, because of uncertainties raised as to possible claims
of State ownership, the New Jersey Constitution was amended to provide that
lands formerly tidal-flowed, but which were not then tidal-flowed at any time
for a period of forty years, were not subject to State claims unless the State
specifically defined and asserted a claim within the one year perod ending
November 2, 1982. As a result, the State published maps of the eastern
(Atlantic) coast of New Jersey depicting claims to portions of many properties,
including certain properties owned by the Company. The Company believes it has
good title to such properties and will vigorously defend its title, or will
obtain such grants from the State as may ultimately be required. The cost to
acquire any such grants may be covered by title insurance policies. Assuming
that all of such State claims were determined adversely to the Company, they
would relate to land, which, together with the improvements thereon, would
amount to less than 1% of net utility plant. No maps depicting State claims to
property owned by the Company on the western (Delaware River) side of New Jersey
were published within the one year period mandated by the Constitutional
Amendment. Nevertheless, the Company
4
<PAGE>
believes it has obtained all necessary grants from the State for its improved
properties along the Delaware River.
The after-acquired property clause may not be effective as to property
acquired subsequent to the filing of a petition with respect to the Company
under the Federal Bankruptcy Code.
The property of the Company subject to the lien of the Mortgage consists
principally of its electric generating facilities, transmission lines,
distribution lines, switching stations and substations, and its gas production
plants and gas distribution facilities, and includes the Company's undivided
interests as a tenant in common without right of partition in jointly-owned
electric generating and gas production facilities and electric transmission
lines.
ISSUANCE OF ADDITIONAL BONDS
Additional Bonds may be authenticated and delivered in a principal amount
not exceeding 60% of the cost or fair value to the Company (whichever is less)
of additions or permanent improvements to the mortgaged property within 250
miles of Newark, New Jersey, after deducting the cost of property permanently
abandoned and the difference between the cost and the net amount realized on the
sale of property sold at a price to net less than half of its cost; but only if
the net earnings of the Company (before income taxes, amortization of debt
discount and expense, and fixed charges), for twelve consecutive months within
the fifteen months preceding the application for the authentication of such
additional Bonds, shall have been at least twice the fixed charges of the
Company, including interest on the Bonds applied for. As of July 1, 1993,
additions or improvements against which Bonds may be authenticated amounted to
$4,300,946,619. No additional Bonds may be authenticated and delivered on the
basis of the Company's 22.84% undivided interest in the Keystone Generating
Station and 22.5% undivided interest in the Conemaugh Generating Station (both
in western Pennsylvania) because such stations are not within 250 miles of
Newark, New Jersey. The principal amount of additional Bonds which may be issued
on account of the acquisition of property subject to prior liens is that amount
which might be issued if there were no such liens, less the principal amount of
obligations secured by such liens and not then deposited with the Trustee.
Additional Bonds may also be authenticated and delivered under the Mortgage
from time to time, in a principal amount equal to the principal amount of Bonds
(excluding Bonds retired through a sinking fund or by the application of the
proceeds of released property) or certain prior debt bonds purchased, paid,
refunded, or retired by the Company and deposited with the Trustee, upon such
deposit.
Additional Bonds may also be issued (a) in a principal amount not exceeding
the amount of cash deposited by the Company with the Trustee, to be subsequently
withdrawn on account of additions or improvements or as otherwise permitted by
the Mortgage, upon compliance with the conditions which, at the time of
withdrawal, would authorize the authentication of Bonds in an amount equal to
the cash withdrawn, or (b) in a principal amount not exceeding the principal
amount of matured or maturing Bonds or prior debt bonds, to provide for the
payment or purchase thereof, within 12 months before maturity (including a
maturity resulting from a call for redemption) or at or after maturity, provided
that cash equal to the principal amount of the Bonds so issued is simultaneously
deposited with the Trustee in exchange therefor.
The New Bonds will be issued under the above provisions.
5
<PAGE>
MAINTENANCE AND DEPRECIATION PROVISIONS
The Company must maintain the useful physical property subject to the
Mortgage in good and businesslike working order and condition and make all
needful and proper repairs, replacements, and improvements thereto. It must also
maintain a reserve for renewals and replacements, reasonable according to the
current standard practice of gas and electric utility companies or as approved
or fixed by the Board of Regulatory Commissioners of the State of New Jersey.
The New Supplements will contain no maintenance provisions with respect to
the New Bonds.
DIVIDEND RESTRICTIONS
So long as there remain outstanding any of the New Bonds or any of the Bonds
of any series now outstanding (other than the Bonds of the 5% Series due 2037
and the 8% Series due 2037), the Company may not pay any dividend on its common
stock other than dividends payable in such stock, or make any other distribution
thereon or purchase or otherwise acquire for value any such stock if such action
would reduce its earned surplus below $10,000,000 less all amounts on the books
of the Company on December 31, 1948, which shall have been thereafter required
to be removed therefrom by charges to earned surplus pursuant to any order or
rule of any regulatory body thereafter entered.
AMENDMENT OF MORTGAGE
The Mortgage may be modified by the Company and the Trustee with the consent
of the holders of 85% in principal amount of the Bonds then outstanding (as
defined in the Mortgage for such purposes), including, if the modification
affects less than all series of Bonds outstanding, the holders of 85% in
principal amount of the outstanding Bonds of each series affected. No such
change, however, may alter the interest rate, redemption price or date, maturity
date, or amount payable at maturity of any outstanding Bond or conflict with the
Trust Indenture Act of 1939 as then in effect.
RELEASE AND SUBSTITUTION OF PROPERTY
Cash proceeds of released property held by the Trustee (i) may be paid to
the Company to reimburse it for the full cost or fair value, whichever be less,
of additions or improvements permitted under the Mortgage to be used as the
basis for the issuance of additional Bonds, without any net earnings
requirement; (ii) may be paid to the Company in an amount equal to the principal
amount of Bonds or certain prior debt bonds purchased, paid, refunded, or
retired by the Company and deposited with the Trustee; (iii) may be invested in
obligations of the United States; or (iv) may be utilized by the Trustee for the
purchase or redemption of Bonds at the lowest prices obtainable. The Trustee
must release pledged prior debt bonds of any issue if all prior debt bonds of
such issue have been pledged and there is no lien on any of the mortgaged
property senior to the lien of the Mortgage but junior to the lien of the prior
debt bonds to be released. The Trustee must release franchises surrendered and
structures removed or abandoned by the Company pursuant to a legal requirement
or an agreement with a state or political subdivision thereof.
Certain additional provisions as to the release of property are referred to
above under Issuance of Additional Bonds and Maintenance and Depreciation
Provisions.
DEFAULTS
The following constitute events of default under the Mortgage: (i) default
in the payment of the principal of any Bonds or prior debt bonds; (ii) default,
continued for three months, in the payment of
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interest on any Bonds or in the payment of any installment of any sinking fund
provided for any series of Bonds; (iii) default, continued for three months
after written notice to the Company from the Trustee or the holders of 5% in
principal amount of the outstanding Bonds, in the observance or performance of
any other covenant or condition in the Mortgage; and (iv) the adjudication of
the Company as a bankrupt, the appointment of a receiver for the Company or its
property or the approval of a petition for the reorganization of the Company
under the Federal Bankruptcy Code, if no appeal from such action is taken within
30 days, or on the same becoming final. The Mortgage does not require the
Company to furnish to the Trustee any periodic evidence as to the absence of
default or as to compliance with the terms of the Mortgage.
The holders of 25% in principal amount of the Bonds then outstanding (or a
majority in principal amount of the Bonds of any series in default, if default
occurs in payments due with respect to Bonds of less than all series) may
require the Trustee to take all steps needful for the protection and enforcement
of the rights of the Trustee and of the holders of Bonds. The holders of 76% in
principal amount of the Bonds then outstanding have the right to direct and
control the action of the Trustee in any judicial or other proceedings to
enforce the Mortgage.
If a default in the payment of principal, interest or sinking fund
installment affects exclusively the Bonds of one or more series, the holders of
a majority of the outstanding Bonds of the series so affected may require the
Trustee to accelerate the maturity of such Bonds and also may require the
Trustee to take other action for the protection of such bondholders.
CERTIFICATE OF COMPLIANCE
Pursuant to the provisions of the Trust Indenture Act of 1939, as amended,
the Company is required to certify to the Trustee, not less than annually, the
Company's compliance with all conditions and covenants under the Mortgage.
CONCERNING THE TRUSTEE
First Fidelity Bank, National Association, Trustee and a paying agent under
the Mortgage, is a subsidiary of First Fidelity Bancorporation. The Company also
maintains other normal banking relationships with First Fidelity Bank, National
Association.
E. James Ferland, Chairman of the Board, President and Chief Executive
Officer of Enterprise, and Chairman of the Board and Chief Executive Officer of
the Company, is a director of First Fidelity Bancorporation and of First
Fidelity Bank, National Association.
PLAN OF DISTRIBUTION
The Company will sell each series of the New Bonds through the competitive
bidding procedures set forth in the Company's Terms and Conditions Relating to
Bids for the New Bonds (the "Terms and Conditions") filed as Exhibit 1a to the
Registration Statement. Notice of the bidding for the New Bonds 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 Bonds, 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
Bonds pursuant to a firm commitment underwriting on the terms set forth therein.
The purchase price of each series of the New Bonds and the proceeds to the
Company
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from such sale and the terms of any re-offering of such New Bonds, 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 Bonds will be subject to certain conditions
precedent and that the Company will indemnify each underwriter or purchaser for
certain civil liabilities, including liabilities under the Securities Act of
1933 (the "1933 Act").
LEGAL OPINIONS
The legality of the New Bonds will be passed on for the Company by James T.
Foran, Esq., General Corporate Counsel, or R. Edwin Selover, Esq., Senior Vice
President and General Counsel, of the Company, who may rely on the opinion of
Ballard Spahr Andrews & Ingersoll, of Philadelphia, Pennsylvania, as to matters
of Pennsylvania law. Brown & Wood, of New York, New York, will pass on the
legality of the New Bonds 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.
EXPERTS
Mr. Foran has reviewed the statements in this Prospectus as to the lien of
the Mortgage securing the New Bonds under Description of the New Bonds--Lien and
Security (except insofar as they relate to the lien of the Mortgage on property
of the Company located in Pennsylvania). Such statements insofar as they relate
to the lien of the Mortgage on property of the Company located in Pennsylvania
have been reviewed by Ballard Spahr Andrews & Ingersoll of Philadelphia,
Pennsylvania. The statements as to liens and encumbrances on the property of the
Company are based in part on title insurance policies and reports and searches
obtained from companies engaged in the business of insuring title to real estate
in New Jersey and from a company engaged in the business of insuring title to
real estate in Pennsylvania, and on certificates or opinions of local counsel in
Pennsylvania deemed by Ballard Spahr Andrews & Ingersoll to be reliable and
competent. All the statements made or referred to in this paragraph, as to
matters of law and legal conclusions, are made in reliance on the authority of
Mr. Foran and of Ballard Spahr Andrews & Ingersoll, respectively, 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.
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NO DEALER, PERSON OR OTHER INDIVIDUAL HAS $150,000,000
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED OR INCORPORATED BY REFERENCE PUBLIC SERVICE ELECTRIC
IN THIS PROSPECTUS SUPPLEMENT OR THE AND GAS COMPANY
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE FIRST AND REFUNDING
RELIED UPON AS HAVING BEEN AUTHORIZED BY MORTGAGE BONDS,
THE COMPANY OR THE UNDERWRITERS. THIS 6 1/4% SERIES WW DUE 2007
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PER-
SON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
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TABLE OF CONTENTS [PSE&G LOGO]
PAGE
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PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents
by Reference...................... S-2 SALOMON BROTHERS INC
Use of Proceeds..................... S-3 CHASE SECURITIES, INC.
Coverage Ratios..................... S-3 CHEMICAL SECURITIES INC.
Certain Terms of the New Bonds...... S-3 DAIWA SECURITIES AMERICA INC.
Underwriting........................ S-5 DILLON, READ & CO. INC.
PROSPECTUS DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
Available Information............... 2
Incorporation of Certain Documents FIRST UNION CAPITAL MARKETS
by Reference...................... 2 CORP.
The Company......................... 3 NATWEST CAPITAL MARKETS LIMITED
Use of Proceeds..................... 3 PAINEWEBBER INCORPORATED
Coverage Ratios..................... 3 PRUDENTIAL SECURITIES
Description of the New Bonds........ 3 INCORPORATED
Plan of Distribution................ 7
Legal Opinions...................... 8 PROSPECTUS SUPPLEMENT
Experts............................. 8 DATED JANUARY 23, 1996
