<PAGE>
PROSPECTUS SUPPLEMENT File Pursuant to Rule 424(b)(5)
(To Prospectus Dated March 11, 1994) Registration No. 33-52509
$15,000,000
SAVANNAH ELECTRIC AND POWER COMPANY
FIRST MORTGAGE BONDS, 7 7/8% SERIES DUE MAY 1, 2025
Interest on the new Bonds will accrue from May 1, 1995 and will be payable
semi-annually on May 1 and November 1, commencing November 1, 1995. The new
Bonds will not be redeemable prior to May 1, 2000. On or after May 1, 2000, the
new Bonds will be redeemable at the option of Savannah Electric and Power
Company (the "Company") as a whole or in part at any time, on not less than 30
days' notice, at the applicable Regular Redemption Price and, under certain
circumstances, at the Special Redemption Price as described herein. See
"Certain Terms of the New Bonds -- Redemption Provisions" herein.
Reference is made to "Description of New Bonds -- Improvement Fund" in the
accompanying Prospectus for the terms of a covenant prohibiting the redemption
of new Bonds in any year subsequent to 1999 by application of cash in the
improvement fund in a principal amount exceeding $150,000.
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>
---------------------------------------------------------------------------------
PROCEEDS
PRICE TO UNDERWRITING TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Bond..................... 99.365% 0.642% 98.723%
Total........................ $14,904,750 $96,300 $14,808,450
---------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest from May 1, 1995 to date of delivery.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before estimated expenses of $185,000 payable by the Company.
The new Bonds are offered by the Underwriter, subject to prior sale, when, as
and if delivered to and accepted by the Underwriter and subject to various
prior conditions, including the Underwriter's right to reject any order in
whole or in part. It is expected that delivery of the new Bonds will be made in
New York, New York, on or about May 25, 1995, against payment therefor in
immediately available funds.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
The date of this Prospectus Supplement is May 18, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW BONDS
OFFERED HEREBY OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the new Bonds, together with $20,000,000 in
bank borrowings having a term of three years, will be used by the Company to
redeem in June 1995 the $27,900,000 outstanding principal amount of its First
Mortgage Bonds, 9 1/4% Series due October 1, 2019, and for other general
corporate purposes.
RECENT RESULTS OF OPERATIONS
For the twelve months ended April 30, 1995, "Operating Revenues", "Income
Before Interest Charges" and "Net Income After Dividends on Preferred Stock"
were $210,380,000, $35,205,000 and $19,749,000, respectively. In the opinion of
the management of the Company, the above amounts for the twelve months ended
April 30, 1995 reflect all adjustments (which were only normal recurring
adjustments) necessary to present fairly the results of operations for such
period. The "Ratio of Earnings to Fixed Charges" for the twelve months ended
April 30, 1995 was 3.51. The "Ratio of Earnings to Fixed Charges" for the year
ended December 31, 1994 was 3.78.
CERTAIN TERMS OF THE NEW BONDS
The following description of certain terms of the new Bonds offered hereby
supplements, and should be read together with, the statements under
"Description of New Bonds" in the accompanying Prospectus.
General: The new Bonds will mature on May 1, 2025 and will bear interest from
May 1, 1995 at the rate per annum shown in their title, payable on May 1 and
November 1 in each year. Interest will, subject to certain exceptions, be paid
to registered holders of record at the close of business on the April 15 or
October 15, as the case may be, next preceding the interest payment date. The
new Bonds will be issued on the basis of available property additions and Bond
retirements.
Settlement by the purchasers of new Bonds will be made in immediately
available funds. The new Bonds will initially be issued in the form of one or
more fully registered securities, representing the aggregate principal amount
of the new Bonds, that will be deposited with, or on behalf of, The Depository
Trust Company ("DTC"), and registered in the name of CEDE & Co., the nominee of
DTC. All payments to DTC of principal and interest on the new Bonds will be
made in immediately available funds.
Redemption Provisions: The new Bonds will not be redeemable prior to May 1,
2000. On or after May 1, 2000, the new Bonds will be redeemable at the option
of the Company as a whole or in part at any time, on not less than 30 nor more
than 90 days' notice, at the applicable Regular Redemption Price set forth
below, with interest accrued to the redemption date. The new Bonds will also be
redeemable as a whole or in part at any time on or after May 1, 2000, on like
notice, at the Special Redemption Price set forth below, with interest accrued
to the redemption date. The Special Redemption Price applies to redemptions (a)
by the application of cash in the improvement fund provided for in the Mortgage
(subject to the limitation referred to below), (b) by the application of cash
deposited with the Trustee in satisfaction of the sinking fund requirement
provided for in the new Supplemental Indenture or pursuant to the sinking fund
provisions of any other supplemental indenture, (c) by the use of proceeds of
released property, and (d) of all the new Bonds, if after the acquisition of
all or substantially all of the common stock of the Company by a municipal,
governmental or other body having similar powers, the Company elects to redeem
all the Bonds outstanding under the Mortgage on a date within 12 months of such
acquisition.
S-2
<PAGE>
IF REDEEMED DURING THE TWELVE MONTHS' PERIOD BEGINNING MAY 1,
<TABLE>
<CAPTION>
REGULAR SPECIAL
REDEMPTION REDEMPTION
YEAR PRICE PRICE
---- ---------- ----------
<S> <C> <C>
2000............... 105.43% 100.00%
2001............... 105.07 100.00
2002............... 104.71 100.00
2003............... 104.35 100.00
2004............... 103.99 100.00
2005............... 103.62 100.00
2006............... 103.26 100.00
2007............... 102.90 100.00
2008............... 102.54 100.00
2009............... 102.18 100.00
2010............... 101.81 100.00
2011............... 101.45 100.00
2012............... 101.09 100.00
</TABLE>
<TABLE>
<CAPTION>
REGULAR SPECIAL
REDEMPTION REDEMPTION
YEAR PRICE PRICE
---- ---------- ----------
<S> <C> <C>
2013............... 100.73% 100.00%
2014............... 100.37 100.00
2015............... 100.00 100.00
2016............... 100.00 100.00
2017............... 100.00 100.00
2018............... 100.00 100.00
2019............... 100.00 100.00
2020............... 100.00 100.00
2021............... 100.00 100.00
2022............... 100.00 100.00
2023............... 100.00 100.00
2024............... 100.00 100.00
</TABLE>
See "Description of New Bonds -- Improvement Fund" in the accompanying
Prospectus, to which reference is made for the terms of a covenant prohibiting
the redemption of new Bonds in any year subsequent to 1999 by application of
cash in the improvement fund in a principal amount exceeding $150,000.
Restrictions on Common Stock Dividends: By Section 1.05 of the new
Supplemental Indenture, so long as any of the new Bonds are outstanding, cash
dividends may not be paid or distributions be made on common stock (except
where an equal amount is concurrently repaid as a capital contribution or as
the purchase price of common stock) or common stock be purchased in an
aggregate amount which would exceed earned surplus accumulated after March 31,
1995, plus earned surplus accumulated prior to April 1, 1995 in an amount not
exceeding $35,000,000, plus such additional amount as shall be authorized or
approved by the Securities and Exchange Commission, or any successor
commission, under the Public Utility Holding Company Act of 1935, as amended.
LEGAL OPINION AND EXPERTS
Bouhan, Williams & Levy, Savannah, Georgia, general counsel for the Company,
and Troutman Sanders, Atlanta, Georgia, counsel for the Company, will render
opinions to the Underwriter as to the legality of the new Bonds. Dewey
Ballantine, New York, New York, will act as counsel for the Underwriter and
will render an opinion to the Underwriter as to the legality of the new Bonds.
Dewey Ballantine will rely on the opinion of Bouhan, Williams & Levy and
Troutman Sanders as to matters of Georgia law.
The financial statements and schedules of the Company filed with the
Company's Annual Report on Form 10-K for the year ended December 31, 1994,
incorporated by reference in the accompanying Prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference therein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
Bouhan, Williams & Levy have reviewed the statements as to matters of law and
legal conclusions relating to the Company under "Item 1 -- Business --
Competition", "Item 1 -- Business -- Regulation" and relating to titles of
property of the Company under "Item 2 -- Properties -- Titles to Property" in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
incorporated by reference in the accompanying Prospectus, and such statements
are incorporated therein in reliance upon their authority as experts. George W.
Williams, a Director Emeritus of the Company, is of counsel to the firm of
Bouhan, Williams & Levy, and he and other members of such firm own an aggregate
of 14,454 shares of common stock of The Southern Company.
S-3
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Contract, the
Company has agreed to sell to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Underwriter"), and the Underwriter has agreed to purchase
from the Company, the entire principal amount of the new Bonds.
The Purchase Contract provides that the Underwriter will be obligated to
purchase all of the new Bonds offered hereby if any of the new Bonds are
purchased.
The Company has been advised by the Underwriter that it proposes to offer the
new Bonds to the public initially at the Price to Public set forth on the cover
page of this Prospectus Supplement and to certain dealers at such price less a
concession not in excess of 0.400% of the principal amount of the new Bonds;
that the Underwriter may allow, and such dealers may reallow, a discount not in
excess of 0.250% of the principal amount of the new Bonds on sales to other
dealers; and that the Price to Public, concession and discount to the dealers
may be changed by the Underwriter after the initial offering.
In the Purchase Contract, the Underwriter and the Company have agreed to
indemnify each other against certain liabilities, including certain liabilities
under the Securities Act of 1933, as amended.
The Company has been advised by the Underwriter that it may from time to time
purchase and sell new Bonds in the secondary market, but that it is not
obligated to do so. There can be no assurance that there will be a secondary
market for the new Bonds.
S-4
<PAGE>
PROSPECTUS
----------
SAVANNAH ELECTRIC AND POWER COMPANY
FIRST MORTGAGE BONDS
PREFERRED STOCK
----------------
Savannah Electric and Power Company (the "Company") may sell its First
Mortgage Bonds (the "new First Mortgage Bonds") and Preferred Stock (which may
have a par value of up to $100 per share) (the "new Preferred Stock")
aggregating up to $65,000,000 in principal amount or par value, as the case may
be, in one or more transactions. See "Plan of Distribution."
An accompanying Prospectus Supplement (the "Prospectus Supplement") will set
forth the original principal amount, maturity date, interest rate provisions,
redemption provisions and other terms of each series of the new First Mortgage
Bonds and the number of shares, par value per share, dividend rate provisions,
redemption provisions and other terms of each series of the new Preferred
Stock.
----------------
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.
----------------
Dated: March 11, 1994
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY OR THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE THE
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE RESPECTIVE DATES OF THIS PROSPECTUS AND ANY SUCH PROSPECTUS SUPPLEMENT.
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
HEREBY OFFERED OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED
ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC"). Such reports and other information can be inspected and
copied at the offices of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C.; 500 West Madison Street, Suite 1400, Chicago,
Ill.; and 13th Floor, Seven World Trade Center, New York, N.Y. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. A series
of the Company's Preferred Stock is listed on the New York Stock Exchange, and
reports and other information concerning the Company can be inspected at the
office of such Exchange.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have heretofore been filed by the Company with
the SEC pursuant to the Exchange Act, are incorporated by reference in this
Prospectus and shall be deemed to be a part hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1992.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993,
June 30, 1993 and September 30, 1993.
3. Current Reports on Form 8-K dated February 12, 1993, July 22, 1993,
November 9, 1993 and February 16, 1994.
All documents subsequently filed by the Company with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering hereunder shall be deemed to be incorporated by reference in
this Prospectus and to be made a part hereof from their respective dates of
filing.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL
REQUEST OF ANY 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. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO LAVONNE CALANDRA, SECRETARY, SAVANNAH ELECTRIC AND POWER COMPANY,
600 BAY STREET, EAST, SAVANNAH, GEORGIA 31401, (912) 238-2249.
2
<PAGE>
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company, has been selected from, or is
based upon, the detailed information and financial statements appearing in the
documents incorporated herein by reference or elsewhere in this Prospectus, is
qualified in its entirety by reference thereto and, therefore, should be read
together therewith.
SAVANNAH ELECTRIC AND POWER COMPANY
<TABLE>
<S> <C>
Business..................................... Generation, transmission,
distribution and sale of electric
energy.
Service Area................................. Approximately 2,000 square miles
comprising the City of Savannah,
Georgia and portions of the sur-
rounding five-county area
Service Area Population...................... Approximately 250,000
Customers at December 31, 1993............... 114,760
Generating Capacity at December 31, 1993
(kilowatts)................................. 627,631
Sources of Generation during 1993
(kilowatthours)............................. Coal (83%); Oil and Gas (17%)
Sources of Generation Estimated for 1994
(kilowatthours)............................. Coal (96%); Oil and Gas (4%)
</TABLE>
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
12 MONTHS
ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
-------------------------------------------- 1994
1989 1990 1991 1992 1993 (UNAUDITED)(1)
-------- -------- -------- -------- -------- --------------
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues(2)... $201,799 $205,635 $189,646 $197,761 $218,442 $222,679
Income Before Interest
Charges................ $42,119 $41,153 $38,243 $33,901 $34,677 $36,072
Net Income After
Dividends on Preferred
Stock.................. $25,535 $26,254 $24,030 $20,512 $21,459 $22,702
Ratio of Earnings to
Fixed Charges(3)....... 3.97 4.28 4.13 3.88 4.00 4.10
Ratio of Earnings to
Fixed Charges Plus
Preferred Dividend
Requirements (Pre-
Income Tax Basis)(4)... 3.16 3.47 3.36 3.12 3.15 3.23
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION AS OF
DECEMBER 31, 1993
--------------------------------
(THOUSANDS, EXCEPT PERCENTAGES)
ACTUAL AS ADJUSTED(5)
--------------------------------
<S> <C> <C> <C>
Common Stock Equity..... $154,269 $154,269 38.0%
Cumulative Preferred
Stock.................. 35,000 35,000 8.6
Long-Term Debt.......... 151,338 216,338 53.4
-------- -------- -----
Total, excluding amounts
due within one year.... $340,607 $405,607 100.0%
======== ======== =====
</TABLE>
--------
(1) See "Recent Results of Operations" herein.
(2) "Operating Revenues" for the years ended December 31, 1989 and 1990 include
amounts relating to certain energy sales (including sales to affiliates)
that formerly were classified as purchased and interchanged power, net.
Such amounts were reclassified to "Operating Revenues" effective December
31, 1991 in accordance with current accounting requirements of the Federal
Energy Regulatory Commission.
(3) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
3
<PAGE>
(4) In computing this ratio, "Preferred Dividend Requirements" represent the
before income tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(5) Assumes the sale of $65,000,000 of new First Mortgage Bonds and no
corresponding redemptions or other retirements of outstanding securities.
SAVANNAH ELECTRIC AND POWER COMPANY
The Company is a wholly-owned subsidiary of The Southern Company, a holding
company registered under the Public Utility Holding Company Act of 1935, as
amended. The Company was incorporated on August 5, 1921, under the laws of the
State of Georgia. The Company is engaged in the generation and purchase of
electricity and the distribution and sale of electricity at retail and, as a
member of the Southern electric system power pool, the transmission and sale of
wholesale energy. The Company has approximately 115,000 customers in a five-
county area in Eastern Georgia containing approximately 2,000 square miles,
including the City of Savannah and its environs, most of Chatham County, most
of Effingham County, and portions of Bryan, Bulloch and Screven Counties. The
Company's service area has a population of approximately 250,000 with
approximately 94% of the Company's customers located in metropolitan Savannah.
The City of Savannah is one of the largest general cargo ports, and a leading
foreign trade port, on the South Atlantic Coast. The principal executive
offices of the Company are located at 600 Bay Street, East, Savannah, Georgia
31401, and its telephone number is (912) 232-7171.
USE OF PROCEEDS
Except as may be otherwise described in a Prospectus Supplement, the proceeds
from the sale of the new First Mortgage Bonds and the new Preferred Stock will
be used in connection with the Company's ongoing construction program, to pay
scheduled maturities and/or refundings of its securities, to repay short-term
indebtedness to the extent outstanding and for other general corporate
purposes.
RECENT RESULTS OF OPERATIONS
For the twelve months ended January 31, 1994, "Operating Revenues", "Income
Before Interest Charges" and "Net Income After Dividends on Preferred Stock"
were $222,679,000, $36,072,000 and $22,702,000, respectively. In the opinion of
the management of the Company, the above amounts for the twelve months ended
January 31, 1994 reflect all adjustments (which were only normal recurring
adjustments) necessary to present fairly the results of operations for such
period. The "Ratio of Earnings to Fixed Charges" and the "Ratio of Earnings to
Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax Basis)" for
the twelve months ended January 31, 1994 were 4.10 and 3.23, respectively.
DESCRIPTION OF NEW BONDS
The new First Mortgage Bonds may be issued and sold by the Company in one or
more series. In the following description, references to the "new Bonds" and
the "new Supplemental Indenture" (as hereinafter defined) are to new First
Mortgage Bonds of the particular series referred to in the Prospectus
Supplement and the new Supplemental Indenture pursuant to which such series is
issued.
General: The new Bonds will be issued as a new series of first mortgage bonds
under and secured by the Company's Indenture of Mortgage dated as of March 1,
1945, as supplemented and modified by indentures supplemental thereto,
including a supplemental indenture to be dated as of the first day of the
calendar month during which the new Bonds are issued (the "new Supplemental
4
<PAGE>
Indenture") creating the new Bonds (such Indenture of Mortgage as so
supplemented and modified being hereinafter called the "Mortgage"), between the
Company and NationsBank of Georgia, National Association (the "Trustee"). The
bonds of all series issued or which may be issued under the Mortgage are
hereinafter referred to as the "Bonds."
The statements herein concerning the new Bonds, the Bonds, the Mortgage and
the new Supplemental Indenture constitute only an outline of such instruments
and do not purport to be complete descriptions thereof. They are qualified in
their entirety by reference to the Mortgage for complete statements and for the
definitions of various terms. Copies of the instruments constituting the
Mortgage are filed or incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part and reference is made thereto for
further information.
The new Bonds will mature on the date shown in their title set forth in the
Prospectus Supplement.
The new Bonds will be issuable only as fully registered bonds, without
coupons, in denominations of $1,000 or any multiple thereof or in such other
denominations as set forth in the Prospectus Supplement. Principal is payable
at the principal office of the Trustee in Atlanta, Georgia, and in New York,
New York, at the agency office of the Trustee, except that, in case of the
redemption as a whole at any time of the new Bonds, the Company may designate
in the redemption notice other offices or agencies at which, at the option of
the holders, new Bonds may be surrendered for redemption and payment. New Bonds
will be exchangeable for a like aggregate principal amount of new Bonds of
other authorized denominations, and will be transferable, at the principal
office of the Trustee in Atlanta, Georgia, or at the agency office of the
Trustee in New York, New York, without payment of any charge other than for any
stamp tax or other governmental charge incident thereto.
Except as otherwise may be indicated in the Prospectus Supplement, there are
no provisions of the Mortgage which are specifically intended to afford holders
of the new Bonds protection in the event of a highly leveraged transaction
involving the Company.
Interest Rate Provisions: The Prospectus Supplement will set forth the
interest rate provisions of the new Bonds, including the payment dates, the
record dates and the rate or rates, or the method of determining the rate or
rates (which may involve periodic interest rate settings through remarketing or
auction procedures or pursuant to one or more formulae, as described in the
Prospectus Supplement).
Redemption Provisions: The redemption provisions applicable to the new Bonds
will be described in the Prospectus Supplement.
Kind and Priority of Lien: In the opinion of general counsel for the Company,
the new Bonds will be secured equally and ratably with all other Bonds by a
valid and direct first mortgage on the Company's bondable public utility
property, and on its franchises and permits, except as stated below, and
subject only to permitted encumbrances and the prior lien of the Trustee for
compensation and expenses. The Mortgage permits the Company to acquire bondable
public utility property subject to certain prior liens. The Mortgage requires
that there shall be subjected to the lien thereof (except as to property of the
character expressly exempt and subject to certain limitations in cases of
mergers and consolidations) all property which the Company may hereafter
acquire.
There are excepted from the lien of the Mortgage: cash, accounts receivable,
fuel, automobiles, trucks, etc., and office equipment, contracts, other choses
in action, and securities, unless specifically mortgaged and pledged or
expressly required so to be; goods, merchandise and appliances held for sale;
materials and supplies; oil, coal and other minerals (except gas) underlying
mortgaged lands; and all other property which is not bondable public utility
property.
5
<PAGE>
Restrictions on Common Stock Dividends: So long as any of the Company's First
Mortgage Bonds, 6 3/8% Series due July 1, 2003, or 7.40% Series due July 1,
2023, are outstanding, cash dividends may not be paid or distributions be made
on common stock (except where an equal amount is concurrently repaid as a
capital contribution or as the purchase price of common stock) or common stock
be purchased in an aggregate amount which would exceed earned surplus
accumulated after June 30, 1993, plus earned surplus accumulated prior to July
1, 1993 in an amount not exceeding $35,000,000, plus such additional amount as
shall be authorized or approved by the SEC, or any successor commission, under
the Public Utility Holding Company Act of 1935, as amended. There are various
other dividend restrictions in the Mortgage which remain in effect so long as
bonds of other series are outstanding.
Any restrictions on dividends and distributions on common stock in the new
Supplemental Indenture will be set forth in the Prospectus Supplement.
See also "Description of New Stock--Restrictions on Junior Stock Dividends"
herein.
Improvement Fund: The Company covenants to pay to the Trustee each year, as
an improvement fund, cash (less certain credits) in an amount equal to the
minimum provision for depreciation (i.e., 2 1/2% of the book cost in the case
of the bondable electric public utility property and 2% in the case of other
depreciable bondable public utility property owned by the Company, or, after
the Bonds of all series created prior to November 1, 1988 cease to be
outstanding, 2% with respect to all such property). In lieu of cash, credit may
be taken for (i) Bonds or retired Bonds, or (ii) property additions, or (iii)
retired prior lien debt and expenditures for acquisition of or improvements to
bondable public utility property subject to prior liens, within specified
limitations, and cash deposited may later be withdrawn against any such credit
or may, at the election of the Company, be used to redeem Bonds of any series
at the special redemption price then applicable to such Bonds or to purchase
Bonds of any series at an amount not exceeding such price. The Company will
covenant in the new Supplemental Indenture that it will not, in any calendar
year, redeem new Bonds by application of cash in the improvement fund in a
principal amount which would exceed 1% of the initial aggregate principal
amount of the new Bonds.
Sinking Fund: Pursuant to the new Supplemental Indenture, the annual sinking
fund requirement applicable to the new Bonds, which must be satisfied on or
before June 1 in each year, will be equal to 1% of the aggregate principal
amount of new Bonds authenticated and delivered prior to the preceding January
1 (less new Bonds retired directly or indirectly as a result of the release of
property). The sinking fund requirement may be satisfied in cash, in principal
amount of Bonds or to the extent of 60% of unfunded available additions. Any
cash so deposited is to be used by the Trustee for the redemption (in the case
of the new Bonds, at the Special Redemption Price) or other retirement of Bonds
of such series as may be designated by the Company or may be withdrawn to the
extent of 60% of available additions and 100% of available Bond retirements.
The Company will covenant in the new Supplemental Indenture that it will not,
in any year prior to the fifth calendar year after the new Bonds are initially
issued, redeem new Bonds through the operation of the sinking fund provisions
in a principal amount which would exceed the sinking fund requirement
attributable to the new Bonds. The principal amount of new Bonds which may be
redeemed through the operation of the sinking fund provisions in any year
subsequent to the fourth calendar year after the new Bonds are initially issued
will not be so limited.
Maintenance and Properties: The Mortgage requires periodic inspections and
reports by an independent engineer as to maintenance and property retirements.
Issuance of Additional Bonds and Withdrawal of Cash Deposited Against such
Issuance: The principal amount of Bonds which may be issued under the Mortgage
is not limited. Bonds of any series may be issued from time to time on the
basis of (1) 60% of unfunded available additions; (2) deposit of cash; and (3)
retirement of Bonds. With certain exceptions in the case of (3) above, the
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issuance of Bonds is subject to net earnings available for interest for 12
consecutive months out of the preceding 15 months having been at least 2 1/2
times the annual interest requirements on all Bonds and all prior lien debt to
be outstanding. Cash deposited with the Trustee pursuant to (2) above may be
withdrawn to the extent of 60% of available additions and 100% of available
Bond retirements.
Release and Substitution of Property: Property subject to the lien of the
Mortgage may (subject to exceptions and limitations contained therein) be
released only upon the substitution of cash (or in lieu thereof available Bond
retirements) or certain other property.
Modification of Mortgage and Waiver of Default: The Mortgage currently
provides that, with the consent of 75% of the Bonds, including not less than
60% of each series affected, the Company and the Trustee may modify the rights
of the bondholders. In general, no modification of the terms of payment of
principal, premium or interest and no modification permitting additional prior
or parity liens or reducing the percentage required for modification is
effective against any bondholder without such bondholder's consent. Uncured
defaults (except in payment of principal, premium or interest) may be waived by
75% of the Bonds (including 60% of the Bonds of each series affected).
After the Bonds of all series created prior to November 1, 1988 cease to be
outstanding, the Mortgage may be modified with the consent of a majority of the
Bonds which would be affected by the action proposed to be taken and uncured
defaults may be waived by a majority of the Bonds.
The Ninth Supplemental Indenture to the Mortgage provides for the
modification of the net earnings that must be available for interest for the
issuance by the Company of additional first mortgage bonds by requiring that
the net earnings available for interest for 12 months out of the preceding 15
months must have been 2 times (rather than 2 1/2 times) the annual interest
requirements on all first mortgage bonds to be outstanding. The Ninth
Supplemental Indenture provides that such modification shall become effective
without the consent of the holders of any series of the Company's first
mortgage bonds created after the date of such Ninth Supplemental Indenture
(including the new Bonds) either when all first mortgage bonds issued prior to
such Ninth Supplemental Indenture shall cease to be outstanding or when the
holders of not less than 75% in principal amount of such outstanding first
mortgage bonds, including the consent of the holders of not less than 60% in
principal amount of each series of such outstanding first mortgage bonds, shall
consent to such modification.
Concerning the Trustee: In the normal course of its business the Company
utilizes many of the banking services offered by the Trustee including such
services as the making of short-term loans and acting as depositary and trustee
for the Company's pension plan.
A majority of the Bonds is necessary to require the Trustee to exercise any
remedy under the Mortgage; the Trustee is entitled to receive reasonable
indemnity and under certain circumstances is not required to act.
Defaults: A default is currently defined as (a) failure to pay principal or
premium when due, (b) failure to pay interest for 30 days after becoming due
with respect to the Bonds of the 4 5/8% Series due April 1, 1994, or failure to
pay interest for 60 days with respect to subsequent series of Bonds, (c)
failure to satisfy sinking, improvement or any analogous fund payments for 60
days after becoming due with respect to the Bonds of the 4 5/8% Series due
April 1, 1994, or failure to satisfy the sinking fund requirement for 90 days
with respect to subsequent series of Bonds, (d) failure to observe covenants,
conditions or agreements as to sale of part or all of the trust estate, or to
merge, consolidate, or lease the trust estate otherwise than in accordance with
Mortgage provisions, (e) failure for 60 days after notice to observe other
covenants or conditions (including the payment of, and the compliance with the
covenants, conditions and obligations with respect to, all other indebtedness
of the Company), (f) entry of an order for reorganization or appointment of a
trustee or receiver and continuance of such order or appointment unstayed for
60 days, (g) certain
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adjudications, petitions or consents in bankruptcy, insolvency or
reorganization proceedings, and (h) rendering of a judgment in excess of
$100,000 for payment of moneys and its continuance unsatisfied or unstayed for
60 days.
After the Bonds of all series created prior to November 1, 1988 cease to be
outstanding, a default will be defined as (a) failure to pay principal or
premium when due, (b) failure to pay interest for 60 days after becoming due,
(c) failure to satisfy sinking, improvement or any analogous fund payments for
90 days after becoming due, (d) failure to observe covenants, conditions or
agreements as to sale of part or all of the trust estate, or to merge,
consolidate, or lease the trust estate otherwise than in accordance with
Mortgage provisions, (e) failure for 90 days after notice to observe other
covenants or conditions, (f) entry of an order for reorganization or
appointment of a trustee or receiver and continuance of such order or
appointment unstayed for 60 days, and (g) certain adjudications, petitions or
consents in bankruptcy, insolvency or reorganization proceedings.
The Mortgage requires the filing with the Trustee of an annual officers'
certificate as to the absence of defaults.
DESCRIPTION OF NEW STOCK
The new Preferred Stock may be issued and sold by the Company in one or more
classes (constituting series of Preferred Stock). In the following description,
references to the "new Stock" are to new Preferred Stock of the particular
series referred to in the Prospectus Supplement.
General: The new Stock is to be created by amendment to the Charter of the
Company. The statements herein concerning the new Stock constitute only an
outline and do not purport to be complete descriptions thereof. They are
qualified in their entirety by reference to the Charter and amendments thereto
for complete statements and for the definition of various terms. Copies of the
instruments constituting the Charter are filed or incorporated by reference as
exhibits to the Registration Statement of which this Prospectus is a part and
reference is made thereto for further information. The shares of preferred
stock of all series issued or which may be issued under the Charter are herein
referred to as "Preferred Stock."
The new Stock constitutes a series of an authorized class of 2,200,000 shares
of Preferred Stock of such par value per share (up to $100 per share) as shall
be fixed by resolution duly adopted at a meeting of the stockholders of the
Company prior to the issue and sale thereof. At December 31, 1993, there were
outstanding 1,400,000 shares of such class with a par value of $25 per share.
The Company's Charter also authorizes 125,000 shares of Preferred Stock of the
par value of $100 per share, of which no shares were outstanding at December
31, 1993. All such Preferred Stock ranks on a parity with respect to dividends
and amounts payable upon liquidation, dissolution or winding up of the Company.
The new Stock will be transferable at the office of Southern Company
Services, Inc., 64 Perimeter Center East, Atlanta, Georgia 30346. Southern
Company Services, Inc. will also act as registrar for the new Stock.
Any proposed listing of the new Stock on a securities exchange will be
described in the Prospectus Supplement.
Dividend Rights: The holders of the Preferred Stock of each class are
entitled to receive, when and as declared by the Board of Directors, dividends
at the rate per annum determined for the respective class, before any dividends
may be declared or paid on the shares of any Junior Stock (as defined in the
Charter). The Prospectus Supplement will set forth the dividend rate provisions
of the new Stock, including the payment dates and the rate or rates, or the
method of determining the rate or rates (which may involve periodic dividend
rate settings through remarketing or auction procedures or pursuant to one or
more formulae, as described in the Prospectus Supplement). Dividends payable on
the new Stock will be cumulative from the date of original issue.
Restrictions on Junior Stock Dividends: The Company's Charter limits cash
dividends on Junior Stock to 50% of net income available for such stock during
a prior period of 12 months if the
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ratio of junior stock equity to total capitalization, including surplus,
adjusted to reflect the payment of the proposed dividend, is below 20%, and to
75% of such net income if such ratio is 20% or more but less than 25%.
The Charter of the Company also provides that the Company shall not declare
or pay any dividends on any shares of Junior Stock, other than dividends
payable in shares of Junior Stock, or make any other distribution on any shares
of Junior Stock or make any expenditures for the purchase, redemption or other
retirement for a consideration of shares of Junior Stock (other than in
exchange for or from the proceeds of the sale of other Junior Stock and other
than Junior Stock required to be redeemed or retired for any sinking or
purchase fund for any class of Junior Stock), except from net income of the
Company available for dividends on Junior Stock (as defined) accumulated
subsequent to December 31, 1952, or if, after giving effect thereto, the
aggregate capital of the Company applicable to all Junior Stock outstanding
plus the earned surplus and capital surplus of the Company, plus premiums on
capital stock of all classes, would be less than the aggregate amount payable
upon involuntary liquidation, dissolution or winding up of the Company in
respect of all shares of Preferred Stock then outstanding.
See also "Description of New Bonds--Restrictions on Common Stock Dividends"
herein.
Redemption Provisions: The redemption provisions applicable to the new Stock
will be described in the Prospectus Supplement.
While dividends are in arrears or while any sinking fund default exists on a
particular series, no Preferred Stock may be redeemed or purchased unless, in
the case of redemptions, all of the outstanding Preferred Stock (or all
Preferred Stock of such series as to which a sinking fund default exists) shall
be redeemed or, in the case of purchases, an offer to purchase on a comparable
basis shall be made to all holders of Preferred Stock (or all holders of
Preferred Stock of such series as to which a sinking fund default exists).
Voting Rights: Except as hereinafter set forth or when some mandatory
provision of law shall be controlling, the holders of the new Stock will have
no voting power.
Holders of Preferred Stock are entitled to vote on certain matters relating
to (1) authorization of stock, other than Preferred Stock, ranking prior to or
on a parity with the Preferred Stock, or any security convertible into shares
of stock of such kind; (2) change of the express terms of any series of
Preferred Stock in a manner prejudicial to the holders; (3) issuance of
additional shares of Preferred Stock unless, for any twelve-month period within
the preceding fifteen months, net earnings applicable to the payment of
dividends on the Preferred Stock and net earnings applicable to payment of
interest charges on indebtedness shall have been, respectively, at least 2 1/2%
times the dividend requirements upon the entire amount of Preferred Stock then
to be outstanding, and at least 1 1/2% times the aggregate of such dividend
requirements and interest charges for such period on the entire amount of
indebtedness then to be outstanding; (4) issuance of additional Preferred
Stock, unless the capital of the Company represented by its common stock
together with its surplus shall in the aggregate be at least equal to the
involuntary liquidation value of the Preferred Stock then to be outstanding;
(5) issuance, creation or assumption of securities representing unsecured
indebtedness (other than to refund or renew outstanding unsecured indebtedness
or to retire Preferred Stock) if the total of all unsecured securities would
exceed 20% of the aggregate of the Company's outstanding secured indebtedness,
capital and surplus, or if the total of all unsecured securities with
maturities of less than ten years would exceed 10% of such aggregate; and (6)
merger or consolidation with or into any corporation or sale or other
disposition of all or substantially all of the Company's assets unless ordered
or approved by the SEC under the Public Utility Holding Company Act of 1935, as
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amended. With respect to (1), (2), (3) and (4) above, the consent or
affirmative vote of at least two-thirds of the outstanding Preferred Stock (or
of the affected series in the case of a change prejudicial to less than all
series) is required; and with respect to (5) and (6), the consent or
affirmative vote of a majority of the outstanding Preferred Stock is required.
However, no consent of the holders of any series of Preferred Stock as
described in this paragraph shall be required if provision is made for the
redemption of all shares of such series, or provision is made that the proposed
action will not be effective unless provision is made for the purchase,
redemption or other retirement of all shares of such series.
If and when dividends on the Preferred Stock shall be in default in an amount
equal to four full quarterly dividends, and until all dividends then in default
shall have been paid, the holders of Preferred Stock, voting as a class, are
entitled to elect the smallest number of directors necessary to constitute a
majority of the full Board of Directors.
If there are outstanding classes of Preferred Stock having different par
values per share, the class having the highest par value will be entitled to
one vote per share and each share of each class having a lower par value will
be entitled to a fractional vote in the same proportion as its par value bears
to the highest par value.
Liquidation Rights: In the event of any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, the holders of each class
of Preferred Stock shall be entitled to receive, for each share thereof, the
par value thereof, plus, in a voluntary liquidation, dissolution or winding up,
an amount per share equal to the then current optional redemption premium,
together in each case with accrued dividends, before any distribution of assets
may be made to the holders of any Junior Stock.
Sinking Fund: The terms and conditions of a sinking or purchase fund, if any,
for the benefit of the holders of the new Stock will be set forth in the
Prospectus Supplement.
Other Rights: The holders of the new Stock do not have any pre-emptive or
conversion rights. The new Stock will not be subject to further calls or to
assessment by the Company.
LEGAL OPINIONS AND EXPERTS
Bouhan, Williams & Levy, Savannah, Georgia, general counsel for the Company,
and Troutman Sanders, Atlanta, Georgia, counsel for the Company, will render
opinions as to the legality of the new First Mortgage Bonds and the new
Preferred Stock. Reid & Priest, New York, New York, will act as counsel for the
underwriters or purchasers and will render an opinion to them as to the
legality of the new First Mortgage Bonds and the new Preferred Stock. Reid &
Priest will rely on the opinions of Bouhan, Williams & Levy and Troutman
Sanders as to matters of Georgia law.
The financial statements filed with the Company's Current Report on Form 8-K
dated February 16, 1994, incorporated by reference in this Prospectus, have
been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
Bouhan, Williams & Levy have reviewed the statements as to matters of law and
legal conclusions relating to the Company under "Item 1 -- Business --
Competition", "Item 1 -- Business -- Regulation" and relating to titles of
property of the Company under "Item 2 -- Properties -- Titles to Property" in
the Company's Annual Report on Form 10-K for the year ended December 31, 1992,
incorporated by reference in this Prospectus, and such statements are
incorporated herein in reliance upon their authority as experts. George W.
Williams, a Director Emeritus of the Company, is of counsel to the firm of
Bouhan, Williams & Levy, and he and other members of such firm own an aggregate
of 19,084 shares of common stock of The Southern Company.
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PLAN OF DISTRIBUTION
The Company may sell the new First Mortgage Bonds and the new Preferred Stock
in one or more transactions. Purchasers of the new First Mortgage Bonds and the
new Preferred Stock from the Company may include underwriters, dealers or
purchasers acting for themselves. A Prospectus Supplement will set forth the
purchase price of the new First Mortgage Bonds and the new Preferred Stock with
respect to which an agreement of sale has been entered into by the Company, the
proceeds to the Company from such sale, and the terms of any re-offering,
including the names of any underwriters, any underwriting discounts and other
items consisting of underwriters' compensation, any fixed public offering price
and any discounts or concessions allowed or reallowed or paid to dealers. Any
fixed public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are involved in the sale, new First Mortgage Bonds or new
Preferred Stock will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Unless otherwise set forth in a Prospectus
Supplement, the obligations of the underwriters to purchase new First Mortgage
Bonds or new Preferred Stock will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such new First Mortgage
Bonds or new Preferred Stock if any are purchased.
New First Mortgage Bonds and new Preferred Stock may be sold directly by the
Company or through agents designated by the Company from time to time. A
Prospectus Supplement will set forth the name of any agent involved in any such
offer or sale, as well as any commissions payable by the Company to such agent.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
The Prospectus Supplement will set forth the name or names and terms of
appointment of any remarketing agent or agents or any auction agent or agents
which may be appointed by the Company in connection with any remarketing
procedures or auction procedures, as the case may be, that may be applicable as
described in the Prospectus Supplement.
The Company may agree to indemnify underwriters and purchasers of the new
First Mortgage Bonds and the new Preferred Stock, and any agents designated by
the Company as aforesaid, against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended.
Underwriters or purchasers of the new Preferred Stock may include one or more
of the following: Robert W. Baird & Co. Incorporated; Bear, Stearns & Co. Inc.;
J.C. Bradford & Co.; Alex. Brown & Sons Incorporated; Chase Securities Inc.;
Chemical Securities, Inc.; Citicorp Securities Inc.; Dain Bosworth
Incorporated; Daiwa Securities America Inc.; Dillon, Read & Co. Inc.;
Donaldson, Lufkin & Jenrette Securities Corporation; A.G. Edwards & Sons, Inc.;
CS First Boston Corporation; Goldman, Sachs & Co.; Interstate/Johnson Lane
Corporation; Raymond James and Associates, Inc.; Edward D. Jones & Co.; Kemper
Securities Group, Inc.; Kidder, Peabody & Co. Incorporated; W.R. Lazard; Legg
Mason Wood Walker Incorporated; Lehman Brothers Inc.; Merrill Lynch, Pierce,
Fenner & Smith Incorporated; Morgan Keegan & Company, Inc.; J.P. Morgan
Securities Inc.; Morgan Stanley & Co. Incorporated; Nomura Securities
International, Inc.; PaineWebber Incorporated; Prudential Securities
Incorporated; Pryor, McClendon, Counts & Co., Inc.; Rauscher Pierce Refsnes,
Inc.; The Robinson-Humphrey Company, Inc.; L.F. Rothschild and Co.
Incorporated; Salomon Brothers Inc; Smith Barney Shearson Inc.; Swiss Bank
Corporation International Securities Inc.; Thomson McKinnon Securities Inc.;
Tucker Anthony Incorporated; UBS Securities Inc.; Wertheim Schroder & Co.
Incorporated; and Dean Witter Reynolds Inc.
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