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424B5
File # 333-27547
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 28, 1997)
$235,000,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BONDS, 6 1/2% SERIES XX DUE 2000
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INTEREST PAYABLE JUNE 1 AND DECEMBER 1
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THE NEW BONDS WILL BEAR INTEREST FROM JUNE 1, 1997 AT THE RATE OF 6 1/2% PER
ANNUM PAYABLE SEMI-ANNUALLY ON JUNE 1 AND DECEMBER 1, COMMENCING DECEMBER 1,
1997. 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.
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APPLICATION HAS BEEN MADE TO LIST THE NEW BONDS ON THE NEW YORK STOCK EXCHANGE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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PRICE 100% AND ACCRUED INTEREST
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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (1)(3)
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<S> <C> <C> <C>
PER NEW BOND..................... 100.000% .081% 99.919%
TOTAL............................ $235,000,000 $190,350 $234,809,650
</TABLE>
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(1) PLUS ACCRUED INTEREST FROM JUNE 1, 1997.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
(3) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT
$125,000.
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THE NEW BONDS ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED
BY THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL
MATTERS BY BROWN & WOOD LLP, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT
DELIVERY OF THE NEW BONDS WILL BE MADE ON OR ABOUT JUNE 17, 1997 AT THE OFFICE
OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR
IN IMMEDIATELY AVAILABLE FUNDS.
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MORGAN STANLEY DEAN WITTER
CITICORP SECURITIES, INC.
BLAYLOCK & PARTNERS, L.P.
CREDIT SUISSE FIRST BOSTON
UBS SECURITIES
WHEAT FIRST BUTCHER SINGER
PRYOR, MCCLENDON, COUNTS & CO., INC.
JUNE 12, 1997
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NEW BONDS.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NEW BONDS IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS".
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, 1996, filed pursuant to the Securities Exchange Act of 1934,
as amended ("1934 Act").
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed pursuant to the 1934 Act.
3. The Company's Current Reports on Form 8-K dated January 24, 1997
and January 29, 1997, 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. 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 Supplement and Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus Supplement and Prospectus.
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).
USE OF PROCEEDS
The net proceeds from the sale of the New Bonds will be added to the
general funds of the Company and used to pay a portion of its maturing
short-term debt obligations incurred for general corporate purposes, including
the refunding and redemption of certain higher cost and maturing debt
obligations. Short-term debt obligations are approximately $900 million.
The Company is calling for redemption on August 1, 1997 $116,862,000
principal amount of its First and Refunding Mortgage Bonds, 8 1/2% Series LL due
2022 at their regular redemption price of 105.97%.
S-2
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COVERAGE RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated is a follows:
<TABLE>
<CAPTION>
3 MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
2.70 3.30 3.35 3.25 2.83 2.98
</TABLE>
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 June 1, 2000 and will bear interest at the
rate shown on the cover of this Prospectus Supplement, payable June 1 and
December 1, commencing December 1, 1997. 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
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 to be redeemed 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.
"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, in each case calculated on the third business day
preceding 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 yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities", for the maturity
comparable to the remaining term of the New Bonds to be redeemed or (ii) if such
release (or any successor
S-3
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release) is not published during the week preceding the calculation date or does
not contain such yields, (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
five 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 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 Treasury Reference 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
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UNDERWRITERS
The underwriters named below (the "Underwriters") have severally agreed to
purchase from the Company, and the Company has agreed to sell to them severally,
the respective principal amounts of New Bonds indicated below. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters will be obligated to
purchase all of the New Bonds if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT
<S> <C>
Morgan Stanley & Co. Incorporated......................................... $ 95,000,000
Citicorp Securities, Inc.................................................. 41,000,000
Blaylock & Partners, L.P.................................................. 40,000,000
Credit Suisse First Boston Corporation.................................... 29,000,000
UBS Securities LLC........................................................ 22,000,000
Wheat, First Securities, Inc.............................................. 5,000,000
Pryor, McClendon, Counts & Co., Inc....................................... 3,000,000
Total................................................................ $235,000,000
</TABLE>
The Company has been advised by the several Underwriters as follows:
The several Underwriters propose to offer part of the New Bonds
directly to the public at the public offering price set forth on the cover
page of this Prospectus Supplement and part to dealers at a price which
represents a concession of .075% of the principal amount under the public
offering price, and any Underwriter may offer the New Bonds to certain
brokers or dealers who are either a parent or subsidiary of such
Underwriter at not less than such price to dealers. The Underwriters may
allow and such dealers may reallow a concession, not in excess of .050% of
the principal amount, to certain other dealers. After the initial public
offering, the public offering price and concessions may be changed.
In order to facilitate the offering of the New Bonds, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the New Bonds. Specifically, the Underwriters may overallot in
connection with the offering, creating a short position in the New Bonds
for their own account. In addition, to cover overallotments or to stabilize
the price of the New Bonds, the Underwriters may bid for, and purchase, the
New Bonds in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the New Bonds in the offering, if the syndicate repurchases
previously distributed New Bonds in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the New Bonds
above independent market levels. The Underwriters are not required to
engage in these activities and may end any of these activities at any time.
The New Bonds are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the New Bonds but are not obligated to do so and may
discontinue market making at any time without notice. Application has been made
to list the New Bonds on the New York Stock Exchange. No assurance can be given
as to the existence or liquidity of any trading market for the New Bonds.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or contribute to certain payments which the Underwriters may be
required to make in respect thereof.
S-5
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NO DEALER, PERSON 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, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY 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
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference................................... S-2
Use of Proceeds............................... S-2
Coverage Ratios............................... S-3
Certain Terms of the New Bonds................ S-3
Underwriters.................................. S-5
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 Bonds.................. 3
Plan of Distribution.......................... 7
Legal Opinions................................ 8
Experts....................................... 8
</TABLE>
(PSE&G logo)
PUBLIC SERVICE
ELECTRIC AND GAS
COMPANY
$235,000,000
FIRST AND REFUNDING
MORTGAGE BONDS,
6 1/2% SERIES XX DUE 2000
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PROSPECTUS SUPPLEMENT
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JUNE 12, 1997
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