Subject to completion, dated November 1, 2000
PROSPECTUS SUPPLEMENT
(To prospectus dated September 7, 2000)
$_____________________
Southern California Edison Company
Variable Rate Notes due 200_
Southern California Edison Company will pay interest at the annual rate
of ___% on the notes (subject to adjustment as set forth in this prospectus
supplement) on the ___ day of each May and November, commencing on May __, 2001,
through the maturity date of ____________, 200 . Under limited circumstances
involving changes in the credit ratings of Southern California Edison Company,
as set forth in this prospectus supplement, the interest rate on the notes may
be adjusted.
The notes may be redeemed in whole or in part at Southern California
Edison Company's option at any time at a make-whole price, as described in
"Description of the Notes -- Redemption."
The notes will be unsecured and will rank equally with all other
existing and future unsecured and unsubordinated indebtedness of Southern
California Edison Company. The notes will be issued only in registered form in
denominations of $1,000 and integral multiples of $1,000.
<TABLE>
<CAPTION>
Proceeds to
Underwriting Southern
Offering Price Discounts and California Edison
to Investors Commissions
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Per Note................ % % %
Total................... $ $ $
</TABLE>
The public offering price set forth above does not include accrued
interest. Interest on the notes will accrue from November ___, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes in book-entry form only
through the facilities of The Depository Trust Company on or about November __,
2000.
Joint Book Running Managers
CHASE SECURITIES INC. LEHMAN BROTHERS
Co-Managers
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
November __, 2000
The information in this prospectus supplement is not complete and may be
changed. We may not deliver these securities until a final prospectus supplement
is delivered. This prospectus supplement and the accompanying prospectus are not
offers to sell these securities, and we are not soliciting offers to buy these
securities, in any state where the offer or sale is not permitted.
<PAGE>
Table of Contents
Prospectus Supplement
Page
About this Prospectus Supplement and Prospectus ...........................S-2
Southern California Edison Company.........................................S-3
Recent Developments........................................................S-3
Use of Proceeds............................................................S-7
Ratio of Earnings to Fixed Charges.........................................S-7
Description of the Notes...................................................S-8
Underwriting..............................................................S-14
Validity of the Notes.....................................................S-15
Available Information.....................................................S-15
Prospectus
Page
About This Prospectus........................................................3
Forward-Looking Statements...................................................3
Southern California Edison Company...........................................4
The Trusts...................................................................4
Use of Proceeds..............................................................5
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.............5
Description of the Securities................................................6
Description of the Debt Securities...........................................6
Description of the Preferred Stock..........................................19
Description of Preferred Securities.........................................23
Description of Preferred Securities Guarantees..............................29
Description of Expense Agreements...........................................31
Relationship among Preferred Securities, Preferred Securities
Guarantees and Subordinated Debt Securities Held by Each Trust...........31
Experts.....................................................................32
Validity of the Securities and Preferred Securities Guarantees..............32
Plan of Distribution........................................................33
Where You Can Find More Information.........................................35
ABOUT THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS
You should read this prospectus supplement and the accompanying
prospectus carefully before you invest. You should rely only on the information
contained in or incorporated by reference in this prospectus supplement and the
accompanying prospectus. We and the underwriters have not authorized any other
person to give you different information. If anyone gives you different or
inconsistent information, you should not rely on it. This prospectus supplement
may add to, update or change information in the accompanying prospectus. The
information contained in this prospectus supplement is current only as of the
date appearing at the bottom of the cover. Since that date, our business,
financial condition, results of operations and prospects may have changed.
We and the underwriters are not offering to sell or seeking offers to
buy the notes in any jurisdiction where the offer or sale is not permitted.
In this prospectus supplement and the accompanying prospectus, unless
otherwise stated, the terms "we," "us," "our," "the Company" and "Southern
California Edison" refer to Southern California Edison Company and its
subsidiaries but not to any other affiliated companies. In this prospectus
supplement, the term "notes" refers to the variable rate notes.
S-2
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY
We are an investor-owned public utility company primarily engaged in
providing electricity to our customers in central and southern California. The
address of our principal executive offices is 2244 Walnut Grove Avenue, P.O. Box
800, Rosemead, California 91770. Our telephone number is (626) 302-1212. We file
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. Those reports and proxy statements
are considered to be part of this prospectus supplement and the accompanying
prospectus through incorporation by reference. You may read and obtain copies of
those reports and other information to learn more about us. Under the heading
"Available Information" below we have described how you can do so.
RECENT DEVELOPMENTS
The retail rates we charge to our customers, as well as various other
aspects of our operations as a California public utility company, are regulated
by the California Public Utilities Commission ("CPUC") and governed by
California law. Our wholesale power transactions and related matters involving
interstate commerce are regulated by the Federal Energy Regulatory Commission
("FERC") and governed by federal law. California is restructuring its electric
utility industry under a statute unanimously adopted by the California
legislature in 1996 (known as "AB 1890") and decisions of the CPUC. AB 1890
established a transition period during which rates paid by retail electricity
consumers are frozen and investor-owned electric utility companies, including
us, are authorized to recover certain generation-related assets and obligations
(commonly referred to as "stranded costs"). A regulatory balancing account
called the transition cost balancing account ("TCBA") has been created to record
these costs.
AB 1890 and the CPUC's implementing decisions authorize three sources
of revenue from which we may recover our stranded costs during the transition
period: (1) market revenues from sales of electricity produced by generation
assets that we continue to own, (2) the proceeds from divestiture of our
generation assets, or the market valuation of generation assets that we retain,
to the extent that the sale proceeds or market valuations exceed the book value
of the assets, and (3) revenues from retail electricity sales to our customers
to the extent that frozen rate levels exceed our energy procurement costs
(commonly referred to as "headroom"). AB 1890 further provides that the rate
freeze will end on "the earlier of March 31, 2002, or the date on which the
commission-authorized costs for utility generation-related assets have been
fully recovered." The CPUC has ruled that the rate freeze will end when the
balance in the TCBA is at zero or is overcollected and the CPUC has completed
its review of applications for valuation of generation assets. The CPUC
contemplated that its final approval could take place some time after the TCBA
reaches zero or is overcollected, in which case the CPUC could make retroactive
adjustments as though the rate freeze had ended at an earlier date.
As a part of industry restructuring, we are required during the
transition period to sell all of the electricity we generate to the California
Power Exchange at prices determined by periodic public auctions. As noted above,
the revenues received are used to recover stranded costs. We also are required
to buy any electricity needed to serve our retail customers through the
California Power Exchange and the California Independent System Operator. Our
total procurement costs, along with our other authorized operating costs and
charges are recorded in a regulatory asset account called the transition revenue
account ("TRA"). Our total billed revenues from retail customers are also
recorded in this account. As noted above, whenever our revenues exceed our
costs, we have headroom revenues which are used to recover stranded costs. On
November 1, 2000, the FERC issued a proposed decision, discussed below, which,
if implemented, would eliminate the requirement to buy and sell power only
through the California Power Exchange and California Independent System
Operator.
S-3
<PAGE>
We are experiencing adverse impacts from unusually high prices for energy
and ancillary services procured through the California Power Exchange and the
California Independent System Operator. Because of the high prices, we have
received insufficient revenues from customers through current frozen rates to
cover all costs of providing service during each month since May 2000. The
amount by which the revenues are insufficient to cover costs is recorded as a
negative balance in the TRA. The amount of undercollections recorded in our TRA
was $2.358 billion as of September 30, 2000. Current published prices for future
deliveries of wholesale electricity suggest that wholesale prices and other
costs of providing service to customers will continue to exceed our authorized
rates for the foreseeable future, resulting in continued increases in the
undercollected TRA balance.
Past decisions of the CPUC, as discussed below, allow us to recover TRA
undercollections only from any future positive revenues attributable to the
account through the end of the statutory rate freeze period as defined above.
Based on current projections of future wholesale energy prices, we anticipate
that we will be unable to recover our TRA undercollections before the end of the
statutory rate freeze. Therefore, if the CPUC does not modify its past decisions
and we are unable to obtain other regulatory or judicial relief, we likely will
not be able to recover our TRA undercollections. That would result in charges
against earnings as discussed below.
In an October 1999 order, the CPUC interpreted and applied AB 1890 to
prohibit us and other California electric utility companies from either
recovering TRA undercollections after the end of the statutory rate freeze or
offsetting those undercollections with overcollections of stranded costs in the
TCBA. In March 2000, the CPUC denied a petition for rehearing of the October
1999 order. A subsequent petition for judicial review of the CPUC's decisions
was denied by the California Court of Appeal, and an appeal is now pending
before the California Supreme Court.
On October 4, 2000, we filed with the CPUC an emergency petition for
expedited modification of the CPUC's October 1999 and March 2000 decisions. In
the emergency petition, we argued that: (1) modification of the prior decisions
is justified by significant new facts, a material change in conditions, and a
basic misconception of law by the CPUC; (2) the prior decisions violate federal
law by preventing us from recovering costs incurred pursuant to tariffs and rate
schedules filed with FERC; and (3) the prior decisions seriously misinterpreted
AB 1890. Our emergency petition requested that the CPUC modify its prior
decisions to allow electric utility companies to carry over costs, excluding
stranded costs, incurred during the statutory rate freeze period to the
post-rate freeze period, and to recover those costs over a reasonable period of
time. We also filed with the CPUC on October 5, 2000 an ex parte request for
immediate suspension of the effectiveness of portions of the October 1999 and
March 2000 CPUC decisions.
On October 17, 2000, the assigned commissioner and the administrative
law judge in the CPUC proceedings described above issued a joint ruling stating
that they would consider the accounting mechanisms developed by the CPUC,
including the TRA and TCBA. They scheduled a prehearing conference on October
27, 2000 to "develop a schedule for submitting testimony related to potential
changes to the TCBA, the TRA, and the interaction of these accounting
mechanisms, including, for example, such methods as applying generation revenues
to offset operating losses, or transferring the TRA undercollection to the
TCBA." In a statement accompanying the joint ruling, the President of the CPUC
stated that "it is crucial to explore equitable solutions to this problem,
including how the Commission should revise the accounting procedures and cost
recovery mechanisms related to the Transition Cost Balancing Account and the
Transition Revenue Account. These approaches might include, for example, whether
the generating revenues that have been earned should be used to net out
operating losses."
On October 17, 2000, The Utility Reform Network ("TURN"), a customer
advocacy group, petitioned the CPUC to modify, apparently retroactively, a 1998
CPUC decision in such a way as to require all TRA undercollections and
overcollections to be transferred to the TCBA on a monthly basis. We believe
that
S-4
<PAGE>
TURN's requested modifications likely would preclude us from recovering a
substantial portion of our stranded costs and ongoing power procurement costs,
which would require us to charge those costs to earnings in accordance with
generally accepted accounting principles, as discussed below. We will oppose
TURN's petition.
On October 25, 2000, the Company filed a statement required by the
October 17 joint ruling. The statement proposed that the CPUC take four key
actions: (1) support market reform, including providing greater freedom for
utilities to contract for longer term supplies of power, completing review of
our bilateral contract proposals, and urging other agencies to help rectify the
market structure problems that have become apparent; (2) confirm that utility
companies will be permitted to recover their reasonable procurement costs
incurred on behalf of customers; (3) protect customers by implementing a
post-freeze rate stabilization plan, including a modest near-term energy rate
increase in the interest of avoiding a much larger rate increase in 2002 and
thereafter; and (4) promptly decide whether the CPUC is going to permit the sale
of the utilities' remaining generation assets. We also proposed a schedule
leading to adoption of a new rate plan effective January 1, 2001. At the October
27, 2000 prehearing conference, the administrative law judge extended the date
for responses to our emergency motions to November 9, 2000, and set the same
date for responses to the TURN petition. Parties were also given until the same
date to file specific accounting proposals relating to the TRA undercollections.
The administrative law judge stated that the scope of the proceeding is limited
to changes in the applicable CPUC-authorized accounting mechanisms, and is not
intended to address before the end of this year the question of whether prior
CPUC decisions should be modified to permit carryover of TRA undercollections
past the end of the rate freeze. On November 1, 2000, the assigned commissioner
issued a ruling confirming that this phase of the proceeding will explore
interim accounting measures that the CPUC can adopt by year-end. The ruling also
stated that the assigned commissioner will prepare an order instituting
investigation for consideration at the CPUC's December 21, 2000 meeting, which
"will allow the [CPUC] to consider alternative ways of handling the residual
cash flow problems from large TRA undercollections that have not otherwise been
resolved through accounting mechanisms."
We cannot predict what actions the CPUC will finally take in the
proceedings described above or their financial impact on the Company. However,
actions that would require us to charge the TRA undercollections to earnings
under generally accepted accounting principles, as discussed below, could have a
material adverse effect on our financial condition and results of operations.
We are continuing to work with the CPUC, the FERC, the California
Electricity Oversight Board, the California Power Exchange, and the California
Independent System Operator to fix the market problems that have resulted in the
recent high prices for wholesale energy and ancillary services. On October 16,
2000, we filed a joint petition with Pacific Gas & Electric Company and TURN
asking the FERC to (1) immediately find the California wholesale electricity
market to be not workably competitive and the resulting prices to be unjust and
unreasonable; (2) immediately impose a cap on the price for energy and ancillary
services; and (3) institute further expedited proceedings regarding the market
failure, mitigation of market power, structural solutions, and responsibility
for refunds. Equitable solutions to the current market problems are essential to
our long-term financial stability. The FERC has not adopted a schedule for
acting on this petition.
On November 1, 2000, the FERC issued a report and proposed order
proposing remedies for California wholesale electric markets. The FERC found
that there is clear evidence that the California market structure provides the
opportunity for sellers to exercise market power and can result in unjust and
unreasonable rates. However, the FERC also found that the record before them
does not support refunds from power sellers for periods prior to October 2,
2000, but that subsequent rates would be subject to refund through December 31,
2002. The FERC described several immediate remedies and certain longer term
structural reforms. The immediate remedies include: (1) the elimination of the
buy/sell requirement (discussed above); (2) incentives to ensure that
transactions occur outside of the California Independent System Operator's
imbalance energy market; (3) establishment of an independent, non-stakeholder
governing
S-5
<PAGE>
board for both the Independent System Operator and California Power
Exchange; and (4) establishment of generation interconnection procedures. The
FERC also proposed modifying the auction procedures for the California Power
Exchange and California Independent System Operator so that bids above $150 per
megawatt hour cannot set the market clearing price. The FERC will take comments
on the proposed order, and will issue a final order in 60 days.
As of September 30, 2000, the book value of our stranded assets to be
recovered by the end of the rate freeze, less estimated credits from the market
valuation or pending sale of remaining generation assets, and the book value of
the TRA are as follows:
(in millions)
Unamortized nuclear investment - net.......................... $783
Unamortized loss on sale of plant............................. 76
Transition-related balancing accounts:
Transition cost balancing account (TCBA)................... (159)
Generation asset balancing account (GABA).................. 510
Coal and hydro balancing accounts.......................... (807)
Flow-through taxes............................................ 132
Other regulatory assets....................................... 35
----------
Subtotal...................................................... $570
Book value of remaining generation plant...................... 363
==========
Total stranded assets......................................... $933
Less projected credits:
Excess of market value over book for hydro assets.......... (500)
Market value of generating plants based on pending
sale prices......................................... (1,083)
----------
Net amount of stranded assets (overcollection)................ $ (650)
Transition revenue account (TRA) undercollection................... $ 2,358
The amounts in the above table are based on our application of the
ratemaking procedures previously approved by the CPUC for recording amounts in
the TRA, the TCBA and related accounts, but the balances reflected here have not
been approved by the CPUC. As discussed above, the CPUC may change the
applicable ratemaking and accounting procedures, and could propose to make
changes retroactively.
There are many factors that affect our ability to recover our stranded
costs and our TRA undercollections. Based on the valuations of generating assets
that have been filed with the CPUC, we believe it is probable that we will be
able to recover our stranded costs that are recorded in the TCBA. We also
believe it is probable that we will be able to recover our costs that are
recorded as undercollections in the TRA. Recovery of our TRA undercollections,
however, depends on favorable regulatory actions as described above, as well as
other factors such as weather conditions, market prices of gas and electricity,
levels of sales, and economic conditions, about which there can be no certainty.
Under Statement of Financial Accounting Standards (FAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation" ("FAS No. 71") the
TRA undercollections can be recorded as a regulatory asset on the balance sheet
rather than being charged to earnings if it is probable that these
undercollections will be recoverable through the ratemaking process. At any time
that all or a portion of the existing TRA undercollections are not deemed to be
probable of recovery, the undercollections or a portion thereof must be charged
against earnings. Thereafter, any further undercollections not probable of
recovery also would be charged to earnings, and any overcollections would be
recorded as earnings. Substantial earnings charges
S-6
<PAGE>
could adversely affect our financial condition and results of operations,
as well as our ability to declare and pay dividends. We are reviewing on an
ongoing basis the facts and circumstances relating to the TRA undercollections
in light of FAS No. 71.
On October 30, 2000, a purported class action lawsuit was filed in
federal district court in California against us and Edison International. The
complaint alleges that the companies are engaging in securities fraud by
over-reporting revenues and income and improperly accounting for the TRA
undercollections. We believe that the complaint is mistaken in its description
of the facts, its interpretation of applicable accounting principles, and its
application of the applicable laws.
Our liquidity is being affected materially and adversely by the
significant extent to which costs have exceeded revenues in recent months and
are continuing to exceed current revenues, as well as by uncertainties about our
ability to recover these past and future undercollections. On October 10, 2000,
the CPUC approved our application to increase our authorized level of borrowing
to finance regulatory balancing accounts from $700 million to $2 billion. The
increase may be used only to finance the purchase of wholesale electric power
for delivery to retail customers, which is the source of most of the TRA
undercollections. We are arranging additional bank credit facilities to finance
current and expected balancing account undercollections and other operating
requirements. We have obtained a commitment from lenders to arrange a 364-day
credit facility of up to $1 billion. The commitment is subject to documentation
and other conditions,and we cannot give assurance that the facility actually
will be obtained. Our ability to meet our obligations as they come due will
depend in significant part upon the willingness of regulatory bodies to allow us
to recover in rates the costs discussed above.
We cannot give assurances that we will be able to fully recover from
ratepayers our uncollected TRA balance or that we will be able to reduce our
exposure to high power purchase costs in the future.
The matters discussed in the section are presented in more detail in
our Annual Report on Form 10-K for the year ended December 31, 1999, our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, and our
Current Report on Form 8-K dated October 17, 2000, which are incorporated by
reference into this prospectus supplement.
USE OF PROCEEDS
We intend to use the proceeds from the sale of the notes for general
corporate purposes, including repayment of outstanding short-term debt used to
finance revenue undercollections in regulatory balancing and asset accounts,
primarily undercollections of the costs of power purchases from the California
Power Exchange.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings to
fixed charges for each of the five years in the five-year period ended December
31, 1999, and for the 12-month period ended September 30, 2000:
<TABLE>
<CAPTION>
12 Months
Ended
Year Ended December 31, September 30,
1995 1996 1997 1998 1999 2000
-------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............... 3.52 3.54 3.49 2.95 2.94 3.20
Adjusted Ratio of Earnings to Fixed Charges (1).. 3.52 3.54 3.54 3.81 3.67 3.88
</TABLE>
----------
(1) The following effects of rate reduction notes are excluded from the adjusted
ratios for the years ended December 31, 1997, 1998, and 1999 and the 12-month
period ended September 30, 2000:
S-7
<PAGE>
<TABLE>
<CAPTION>
12 Months
Ended
Year Ended December 31, September 30,
1997 1998 1999 2000
------ ------ ------- -------------
(in millions)
<S> <C> <C> <C> <C>
Income before interest expense $8,142 $149,486 $132,359 $121,629
Interest expense $8,142 $149,486 $132,359 $121,629
</TABLE>
SCE Funding LLC, a special purpose entity, of which the Company is the
sole member, issued approximately $2.5 billion of rate reduction notes in
December 1997. For further details, you should refer to the information
described in "Available Information" in this prospectus supplement, particularly
page 22 of the Company's 1999 Annual Report to Shareholders.
DESCRIPTION OF THE NOTES
The following description of the specific terms of the notes
supplements the general and more extensive description of debt securities,
including the notes, set forth in the accompanying prospectus under the heading
"Description of Debt Securities."
Interest and Maturity
The notes will be unsecured and will rank equally with all other
existing and future unsecured and unsubordinated indebtedness of the Company.
The notes initially will be limited to $___________ aggregate principal amount.
The Company may, without the consent of the holders of the notes, issue
additional notes having the same interest rate, maturity, and other terms as the
notes. Any additional notes will, together with the notes, constitute a single
series of the notes under the indenture. No additional notes may be issued if an
event of default has occurred.
The Company will pay interest at the annual rate of ___% (subject to
adjustment as described in "--Interest Rate Adjustment") on the notes on the ___
day of each May and November, commencing with May __, 2001, through the maturity
date of __________________, 200_. Interest will accrue from the issue date of
November __, 2000 and will be paid to holders of record on the fifteenth
calendar day before each interest payment date. If any scheduled interest
payment date falls on a day that is not a business day, it will be postponed to
the following business day. If the maturity date of the notes falls on a day
which is not a business day, we will make the required payment of principal
and/or interest on the following day which is a business day. Additional
interest will not accrue as a result of this delayed payment. Interest on the
notes will be calculated on the basis of a 360-day year consisting of twelve
30-day months. All dollar amounts resulting from such calculation will be
rounded, if necessary, to the nearest cent with one-half cent rounded upward.
S-8
<PAGE>
Interest Rate Adjustment
Our current senior unsecured long-term debt rating by Moody's Investors
Service, Inc. ("Moody's") is A2 with a negative outlook, and our current
corresponding rating by Standard & Poor's Rating Service ("S&P") is A with a
negative outlook.
The interest rate on the notes will be subject to adjustment until May
__, 2002. In the event of a downgrade in the ratings below A3 by Moody's or A-
by S&P, the interest rate on the notes will be adjusted in accordance with the
table below.
If, prior to May __, 2002, either Moody's or S&P changes our rating
subsequent to an adjustment in the interest rate as a result of a previous
rating change by Moody's or S&P, the interest rate on the notes will be
re-adjusted in accordance with the table below.
The notes will bear interest at an annual rate of ____% from November
__, 2000 until the first interest payment date following a downgrade below A3 by
Moody's or A- by S&P.
Beginning with the first interest payment date after a rating change,
the notes will bear interest at an adjusted interest rate. Subsequent interest
rate adjustments (whether the adjustment is up or down) will also become
effective on the first interest payment date after such rating change.
The adjusted annual interest rate for the notes will be the initial
interest rate thereon increased by the sum of the Moody's and S&P adjustment
amounts set forth below.
<TABLE>
<CAPTION>
---------------------- ---------------------- ------------------- --------------------
Moody's Adjustment S&P Adjustment
Moody's Rating Amount S&P Rating Amount
---------------------- ---------------------- ------------------- --------------------
<S> <C> <C> <C>
A3 0.000% A- 0.000%
---------------------- ---------------------- ------------------- --------------------
Baa1 0.125% BBB+ 0.125%
---------------------- ---------------------- ------------------- --------------------
Baa2 0.250% BBB 0.250%
---------------------- ---------------------- ------------------- --------------------
Baa3 0.375% BBB- 0.375%
---------------------- ---------------------- ------------------- --------------------
Ba1 or lower 0.875% BB+ or lower 0.875%
---------------------- ---------------------- ------------------- --------------------
</TABLE>
Redemption
The notes may be redeemed in whole or in part at the Company's option
at any time at a redemption price equal to the greater of (1) the principal
amount to be redeemed or (2) the sum of the present values of the remaining
scheduled payments of principal and interest on the notes to be redeemed,
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Yield plus 0.__%, as
determined by the Independent Investment Banker. The notes are not subject to
the benefits of any sinking fund.
If we elect to redeem less than all of the notes, the trustee for the
notes will select, in a manner it deems fair and appropriate, the particular
notes or portions of them to be redeemed. Notice of redemption shall be given by
mail not less than 30 nor more than 60 days prior to the date fixed for
redemption to the holders of notes to be redeemed (which, as long as the notes
are held in the book-entry only system, will be The Depository Trust Company,
its nominees or successors as described below). On and after the date fixed for
redemption (unless we default in the payment of the redemption price and
interest accrued thereon to such date), interest shall cease to accrue on the
notes or the portions of them called for redemption.
S-9
<PAGE>
Restriction on Liens for Other Debt
In connection with the issuance of the notes described in this
prospectus supplement, we will covenant, until May __, 2002, not to directly or
indirectly create, incur, assume or otherwise allow to exist any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind (collectively
referred to as "liens") with respect to any of our assets or property, or any
income or profits therefrom, for the purpose of securing any indebtedness for
borrowed money evidenced by a bond, note, debenture, security or similar
instrument, or any guaranty of any such indebtedness, unless at the same time we
provide equal and ratable security for the benefit of the notes described in
this prospectus supplement which are outstanding at such time. This covenant
shall not apply to:
o liens arising under the indenture dated as of October 1, 1923, as amended
and supplemented, between the Company and The Bank of New York, as
successor trustee (the "Mortgage Indenture"), providing for the issuance of
first and refunding mortgage bonds of the Company; provided, that the
aggregate principal amount of the mortgage bonds outstanding under the
Mortgage Indenture does not exceed the amount outstanding as of the date
the notes are issued;
o to the extent the Company refinances or prefinances any debt under the
Mortgage Indenture , any lien securing debt incurred by the Company within
91 days before or after the repurchase, redemption or retirement of debt
under the Mortgage Indenture, provided that (i) the proceeds of the new
debt are used to fund or replace funds used for the repurchase, redemption
or retirement of debt under the Mortgage Indenture, (ii) the amount of the
new debt does not exceed an amount equal to the sum of the amount of debt
that is to be repurchased, redeemed or retired and the reasonable costs
associated with repurchasing, redeeming or retiring debt under the Mortgage
Indenture and incurring such new debt and (iii) the liens securing such new
debt shall not encumber any assets other than those encumbered by the lien
of the Mortgage Indenture;
o liens on "transition property" or securing the repayment of "rate reduction
bonds," as such terms are defined in Section 840 of the California Public
Utilities Code;
o liens on general intangibles or other property pledged to ensure the
payment of principal and interest on debt issued to finance or refinance
some or all of the undercollection reflected in the Company's Transition
Revenue Account (TRA) or any other accounts established for the same or
similar purposes as the TRA;
o liens incurred in connection with financing or refinancing the costs of air
or water pollution control, solid waste disposal or sewage facilities;
o liens incurred in connection with sale-leaseback transactions by the
Company;
o liens on property of a person existing at the time the capital stock of
such person is acquired by, or such person is merged into or consolidated
with, the Company; provided that such liens were in existence before the
contemplation of such acquisition, merger or consolidation and do not
extend to any assets other than those of the person whose capital stock was
acquired by, or that was merged into or consolidated with, the Company;
o liens on property existing at the time such property is acquired by the
Company, provided that such liens were in existence before the
contemplation of such acquisition and do not extend to any additional
assets;
S-10
<PAGE>
o purchase money liens upon or in any real or personal property (including
fixtures and other equipment) to secure the purchase price of such property
or to secure indebtedness incurred solely to finance or refinance the
acquisition or improvement of such property and incurred within 180 days
after completion of such acquisition or improvement, provided that such
liens do not extend to any property other than the property being acquired
or improved;
o liens incurred in connection with the securitization or other financing of
revenues arising from added facilities contracts, generation tie-line
agreements, or other arrangements in which third parties agree to pay over
time the costs of facilities or equipment to be constructed and/or operated
by the Company;
o liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in
the ordinary course of business;
o liens existing on the date the notes are issued, and any extension, renewal
or replacement (or successive extensions, renewals or replacements) of any
such lien; provided, that such renewal, replacement or extension does not
cover any additional assets or property not contemplated by the liens
existing on the date the notes are issued;
o liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
o carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar liens arising in the ordinary course of
business in respect of obligations that are not yet due, are bonded or are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Company in
accordance with GAAP; and
o liens arising by reason of a judgment, decree or court order, to the extent
not otherwise resulting in an event of default under the indenture for the
notes.
Notwithstanding the above, we may, without securing the notes, create,
assume or guarantee liens or indebtedness which would otherwise be subject to
the foregoing restrictions, provided that, after giving effect thereto, the
aggregate amount of all secured debt then outstanding (not including secured
debt permitted under the foregoing exceptions) at such time does not exceed 10%
of the consolidated net tangible assets of the Company.
Certain Definitions
"Calculation Agent" means The Bank of New York, or its successor
appointed by the Company, acting as calculation agent.
"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 notes 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
notes.
"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
S-11
<PAGE>
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 that release (or any
successor release) is not published or does not contain such prices on such
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 for such redemption date, or (B) if the Calculation
Agent obtains fewer than four such Reference Treasury Dealer Quotation, the
average of all such Quotations.
"Consolidated net tangible assets" of the Company means, as of any
particular time, the aggregate amount of assets after deducting therefrom (a)
all current liabilities (excluding any such liability that by its terms is
extendable or renewable at the option of the obligor thereon to a time more than
12 months after the time as of which the amount thereof is being computed) and
(b) all goodwill, excess of cost over assets acquired, patents, copyrights,
trademarks, tradenames, and other like intangibles, all as shown in the
Company's most recent consolidated financial statements prepared in accordance
with generally accepted accounting principles.
"Independent Investment Banker" means Chase Securities Inc. or Lehman
Brothers Inc., as selected by us, or, if such firms are unwilling or unable to
select the Comparable Treasury Issue, an independent investment banking
institution of national standing selected by us and appointed by the trustee for
the notes.
"Reference Treasury Dealer" means each of Chase Securities Inc., Lehman
Brothers Inc., Banc of America Securities LLC, Credit Suisse First Boston and
Salomon Smith Barney Inc. and their respective successors, provided, however,
that if any of the foregoing shall cease to be a primary U.S. Government
Securities dealer (a "Primary Treasury Dealer"), we shall substitute for it
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee for the notes, 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 for the notes by such Reference Treasury Dealer
at 5:00 p.m. on the third business day preceding such redemption date.
"Treasury Yield" means, with respect to any redemption date, the annual
rate equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
the redemption date.
Book-Entry Issuance
The certificates representing the notes will be issued in fully
registered form, without coupons. The notes will be deposited with, or on behalf
of, The Depository Trust Company ("DTC") and registered in the name of Cede &
Co., as DTC's nominee in the form of one or more global certificates
representing the notes or will remain in the custody of the trustee pursuant to
a FAST Balance Certificate Agreement between DTC and the trustee for the notes.
Upon the issuance of a global certificate, DTC or its custodian will credit, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such global certificate to the accounts of
persons who have accounts with such depositary. Such accounts initially will be
designated by or on behalf of the underwriters. Ownership of beneficial
interests in the global certificate will be limited to persons who have accounts
with DTC (participants) or persons who hold interests through participants.
Ownership of beneficial interests in the global certificate will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants) and
the records of participants (with respect to interests of persons other than
participants).
S-12
<PAGE>
So long as DTC, or its nominee, is the registered owner or holder of a
global certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the notes represented by such global certificate for
all purposes under the indenture and the notes. No beneficial owner of an
interest in a global certificate will be able to transfer the interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the indenture.
Payments of the principal of and interest on a global certificate will
be made to DTC or its nominee, as the case may be, as the registered owners
thereof. Neither the Company, the trustee for the notes nor any affiliate
thereof or any paying agent will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in a global certificate or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests. DTC or
its nominee, upon receipt of any payment of principal or interest in respect of
a global certificate, will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global certificate as shown on the records of DTC or its nominee.
The Company also expects that payments by participants to owners of beneficial
interests in a global certificate held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules. If a holder requires physical delivery of a
certificated note for any reason, including to sell notes to persons in
jurisdictions that require such delivery of such notes or to pledge such notes,
such holder must transfer its interest in the global certificate in accordance
with DTC's applicable procedures and the procedures set forth in the indenture
for the notes.
DTC will take any action permitted to be taken by a holder of notes
(including the presentation of notes for such exchange as described below) only
at the direction of one more participants to whose account the DTC interests in
a global certificate is credited and only in respect of such portion of the
aggregate principal amount of the notes as to which such participant or
participants has or have given such direction. However, if there is an event of
default under the notes, DTC will exchange the global certificate for
certificated notes, which it will distribute to its participants.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "Clearing
Agency" registered pursuant to the provisions Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of securities.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. The rules applicable to DTC and
its participants are on file with the Securities and Exchange Commission.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the notes represented by the global
certificate among its respective participants, it is under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the trustee for the notes will
have any responsibility for the performance by DTC or its respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
S-13
<PAGE>
If DTC is at any time unwilling or unable to continue as a depositary
for a global certificate and a successor depositary is not appointed by the
Company within 90 days, the Company will issue certificated notes in exchange
for such global certificate.
Settlement for the notes will be made by the underwriters in
immediately available funds. The Company will make all payments of principal and
interest in immediately available funds.
Secondary trading in long-term bonds and notes of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, beneficial
interests in the notes that are not certificated notes will trade in DTC's Same
Day Funds Settlement System until maturity. Therefore, the secondary market
trading activity in such interests will settle in immediately available funds.
No assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
We have obtained this information concerning DTC and DTC's book-entry
system from sources that we believe to be reliable, but we do not take any
responsibility for its accuracy.
UNDERWRITING
We have entered into an underwriting agreement with each of the
underwriters named below, for whom Chase Securities Inc. and Lehman Brothers
Inc. are acting as representatives. Subject to the terms and conditions set
forth in the underwriting agreement, the underwriters have agreed to purchase,
and we have agreed to sell to each of the underwriters, the respective principal
amount of the notes set forth opposite their respective names in the table
below.
Principal
Amount of
Notes
Chase Securities Inc................................ $
Lehman Brothers Inc.................................
Banc of America Securities LLC......................
Credit Suisse First Boston..........................
Salomon Smith Barney Inc. ..........................
-----------
Total......................................... $
The underwriting agreement provides that the obligation of the
underwriters to purchase the notes included in this offering is subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the notes if they purchase any of
the notes.
The notes are new securities for which there is currently no market.
The notes will not be listed on any national securities exchange. The
underwriters have advised us that they intend to make a market for the notes,
but they have no obligation to do so and may discontinue market making at any
time without providing any notice. We cannot assure you that there will be
liquidity in any trading market for the notes.
If the underwriters over-allot by selling more notes than are set forth
on the cover page of this prospectus supplement, and thereby create a short
position in the notes, in connection with the offering, the underwriters may
reduce that short position by purchasing notes in the open market. Purchases of
a security for the purpose of reducing a short position could cause the price of
the security to be higher than it might otherwise be in the absence of such
purchases.
Neither we nor the underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither we nor the
underwriters make any representation that the underwriters will engage in such
transactions or that such transactions will not be discontinued without notice,
once they are commenced.
S-14
<PAGE>
We estimate that our total expenses of this offering, excluding
underwriting discounts, will be $_____________.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, certain of the
underwriters and their affiliates are currently engaged in, have engaged in and
may in the future engage in certain investment banking, commercial banking
and/or general financing services for Southern California Edison and its
affiliates. Certain of the underwriters currently provide, and have in the past
provided, financial advisory services to Southern California Edison and its
affiliates. As described in "Use of Proceeds," a portion of the net proceeds
from the sale of the notes may be used to repay short-term indebtedness, which
includes short-term indebtedness under our commercial paper program for which
certain of the underwriters serve as dealers.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon on behalf of Southern
California Edison by Kenneth S. Stewart, its Assistant General Counsel. Mr.
Stewart is a salaried employee of Southern California Edison and shares in the
benefits available to employees. As of September 30, 2000, Mr. Stewart had a
direct or indirect interest in 58,603 shares of common stock of Edison
International, the parent company of Southern California Edison, including
shares beneficially owned through Edison International's employee stock plan and
dividend reinvestment plan and options awarded under Edison International's
officer incentive plans. Mr. Stewart owns no securities of Southern California
Edison. Certain legal matters will be passed upon for the underwriters by
Gibson, Dunn & Crutcher LLP, Los Angeles, California.
AVAILABLE INFORMATION
You may read and copy any document filed by us with the Securities and
Exchange Commission (the "Commission") at the Commission's Public Reference
Room, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information
on the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy statements, and other information regarding issuers, including the
Company, that file electronically with the Commission. The address of that site
is http://www.sec.gov. Information about the Company is available at the
Internet site maintained by Edison International, the corporate parent of the
Company. The address of that site is http://www.edison.com.
Reports, proxy statements and other documents that we have filed with
the Commission are considered to be part of this prospectus supplement and
prospectus as described on page 2 of the accompanying prospectus under
"Incorporation by Reference." We will provide without charge to you, at your
request, a copy of any or all of the documents that we have incorporated by
reference, other than exhibits to those documents (unless the exhibits are
specifically incorporated by reference in the document). Written or telephone
requests should be directed to Southern California Edison Company, P.O. Box 800,
Rosemead, California 91770, Attention: Corporate Governance, telephone (626)
302-2662.
S-15
<PAGE>
PROSPECTUS
----------
$1,500,000,000
SOUTHERN CALIFORNIA EDISON COMPANY
Debt Securities, Preferred Stock and Guarantees
SCE TRUST I
SCE TRUST II
Preferred Securities Guaranteed by Southern California Edison Company
The securities may be offered and sold from time to time in one or more
offerings up to an aggregate amount of $1,500,000,000. This prospectus provides
you with a general description of the securities that may be offered.
Each time securities are sold, a supplement to this prospectus that
contains specific information about the offering and the terms of the securities
will be provided. The supplement may also add, update or change information
contained in this prospectus. You should carefully read this prospectus and any
supplement for the specific offering before you invest in any of the securities.
The securities may be sold to or through underwriters, dealers or
agents or directly to other purchasers. A prospectus supplement will set forth
the names of any underwriters, dealers or agents involved in the sale of the
securities, the principal amounts of securities to be purchased by them, and the
compensation they will receive.
Southern California Edison Company may offer and sell debt securities,
preferred stock and guarantees of preferred securities.
SCE Trust I and SCE Trust II may offer and sell preferred securities,
guaranteed by Southern California Edison Company.
-------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-------------------
The date of this Prospectus is September 7, 2000
<PAGE>
TABLE OF CONTENTS
About This Prospectus.....................................................3
Forward-Looking Statements................................................3
Southern California Edison Company........................................4
The Trusts................................................................4
Use of Proceeds...........................................................5
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends..........5
Description of the Securities.............................................6
Description of the Debt Securities........................................6
Description of the Preferred Stock.......................................19
Description of Preferred Securities......................................23
Description of Preferred Securities Guarantees...........................29
Description of Expense Agreements........................................31
Relationship among Preferred Securities, Preferred
Securities Guarantees and Subordinated Debt Securities
Held by Each Trust...................................................31
Experts..................................................................32
Validity of the Securities and Preferred Securities Guarantees...........32
Plan of Distribution.....................................................33
Where You Can Find More Information......................................35
2
<PAGE>
About This Prospectus
This prospectus is provided by Southern California Edison Company, SCE
Trust I and SCE Trust II. In this prospectus, Southern California Edison Company
is sometimes referred to as "Southern California Edison" or by the terms "we,"
"us" and "our." SCE Trust I and SCE Trust II are sometimes referred to together
as the "trusts" or each separately as a "trust."
This prospectus is part of a "shelf" registration statement filed with
the United States Securities and Exchange Commission. By using a shelf
registration statement, we and the trusts may sell up to an aggregate of
$1,500,000,000 of any combination of the securities described in this prospectus
from time to time in one or more offerings. This prospectus only provides you
with a general description of the securities that we and the trusts may offer.
Each time we and/or the trusts sell securities, we will provide a supplement to
this prospectus that contains specific information about the terms of the
securities. The supplement may also add, delete, update or change information
contained in this prospectus. You should rely on the information in the
applicable supplement if this prospectus and the supplement are inconsistent.
Before purchasing any securities, you should carefully read both this prospectus
and any applicable supplement, together with the additional information
described under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and in any supplement. Neither we nor the trusts
have authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. Neither we nor the trusts will make an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus and any
supplement is accurate only as of the dates on their covers. Our business,
financial condition, results of operations and prospects may have changed since
that date.
Forward-Looking Statements
This prospectus, any accompanying supplement and the additional
information described under the heading "Where You Can Find More Information"
may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of our
management, relying on information currently available to our management. When
we use words such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "should," or similar expressions, we are making forward-looking
statements. Forward-looking statements include the information concerning
possible or assumed future results of operations set forth under the headings
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" or similar headings in our Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, as well as information in our Current
Reports on Form 8-K, incorporated by reference into this prospectus.
Forward-looking statements are not guarantees of performance. Our
future results and shareholder value may differ materially from those expressed
in these forward-looking statements. Many of the factors that will determine
these results and value are beyond our ability to control or predict. These
statements are necessarily based upon various assumptions involving judgments
about the future including, among others, our ability to achieve revenue growth,
national, international, regional and local economic, competitive and regulatory
conditions and developments, technological developments, capital market
conditions, inflation rates, interest rates, energy markets, weather conditions,
regulatory and legal decisions, the pace of deregulation of retail electricity,
the timing and extent of changes in commodity prices for oil, natural gas and
electricity, the timing and success of business development efforts, new or
increased environmental liabilities, and other uncertainties. We and the trusts
caution you not to put undue reliance on any forward-looking statements. For
those statements, we and the trusts claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
3
<PAGE>
You should also consider any other factors contained in this prospectus
or in any accompanying supplement, including the information incorporated by
reference into this prospectus or into any accompanying supplement.
Southern California Edison Company
Southern California Edison is an investor-owned electric utility
company, serving approximately 11 million people within an area of about 50,000
square miles in central, coastal and southern California. Based in Rosemead,
California, Southern California Edison was incorporated in California in 1909,
and now has assets of more than $18 billion. The mailing address and telephone
number of our principal executive offices are P.O. Box 800, Rosemead, California
91770 and (626) 302-1212.
Edison International, a multinational holding company, owns all of the
outstanding common stock of Southern California Edison, representing over 80
percent of the votes that can be cast by shareholders of Southern California
Edison. Holders of outstanding shares of preferred stock may cast the remainder
of the votes.
The Trusts
Southern California Edison created two Delaware business trusts under
two trust agreements. The trusts are named SCE Trust I and SCE Trust II.
Southern California Edison plans to enter into an amended and restated trust
agreement for each trust, which will state the terms and conditions for each
trust to issue and sell its preferred securities and common securities. A form
of amended and restated trust agreement is filed as an exhibit to the
registration statement of which this prospectus is a part.
Each trust will exist solely to:
o issue and sell its preferred securities (representing undivided beneficial
interests in the assets of the trust) to the public;
o issue and sell its common securities (representing undivided beneficial
interests in the assets of the trust) to Southern California Edison;
o use the proceeds from the sale of its preferred and common securities to
purchase a series of Southern California Edison's subordinated debt
securities;
o distribute the cash payments it receives on the subordinated debt
securities it owns to the holders of the preferred and common securities;
and
o engage in other activities that are necessary or incidental to these
purposes.
Southern California Edison will purchase all of the common securities
of each trust. The common securities will represent an aggregate liquidation
amount equal to at least 3 percent of each trust's total capitalization. The
preferred securities will represent the remaining 97 percent or less of the
trust's total capitalization. The common securities will have terms
substantially identical to, and will rank equal in priority of payment with, the
preferred securities. However, if Southern California Edison defaults on the
related subordinated debt securities, then cash distributions and liquidation,
redemption and other amounts payable on the common securities will be
subordinate in priority of payment to the similar amounts payable on the
preferred securities.
The preferred securities will be guaranteed by Southern California
Edison as described later in this prospectus.
Southern California Edison has appointed five trustees to conduct each
trust's business and affairs:
o The Chase Manhattan Bank, as the "property trustee;"
o Chase Manhattan Bank USA, National Association, as the "Delaware trustee;"
and
4
<PAGE>
o Three Southern California Edison officers, as the "regular trustees."
Except under certain limited circumstances, only Southern California
Edison can remove or replace the trustees. Southern California Edison also can
increase or decrease the number of trustees.
Southern California Edison will pay all fees and expenses related to
each trust and each offering of the related preferred securities and will pay
all ongoing costs and expenses of each trust, except the respective trust's
obligations under the related preferred and common securities.
The trusts will not have separate financial statements. The statements
would not be material to holders of the preferred securities because neither
trust will have any independent operations. Each trust exists solely for the
reasons summarized above.
The principal offices of each trust are located at 2244 Walnut Grove
Avenue, Rosemead, California 91770, and the telephone number of each trust is
(626) 302-1930.
Use of Proceeds
Except as otherwise described in a prospectus supplement, we or the
trusts, as applicable, intend for the net proceeds of the offered securities to
be used by:
o Southern California Edison to redeem, repay or retire outstanding debt or
other securities, to finance construction expenditures, for other general
corporate purposes, or to reduce short-term debt incurred to finance such
activities; and
o the trusts to purchase subordinated debt securities of Southern California
Edison.
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
The following table sets forth the ratio of Southern California
Edison's earnings to combined fixed charges and preferred stock dividends for
each year in the five-year period ended December 31, 1999:
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Ratio of Earnings to Combined Fixed Charges and Preferred
<S> <C> <C> <C> <C> <C>
Stock Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 3.10 3.12 3.11 2.70 2.71
Adjusted Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (1) . . . . . . . . . . . . . . . . . . 3.10 3.12 3.15 3.36 3.28
</TABLE>
(1) The following effects of rate reduction notes are excluded from the adjusted
ratios for 1997, 1998 and 1999:
<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Income before interest expense . . . . . . . . . . . . . . . $8,142,000 $149,486,000 $132,359,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . 8,142,000 149,486,000 132,359,000
</TABLE>
SCE Funding LLC, a special purpose entity of which Southern California
Edison is the sole member, issued approximately $2.5 billion of these rate
reduction notes in December 1997. For further details you should refer to
the information described above in "Where You Can Find More Information"
in this prospectus, particularly page 22 of our 1999 Annual Report to
Shareholders.
5
<PAGE>
Description of the Securities
The following is a general description of the terms and provisions of the
securities we and/or the trusts may offer and sell by this prospectus in one or
more distinct offerings. These summaries are not meant to be a complete
description of each security. This prospectus and any accompanying prospectus
supplement will contain the material terms and conditions for each security. The
prospectus supplement may add, update or change the terms and conditions of the
securities as described in this prospectus. For more information about the
securities, please refer to:
o the indenture between Southern California Edison and The Bank of New York,
successor to Harris Trust and Savings Bank as trustee, dated as of January
15, 1993, for the issuance of senior debt securities, which we refer to as
the "senior indenture" in this prospectus;
o the indenture between Southern California Edison and The Chase Manhattan
Bank, as trustee, for the issuance of subordinated debt securities, which
we refer to as the "subordinated indenture" in this prospectus;
o Southern California Edison's restated articles of incorporation, including
the certificates of determination of preferences for outstanding series of
preferred stock;
o the amended and restated trust agreement of each trust, which we refer to
as the "trust agreement" in this prospectus; and
o the guarantee agreement between Southern California Edison and The Chase
Manhattan Bank, as trustee, relating to Southern California Edison's
guarantee of the preferred securities issued by each trust.
We and the trusts have filed or incorporated by reference forms or
copies of these documents as exhibits to the registration statement. In this
prospectus we sometimes refer to the indentures listed above together as the
"indentures" and each separately as an "indenture." We refer to the trustee for
each indenture as the "indenture trustee." The indentures are governed by the
Trust Indenture Act of 1939 and may be supplemented or amended from time to
time. The indentures are substantially similar, but differ in some important
respects. The material differences between the indentures are set forth in the
description below.
Description of the Debt Securities
The following description discusses the general terms and provisions of
the debt securities that we may offer by this prospectus in one or more distinct
offerings. We may issue the debt securities as senior debt securities or
subordinated debt securities. The indebtedness represented by the senior debt
securities will rank equally with all other unsecured and unsubordinated debt of
Southern California Edison. The indebtedness represented by the subordinated
debt securities will rank junior and be subordinate in right of payment to the
prior payment in full of the senior debt of Southern California Edison, to the
extent and in the manner set forth in the applicable prospectus supplement for
the securities. (See "Subordination" below.)
At June 30, 2000, Southern California Edison had approximately $3.82
billion of indebtedness that would rank senior to the senior debt securities and
approximately $6.30 billion that would rank senior to the subordinated debt
securities. Both those amounts of indebtedness include $1.96 billion of first
mortgage bonds and $1.86 billion of rate reduction notes previously issued by or
on behalf of Southern California Edison that would rank senior to the senior
debt securities and the subordinated debt securities. The first mortgage bonds
are issued under and secured by a trust indenture that creates a lien on
substantially all the properties of Southern California Edison for the benefit
of the holders of the first mortgage bonds. The rate reduction notes are secured
by a right to receive certain charges from electricity customers of Southern
California Edison. The debt securities we are offering by this prospectus are
not secured by any assets or property of Southern California Edison.
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The indentures give us broad authority to set the particular terms of
each series of debt securities, including the right to modify certain of the
terms contained in the indentures. The particular terms of a series of debt
securities and the extent, if any, to which the particular terms of the issue
modify the terms of the indenture will be described in the prospectus supplement
relating to the debt securities.
Each indenture contains the full legal text of the matters described in
this section. Because this section is a summary, it does not describe every
aspect of the debt securities or the applicable indenture. This summary is
subject to and qualified by all the provisions of the applicable indenture,
including definitions of terms used in the indenture. We also include references
in parentheses to certain sections of the indentures. Unless we indicate
otherwise, each time we refer to a section number it is to the same numbered
section in each indenture. Whenever we refer to particular sections or defined
terms of the indentures in this prospectus or in a prospectus supplement, these
sections or defined terms are incorporated by reference herein or in the
prospectus supplement. This summary also is subject to and qualified by the
description of the particular terms of the debt securities in the applicable
prospectus supplement.
General
We may issue an unlimited amount of debt securities under each
indenture in one or more series, up to the aggregate principal amounts that may
be authorized by us from time to time.
The debt securities will be unsecured obligations of Southern
California Edison.
Before issuing each series of debt securities, we will specify the
terms of that series through a board resolution, officers' certificate or
supplemental indenture. We refer you to the applicable prospectus supplement for
a description of the following terms, among others, of each series of debt
securities:
o the title of the debt securities;
o any limit on the aggregate principal amount of the debt securities of that
series;
o the price at which the debt securities will be issued;
o the date or dates on which principal will be payable or how to determine
the dates;
o the rate or rates or method of determining interest; the date or dates from
which interest will accrue; the dates on which interest will be payable,
which we refer to as the "interest payment dates;" any record dates for the
interest payable on the interest payment dates; and any special provisions
for the payment of additional amounts with respect to the debt securities;
o the place or places where payments on the debt securities will be made;
o any obligation or option on our part to redeem, purchase or repay debt
securities; any option of the holder to require us to redeem or repurchase
debt securities; and the terms and conditions upon which the debt
securities will be redeemed, purchased or repaid;
o any provision for deferral of interest payments;
o the denominations in which the debt securities will be issued (if other
than denominations of $1,000 and any integral multiple thereof);
o whether the debt securities are to be issued in whole or in part in the
form of one or more global debt securities and, if so, the identity of the
depositary for the global debt securities;
o whether the debt securities may be issued in the form of bearer securities
or registered securities, or both, and provisions related thereto;
o if bearer securities are issuable, the terms and conditions upon which (a)
interest payments will be credited to the persons entitled to them, (b)
interests in a temporary global security may be exchanged for interests in
a definitive global security or for definitive debt securities, and (c)
interests in any definitive global security may be exchanged for definitive
debt securities;
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o if other than United States dollars, the currency or currencies in which
the debt securities will be denominated and principal and interest will be
payable;
o any index used to determine the amount of payments of principal of and any
premium and interest on the debt securities;
o any deletions, modifications or additions to the covenants or events of
default provided for the debt securities;
o whether the debt securities are subject to discharge and defeasance at our
option; and
o any other terms of the debt securities.
In addition, we will set forth in the prospectus supplement for any
offering of subordinated debt securities the following terms to the extent they
are applicable:
o any right to extend the interest payment periods;
o whether the series of subordinated debt securities will be junior in right
of payment to any other series; and
o any changes in the subordination provisions of the subordinated indenture
with respect to the series.
(Section 301.)
We may also issue debt securities as original issue discount securities
to be offered and sold at a substantial discount below their stated principal
amount. We will describe in a prospectus supplement the federal income tax
consequences and other special considerations applicable to any original issue
discount securities. (Section 101.)
Form of Debt Securities
We may issue the senior debt securities as registered securities,
bearer securities or both. We may issue the subordinated debt securities only as
registered securities, unless we enter into a supplemental indenture that
provides for bearer securities. We also may issue the debt securities of a
series in whole or in part in the form of one or more global securities, as
described below under the heading "Global Securities." Unless we specify
otherwise in a prospectus supplement, registered securities denominated in
United States dollars will be issued only in the denominations of $1,000 and any
integral multiple thereof and bearer securities denominated in United States
dollars will be issued only in denominations of $1,000, $10,000, and $100,000.
All debt securities of any one series will be substantially identical except as
to denomination and as otherwise provided by a board resolution, officer's
certificate or supplemental indenture. For any series of debt securities
denominated in a foreign or composite currency, we will specify the
denominations and any special United States federal income tax and other related
considerations in a prospectus supplement. No service charge will be made for
any transfer or exchange of debt securities, but we may require payment of a sum
sufficient to cover any applicable tax or other governmental charge. (Sections
301 and 302.)
Payment of Debt Securities
Registered Securities. Unless we state otherwise in a prospectus
supplement, we will make payments with respect to debt securities that are in
registered form as follows:
o We will pay interest on each interest payment date to the person in whose
name the debt security is registered at the close of business on the
regular record date for the interest payment. At our option, we may pay
interest by mailing a check to each holder's registered address or by wire
transfer to an account designated by the holder under an arrangement that
is satisfactory to the indenture trustee and us.
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o We will pay principal of and any premium on registered securities at their
stated maturity, upon redemption or when otherwise due, upon presentation
of the debt securities at the corporate trust office of the respective
indenture trustee in Chicago, Illinois, for senior debt securities, and New
York, New York, for subordinated debt securities.
(Sections 307 and 1001.)
Bearer Securities. Unless we state otherwise in a prospectus
supplement, we will make payments in the designated currency with respect to
senior debt securities that are in bearer form as follows:
o We will pay interest on each interest payment date only upon presentation
of the coupon for the interest payment at a paying agency outside the
United States designated by us.
o We will pay principal of and any premium on bearer securities at their
stated maturity, upon redemption or when otherwise due, upon presentation
of the debt securities at a paying agency outside the United States
designated by us.
o At the option of a holder of bearer debt securities, we will also pay any
principal, premium or interest by mailing a check or by wire transfer to an
account with a bank located outside the United States.
Unless we state otherwise in a prospectus supplement, we will not make
any payment with respect to a bearer senior debt security within the United
States (including payment at the corporate trust office of the indenture trustee
or any other paying agency in the United States, by transfer to an account in
the United States, or by mail to an address in the United States), except if
payment at all paying agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions. In
that case, we will pay principal of and premium, if any, and interest on bearer
senior debt securities in United States dollars at the corporate trust office of
the indenture trustee in Chicago, Illinois. (Sections 1001 and 1002 of the
senior indenture.)
Paying Agents. In a prospectus supplement, we will name any paying
agents other than the indenture trustee that we have initially appointed for a
series of debt securities. We may terminate the appointment of any of the paying
agents at any time, except that we will maintain at least one paying agent in
Chicago, Illinois for registered senior debt securities and at least one paying
agent in a city outside the United States so long as any bearer senior debt
securities are outstanding. In addition, we will maintain a paying agent in
London or Luxembourg or any city outside the United States, if that is required
by a stock exchange on which a series of senior debt securities is listed.
(Section 1002.)
Any money we provide to a paying agent for the payment of principal,
premium or interest that remains unclaimed at the end of two years after the
payment became due and payable will be repaid to us. Thereafter, the holder of
debt securities entitled to such payment must look only to us for payment.
(Section 1003.)
Exchanges and Transfers of Debt Securities
Subject to the provisions of the applicable indenture and prospectus
supplement, you may exchange your debt securities (other than debt securities
represented by a global security, except as set forth below) for other debt
securities of the same series with the same interest rate, maturity and total
principal amount, as described in this section. You may have your debt
securities divided or combined into smaller or larger authorized denominations.
If you hold bearer senior debt securities, you may exchange them (with the
remaining coupons) for registered senior debt securities or other bearer senior
debt securities, but the exchange must be made outside the United States. If you
hold registered securities, you may not exchange them for bearer securities.
(Section 305.)
You may exchange or transfer your registered debt securities, other
than debt securities represented by a global security, at the office of the
indenture trustee or another transfer agent designated by us and named in a
prospectus supplement. We have appointed the indenture trustee to act as the
security registrar for registering debt securities in the names of holders and
transferring debt securities. We may appoint, remove
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or add additional transfer agents and change their locations. If we issue
bearer debt securities, we will maintain a transfer agent outside the United
States where they may be exchanged. If you hold bearer senior debt securities,
you may transfer them by delivering the certificate to the new holder. There
will be no service charge for transfer or exchange of your debt securities, but
you may be required to pay for any related taxes and other governmental charges.
(Sections 305 and 1002.)
In the event of any redemption, we are not required to:
o issue, register the transfer of or exchange the debt securities during a
period of 15 days before giving any notice of redemption;
o register the transfer of or exchange any registered security selected for
redemption in whole or in part, except the unredeemed portion of any
registered security being redeemed in part;
o exchange any bearer senior debt security selected for redemption, except
that a bearer senior debt security may be exchanged for a registered senior
debt security of the same series if the debt securities of the series are
issuable as registered securities; or
o register the transfer of or exchange any debt security if the holder of the
debt security has expressed the right, if any, to require us to repurchase
the debt security in whole or in part, except that portion of the debt
security not required to be repurchased, provided that the debt security
shall be immediately surrendered for redemption with written instructions
for payment consistent with the provisions of the indenture.
(Section 305.)
Redemption of Debt Securities
We will set forth any terms for the redemption of debt securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except for debt securities redeemable at the option of the
registered holder, we may redeem debt securities upon notice by mail between 30
and 60 days before the redemption date. If we choose to redeem less than all of
the debt securities of any series or tranche of a series, the indenture trustee
will select the debt securities to be redeemed. The indenture trustee will
choose a method of selection it deems fair and appropriate unless another method
has been specified in accordance with the indenture. (Sections 1102, 1103 and
1104.)
Debt securities will cease to bear interest on the redemption date. We
will pay the redemption price and any accrued interest once you surrender the
debt security for redemption (along with any remaining coupons in the case of
bearer senior debt securities). If only part of a debt security is redeemed and
you have surrendered the debt security, the indenture trustee will deliver to
you a new debt security of the same series for the remaining portion without
charge. (Sections 1106 and 1107.)
Global Securities
We may issue all or part of the debt securities of a series in the form
of one or more global securities. Each global security will be issued in a total
principal amount equal to the principal amount of all the debt securities
represented by that global security. We may issue global securities in either
registered or bearer form (as to senior debt securities) and in either temporary
or definitive form. The global securities will be deposited with a depositary.
(Sections 303 and 305.)
We will describe the specific terms of the depositary arrangement for
any global securities in the prospectus supplement for the applicable series. We
expect that the following provisions will generally apply to depositary
arrangements.
We will treat the depositary for a global security, or its nominee, as
the sole holder of the global security and all the debt securities represented
by the global security. The depositary will keep a book-entry registration and
transfer system in which it will credit ownership of the underlying debt
securities to participating institutions that have accounts with the depositary.
Those participants may be brokers, dealers, banks and other financial or
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securities institutions. A participant may own an interest in a global security
for its own account or for the benefit of persons who have accounts with the
participant. Ownership and transfers of beneficial interests in a global
security will be shown only on the records maintained by the depositary or by
participants or persons that hold through participants.
Except as set forth below, if you own a beneficial interest in a global
security, you will not be entitled to have debt securities represented by the
global security registered in your name, you will not be entitled to receive
physical certificates for the debt securities, and you will not be considered
the owner under the indenture. Accordingly, to exercise the rights of a holder
of debt securities under the indenture, you must rely on the procedures of the
depositary and/or the participant or indirect participant through which you own
your interest.
We will make principal, premium, if any, and interest payments to the
depositary, or its nominee, as the registered owner of a global security. We
expect that the depositary immediately will credit participants' accounts with
the payments in amounts proportionate to their respective beneficial interests
in the principal amount of the global security as shown on the records of the
depositary. We also expect that those participants will make payments to persons
who own beneficial interests in the global security through the participants, in
accordance with standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name." Payments to owners of beneficial interests in a
temporary global security that represents bearer senior debt securities will be
subject to the restrictions discussed under the heading "Limitations on Issuance
of Bearer Securities" below.
We will issue debt securities in definitive form in exchange for the
global security held by a depositary if:
o the depositary is unwilling or unable to continue as depositary and we do
not appoint a successor within 90 days; or
o we choose not to have any debt securities of a series represented by a
global security.
In either instance, an owner of a beneficial interest in a global
security will be entitled to physical delivery in definitive form of debt
securities equal in principal amount to the owner's beneficial interest in the
global security. See, however, the discussion under the heading "Limitations on
Issuance of Bearer Securities" below for a description of certain restrictions
on the issuance of a bearer senior debt security in definitive form in exchange
for an interest in a global senior debt security.
Events of Default and Remedies for Senior Debt Securities
This section contains descriptions of the events of default and
remedies specified in the senior indenture for the senior debt securities. The
corresponding provisions for the subordinated debt securities, which differ in
some material respects, are described in the next following section under the
heading "Events of Default and Remedies for Subordinated Debt Securities."
Defaults. An "event of default" under the senior indenture occurs with
respect to any series of senior debt securities if:
o we do not pay any installment of interest on senior debt securities of the
series within 30 days of when it is due;
o we do not pay principal or premium on any senior debt securities of the
series when it is due;
o we do not pay any sinking fund installment on senior debt securities of the
series when it is due;
o we remain in breach of any other covenant or agreement in the senior
indenture for 60 days after receiving notice from the indenture trustee or
the holders of 25 percent in principal amount of all the outstanding senior
debt securities;
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o we fail to pay any indebtedness of more than $10,000,000 when it is finally
due and do not fully cure the failure within 30 days after receiving of
notice from the indenture trustee or the holders of 25 percent in principal
amount of all the outstanding senior debt securities; or
o we file for bankruptcy or become subject to specified proceedings involving
bankruptcy, insolvency or reorganization.
An event of default with respect to one series of senior debt
securities does not necessarily constitute an event of default with respect to
any other series of senior debt securities. (Section 501 of the senior
indenture.) We are required to file with the indenture trustee an annual
officer's certificate indicating whether we are in default under the senior
indenture. (Section 1008 of the senior indenture.)
Acceleration. If an event of default occurs and is continuing with
respect to any series of senior debt securities, either the indenture trustee or
the holders of 25 percent in principal amount of the senior debt securities of
the series (or in the case of defaults described in the last three bulleted
clauses under "Defaults" above, the holders of 25 percent in principal amount of
all the senior debt securities) may declare the principal amount of the senior
debt securities of that series (or of all the senior debt securities, as the
case may be) to be immediately due and payable. After a declaration of
acceleration has been made and before the indenture trustee has obtained a
judgment or decree for payment of the money due, the holders of a majority in
principal amount of senior debt securities of that series or of all of the
senior debt securities, as the case may be, may rescind and annul the
acceleration if we have paid any past due payments of principal, premium or
interest and met certain other conditions. In certain cases, the holders of a
majority in principal amount of the senior debt securities of any series or of
all the senior debt securities, as the case may be, may waive any past default
or event of default. (Sections 502 and 513 of the senior indenture.)
Actions by Indenture Trustee and Holders. The senior indenture contains
the following provisions regarding the actions of the indenture trustee and the
holders of the senior debt securities after an event of default:
o The indenture trustee must give notice of a default to the holders of
senior debt securities of the affected series within 90 days after a
default occurs that is known to the indenture trustee, if the default is
not cured or waived. However, the indenture trustee may withhold the notice
if it determines in good faith that it is in the interests of the holders
to do so, except in the case of a default in the payment of principal,
premium or interest. (Section 602 of the senior indenture.)
o Subject to its duty to act with the required standard of care during a
default, the indenture trustee is entitled to be indemnified by the holders
of the senior debt securities of a series before exercising any right or
power under the senior indenture with respect to the series at the request
of the holders. (Section 603 of the senior indenture.)
o No holder of senior debt securities of a series may institute proceedings
to enforce the senior indenture except, among other things, where the
indenture trustee has failed to act for 60 days after it has been given
notice of a default and holders of 25 percent in principal amount of the
senior debt securities of the series (or in the case of defaults described
in the last three bulleted clauses under "Defaults" above, the holders of
25 percent in principal amount of all the senior debt securities) have
requested the indenture trustee to enforce the senior indenture and offered
reasonable indemnity to the indenture trustee. (Section 507 of the senior
indenture.)
o Each holder of senior debt securities has an absolute and unconditional
right to receive payment of principal, premium and interest when due and to
bring a suit a to enforce that right. (Section 508 of the senior
indenture.)
o The holders of a majority in principal amount of the senior debt securities
of a series or of all the senior debt securities, as the case may be, may
direct the time, method and place of conducting any proceedings for any
remedy available to the indenture trustee or exercising any trust or power
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conferred on it with respect to the senior debt securities of the series,
as long as the direction does not conflict with any law or the senior
indenture or expose the indenture trustee to personal liability. The
indenture trustee may take any other action it deems proper that is not
inconsistent with the direction of the holders. (Section 512 of the senior
indenture.)
Events of Default and Remedies for Subordinated Debt Securities
This section contains descriptions of the events of default and
remedies specified in the subordinated indenture for the subordinated debt
securities. The corresponding provisions for the senior debt securities, which
differ in some material respects, are described in the preceding section under
the heading "Events of Default and Remedies for Senior Debt Securities."
Defaults. An "event of default" under the subordinated indenture occurs
with respect to any series of subordinated debt securities if:
o we do not pay any installment of interest on subordinated debt securities
of the series within 30 days of when it is due (following any deferral
allowed under the terms of the subordinated debt securities and elected by
us);
o we do not pay principal or premium on any subordinated debt securities of
the series when it is due;
o we do not pay any sinking fund installment on subordinated debt securities
of the series within 60 days of when it is due;
o we remain in breach of any other covenant or agreement in the subordinated
indenture for 90 days after receiving notice from the indenture trustee or
the holders of 25 percent in principal amount of the outstanding
subordinated debt securities of the series;
o we file for bankruptcy or become subject to specified proceedings involving
bankruptcy, insolvency or reorganization; or
o any other event of default specified in the prospectus supplement occurs.
An event of default with respect to one series of subordinated debt
securities does not necessarily constitute an event of default with respect to
any other series of subordinated debt securities. (Section 501 of the
subordinated indenture.) We are required to file with the indenture trustee an
annual officer's certificate indicating whether we are in default under the
subordinated indenture. (Section 1005 of the subordinated indenture.)
Acceleration. If an event of default occurs and is continuing with
respect to any series of subordinated debt securities, either the indenture
trustee or the holders of 25 percent in principal amount of the subordinated
debt securities of the series (or, if any subordinated debt securities of that
series are original issue discount securities, such portion of the principal
amount as may be specified in such securities) may declare the principal amount
of the subordinated debt securities of that series to be immediately due and
payable. After a declaration of acceleration has been made and before the
indenture trustee has obtained a judgment or decree for payment of the money
due, the holders of a majority in principal amount of subordinated debt
securities of that series may rescind and annul the acceleration if we have paid
any past due payments of principal, premium or interest and met certain other
conditions. In certain cases, the holders of a majority in principal amount of
the subordinated debt securities of all affected series, voting as one class,
may waive any past default or event of default. (Sections 502 and 513 of the
subordinated indenture.)
Actions by Indenture Trustee and Holders. The subordinated indenture
contains the following provisions regarding the actions of the indenture trustee
and the holders of the subordinated debt securities after an event of default:
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o The indenture trustee must give notice of a default to the holders of
subordinated debt securities of the affected series as provided by the
Trust Indenture Act. (Section 602 of the subordinated indenture.)
o Subject to its duty to act with the required standard of care during a
default, the indenture trustee is entitled to be indemnified by the holders
of the subordinated debt securities of a series before exercising any right
or power under the subordinated indenture with respect to the series at the
request of the holders. (Section 603 of the subordinated indenture.)
o No holder of subordinated debt securities of a series may institute
proceedings to enforce the subordinated indenture except, among other
things, where the indenture trustee has failed to act for 60 days after it
has been given notice of a default and holders of 25 percent in principal
amount of the subordinated debt securities of all affected series,
considered as one class (or in the case of defaults in the payment of
principal, premium or interest, an affected series) have requested the
indenture trustee to enforce the subordinated indenture and offered
reasonable indemnity to the indenture trustee. (Section 507 of the
subordinated indenture.)
o Each holder of subordinated debt securities has an absolute and
unconditional right to receive payment of principal, premium and interest
when due and to bring a suit a to enforce that right. (Section 508 of the
subordinated indenture.)
o The holders of a majority in principal amount of the subordinated debt
securities of an affected series (or of all the subordinated debt
securities, in the case of a default as to all series) may direct the time,
method and place of conducting any proceedings for any remedy available to
the indenture trustee or exercising any trust or power conferred on it with
respect to the subordinated debt securities of the series, as long as the
direction does not conflict with any law or the subordinated indenture or
involve the indenture trustee in personal liability. The indenture trustee
may take any other action it deems proper that is not inconsistent with the
direction of the holders. (Section 512 of the subordinated indenture.)
Modification of the Indenture
Without Consent of Holders. Without the consent of any holders of debt
securities, we and the indenture trustees may enter into supplemental indentures
to:
o evidence the succession of another entity to take our place and assume our
covenants;
o add to our covenants for the benefit of the holders of all or any series of
the debt securities, or surrender any right or power conferred upon us;
o add any additional events of default for all or any series of the debt
securities;
o add to or change certain provisions for issuing, exchanging or registering
bearer securities, as specified in the senior indenture or the subordinated
indenture;
o add to, change or eliminate any provisions of the indenture, but those
modifications will not apply to debt securities of any series that was
created before the modifications;
o establish the form or terms of debt securities of any series as permitted
by the indentures;
o evidence and provide for a successor or additional indenture trustee;
o provide security for the debt securities of any series;
o cure any ambiguity, defect or inconsistency or make any other changes that
do not adversely affect the interests of the holders of debt securities; or
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o evidence any changes in the disqualification and eligibility requirements
applicable to the indenture trustee under the senior indenture, as
permitted by the senior indenture, or effect any change to qualify the
senior indenture under the Trust Indenture Act of 1939.
(Section 901.)
With Consent of Holders. We may enter into supplemental indentures with
the indenture trustees to modify the indentures or the rights of holders of the
debt securities, if we obtain the consent of the holders of at least a majority
in principal amount of the debt securities affected by the modification.
However, without the consent of all affected holders of debt securities, no
supplemental indenture may:
o change the stated maturity of the principal or interest on any debt
security, reduce the principal amount or interest payable, reduce any
premium payable upon redemption, reduce the amount of principal of an
original issue discount security payable upon its acceleration, change the
currency in which any debt security is payable, change any right of
redemption or repurchase, or impair the right to bring suit to enforce any
payment;
o reduce the percentages of holders whose consent is required for any
supplemental indenture or waiver or reduce the requirements for quorum and
voting under the indentures; or
o modify certain provisions in the indentures relating to supplemental
indentures and waivers of covenants and past defaults.
A supplemental indenture that changes or eliminates any provision of
the indentures expressly included solely for the benefit of holders of debt
securities of one or more particular series will be deemed not to affect the
rights of the holders of debt securities of any other series. (Section 902.)
Consolidation, Merger and Sale of Assets; No Financial Covenants
Subject to the provisions described in the next paragraph, we will
preserve our corporate existence. (Section 1004.)
We have agreed not to consolidate with or merge into any other entity
and not to convey, transfer or lease our properties and assets substantially as
an entirety to any entity, unless:
o the entity formed by the consolidation or merger, or which acquires or
leases our property and assets substantially as an entirety, is organized
and existing under the laws of the United States or any state or the
District of Columbia, and expressly assumes, by a supplemental indenture in
form satisfactory to the indenture trustees, the due and punctual payment
of the principal, premium and interest on all the debt securities and the
performance of all of our covenants under the indentures;
o immediately after giving effect to the transactions, no event of default,
and no event which after notice or lapse of time or both would become an
event of default, will have happened and be continuing; and
o we have given the indenture trustees an officers' certificate and legal
opinion that all conditions in the indentures relating to the transactions
have been complied with.
(Section 801.)
The indentures contain no financial or other similar restrictive
covenants. Any such covenants with respect to any particular series of debt
securities will be set forth in the applicable prospectus supplement. There are
no provisions of the indentures that protect holders of the debt securities in
the event of a highly leveraged transaction involving Southern California
Edison. However, management of Southern California Edison believes that required
regulatory approvals of a highly leveraged transaction would be unlikely to be
obtained.
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Discharge and Defeasance
There are significant differences between the provisions of the senior
indenture and the subordinated indenture for defeasance of debt securities and
discharge of our obligations. The respective provisions are discussed separately
below.
Defeasance of Senior Debt Securities When we issue a series of senior
debt securities, we may specify that we will be discharged from any and all
obligations in respect of those senior debt securities (except as described
below) upon the irrevocable deposit with the indenture trustee of money and/or
government obligations which will provide money in an amount sufficient to pay
principal, premium and interest on the senior debt securities when due in
accordance with the terms of the senior indenture and the senior debt
securities. We must also satisfy conditions that:
o the deposit will not cause the indenture trustee to have a conflicting
interest;
o there is no event of default under the senior indenture within 91 days
after the deposit;
o the deposit will not result in breach or violation of any applicable laws,
the senior indenture or any other agreement by which we are bound;
o the deposit will not result in a trust that is an investment company
subject to the Investment Company Act of 1940, or such trust will be
qualified or exempt from the Investment Company Act of 1940; and
o we have delivered to the indenture trustee an officer's certificate and an
opinion of counsel each stating that all conditions in the senior indenture
to the defeasance and discharge have been complied with.
The discharge of our obligations does not include certain obligations
to register the transfer or exchange of senior debt securities, replace stolen,
lost or mutilated senior debt securities, maintain paying agencies and hold
monies for payment in trust and, if so specified as to the senior debt
securities of a series, to pay the principal, premium and interest on those
senior debt securities.
We may specify as to the senior debt securities of a series that the
deposit of money described above will be made only if it will not cause the
senior debt securities listed on any nationally recognized securities exchange
to be de-listed. We may also specify as to a series of senior debt securities
that the deposit will be conditioned on our giving to the indenture trustee an
opinion of counsel (who may be our counsel) to the effect that, based upon
applicable United States federal income tax laws or a ruling published by the
United States Internal Revenue Service, the deposit and discharge will not be a
taxable event for the holders of the senior debt securities. (Section 1301 of
the senior indenture.)
Defeasance of Subordinated Debt Securities. The subordinated indenture
provides, unless the terms of the particular series of subordinated debt
securities provide otherwise, that upon satisfying several conditions we may
cause ourselves to be:
o discharged from our obligations, with some exceptions, as to any series of
subordinated debt securities, which we refer to as "defeasance;" and
o released from our obligations under specified covenants as to any series of
subordinated debt securities, which we refer to as "covenant defeasance."
The conditions that we must satisfy for either a defeasance or a
covenant defeasance of a series of subordinated debt securities include:
o the irrevocable deposit with the indenture trustee, in trust, of money
and/or government obligations which, through the scheduled payment of
principal and interest on those obligations, would provide sufficient
moneys to pay principal, premium and interest on the subordinated debt
securities on the maturity dates of the payments or upon redemption;
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o there is no event of default under the subordinated indenture at the time
of such deposit or, as to defaults related to bankruptcy or similar
proceedings, within 90 days after the deposit;
o notice of redemption of the subordinated debt securities has been given or
provided for, if the subordinated debt securities are to be redeemed before
their stated maturity (other than from mandatory sinking fund payments or
analogous payments); and
o we have delivered to the indenture trustee an officer's certificate and an
opinion of counsel each stating that all conditions to the defeasance or
covenant defeasance have been complied with.
The discharge of our obligations through a defeasance or covenant
defeasance does not discharge the rights of the holders of the defeased
subordinated debt securities to receive payments of principal, premium and
interest from the trust funds when due, or our obligations to register the
transfer or exchange of subordinated debt securities, replace stolen, lost or
mutilated subordinated debt securities, maintain paying agencies and hold monies
for payment in trust.
The subordinated indenture permits defeasance as to any series of
subordinated debt securities even if a prior covenant defeasance has occurred as
to the subordinated debt securities of that series. Following a defeasance,
payment of the subordinated debt securities defeased may not be accelerated
because of an event of default. Following a covenant defeasance, payment of the
subordinated debt securities may not be accelerated because of a breach of the
specified covenants affected by the covenant defeasance. However, if an
acceleration were to occur, the realizable value at the acceleration date of the
money and government obligations in the defeasance trust could be less than the
principal and interest then due on the subordinated debt securities defeased,
since the required deposit in the defeasance trust would be based upon scheduled
cash flows rather than market value, which would vary depending upon interest
rates and other factors. (Sections 1301 to 1305 of the subordinated indenture.)
Tax Effects of Defeasance of Debt Securities. Under current United
States federal income tax law, the defeasance of either senior or subordinated
debt securities as described in the preceding paragraphs would be treated as an
exchange of the relevant debt securities in which holders of the debt securities
might recognize gain or loss. In addition, the amount, timing and character of
amounts that holders would be required after the defeasance to include in income
might be different from that which would be includible in the absence of the
defeasance. You should consult your own tax advisors as to the specific
consequences of a defeasance, including the applicability and effect of tax laws
other than United States federal income tax laws.
Under current United States federal income tax laws, unless accompanied by
other changes in the terms of the subordinated debt securities, covenant
defeasance of subordinated debt securities generally should not be treated as a
taxable exchange.
Subordination
Unless we establish other provisions through a board resolution,
officer's certificate or supplemental indenture, which we will describe in a
prospectus supplement, the debt securities issued under the subordinated
indenture will be subordinated in the following manner:
o If our assets are distributed upon our dissolution, winding up, liquidation
or reorganization, the payment of principal, premium and interest on any
subordinated debt securities will be subordinated, to the extent provided
in the subordinated indenture, to the prior payment in full of all senior
indebtedness (as defined below), including senior debt securities. However,
our obligation to pay principal, premium or interest on the subordinated
debt securities will not otherwise be affected.
o No payment on account of principal, premium, sinking fund or interest may
be made on the subordinated debt securities at any time when there is a
default in the payment of principal, premium, sinking fund or interest on
senior indebtedness.
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o If, while we are in default on senior indebtedness, any payment is received
by the indenture trustee under the subordinated indenture or the holders of
any of the subordinated debt securities before we have paid all senior
indebtedness in full, the payment or distribution must be paid over to the
holders of the unpaid senior indebtedness or applied to the repayment of
the unpaid senior indebtedness.
o Subject to paying the senior indebtedness in full, the holders of the
subordinated debt securities will be subrogated to the rights of the
holders of the senior indebtedness to the extent that payments are made to
the holders of senior indebtedness out of the distributive share of the
subordinated debt securities.
(Sections 1401 to 1412 of the subordinated indenture.)
The term "senior indebtedness" means the principal, premium, interest
and any other payment due on any of the following, whether existing before the
subordinated indenture was signed or incurred after it was signed: (a) all of
our indebtedness evidenced by notes, debentures, bonds or other securities sold
by us for money or other obligations for money borrowed, (b) all indebtedness of
others of the kinds described in the preceding clause assumed or guaranteed in
any manner by us, and (c) all renewals, extensions or refundings of indebtedness
of the kinds described in either of the preceding clauses, unless it is
expressly provided in the case of any particular obligation described above that
it is not superior in right of payment to or is pari passu with the subordinated
debt securities. Senior indebtedness includes all of our first and refunding
mortgage bonds and all of the senior debt securities. (Section 101 of the
subordinated indenture.)
Due to the subordination, if our assets are distributed upon
insolvency, some or all of our general creditors may recover more ratably than
holders of subordinated debt securities. The subordinated indenture or
applicable supplemental indenture may state that its subordination provisions
will not apply to money and securities held in trust under the satisfaction and
discharge and the legal defeasance provisions of the subordinated indenture.
If this prospectus is being delivered in connection with the offering
of a series of subordinated debt securities, the accompanying prospectus
supplement or the information incorporated by reference in it will set forth the
approximate amount of senior indebtedness outstanding as of a recent date.
Concerning the Indenture Trustees
The Bank of New York and certain of its affiliates act as trustees for
our first and refunding mortgage bonds and certain pollution control bonds
issued on our behalf and for certain securities issued by our parent, Edison
International
The Chase Manhattan Bank acts as trustee for certain securities issued
by our parent, Edison International. We and Edison International maintain bank
deposits with The Chase Manhattan Bank and may borrow money from the bank from
time to time.
Limitations on Issuance of Bearer Securities
Senior debt securities may be issued in the form of bearer securities.
Subordinated debt securities may not be issued in bearer form unless the
subordinated indenture is amended to provide for bearer securities.
In compliance with United States federal tax laws and regulations,
bearer securities generally may not be offered or sold during a restricted
period to a person within the United States or its possessions or to or for the
account or benefit of a United States person. However, subject to certain
restrictions and limitations, offers or sales may be made to:
o the United States office of an international organization (as defined in
Section 7701(a)(18) of the Internal Revenue Code of 1986 and the
regulations thereunder);
o the United States office of a foreign central bank (as defined in Section
895 of the Internal Revenue Code of 1986 and the regulations thereunder);
and
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o United States persons that are (a) foreign branches of United States
financial institutions (as defined in Treasury Regulation Section
1.165-12(c)(1)(v)), which are purchasing for their own account or for
resale, or (b) persons that acquire and hold bearer securities through a
foreign branch of a U.S. financial institution, and in either case, the
financial institution agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986.
Definitive bearer securities will not be delivered during the same
restricted period within the United States and will not be delivered in any
event unless the beneficial owner of the bearer securities provides the required
certification as to non-United States beneficial ownership. The restricted
period for these purposes is the period beginning upon the earlier of the issue
date of any bearer securities or the date on which those bearer securities are
first offered and ending 40 days after the issue date or later date in the case
of any unsold original allotment or subscription.
Bearer securities will bear the following legend on their face and on
any interest coupons which may be detached therefrom or, if the obligation is
evidenced by a book entry, in the book of record in which the book entry is
made: "Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the United States Internal Revenue
Code." The sections referred to in the legend provide that a United States
person who holds a bearer security will not be allowed to deduct any loss
realized on the sale, exchange or redemption of the bearer security and any gain
(which might otherwise be characterized as capital gain) recognized on the sale,
exchange or redemption will be treated as ordinary income.
As used herein, "United States person" means an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
Governing Law
The senior indenture and the senior debt securities will be governed by
and construed in accordance with the laws of the State of New York. The
subordinated indenture and the subordinated debt securities will be governed by
and construed in accordance with the laws of the State of California, except
that the rights, duties, indemnities and immunities of the indenture trustee
will be governed by the laws of the State of New York.
(Section 112.)
Description of the Preferred Stock
The following description of Southern California Edison's preferred
stock is a summary, and it does not describe every aspect of the preferred
stock. Southern California Edison's amended, restated and corrected articles of
incorporation, including the certificates of determination of preferences
relating to outstanding series of preferred stock, which are collectively
referred to in this prospectus as the "articles of incorporation," contain the
full legal text of the matters described in this section. This summary is
subject to and qualified by the articles of incorporation. Therefore, you should
read carefully the detailed provisions of the articles of incorporation, which
we have incorporated by reference as an exhibit to the registration statement
that includes this prospectus. Whenever we refer to particular sections or
defined terms of the articles of incorporation in this prospectus or in a
prospectus supplement, those sections or defined terms are incorporated by
reference herein or in the prospectus supplement. This summary also is subject
to and qualified by the description of the particular terms of the preferred
stock in the applicable prospectus supplement.
General
The rights, preferences and privileges of the preferred stock are
established by the articles of incorporation. In this summary, we have included
parenthetical references to pertinent sections of the articles of incorporation.
Whenever we offer and sell preferred stock, our board of directors will adopt
and we will
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file with the California Secretary of State a new certificate of
determination of preferences to establish the terms of each new series of
preferred stock. We will also set forth the terms in a prospectus supplement.
Southern California Edison's authorized capital stock consists of the
following classes of shares of stock with the following number of shares per
class:
o cumulative preferred stock - 24,000,000 shares with a par value of $25 per
share;
o $100 cumulative preferred stock - 12,000,000 shares with a par value of
$100 per share;
o preference stock - 50,000,000 shares with no par value; and
o common stock - 560,000,000 shares with no par value.
As of June 30, 2000, Southern California Edison had issued and
outstanding 5,150,198 shares of cumulative preferred stock, 2,557,000 shares of
$100 cumulative preferred stock, no shares of preference stock, and 434,888,104
shares of common stock. All of the outstanding shares of common stock are owned
by Edison International, our corporate parent.
The Southern California Edison board of directors may authorize the
preferred stock to be issued from time to time as one or more series of
cumulative preferred stock or $100 cumulative preferred stock. For each new
series of preferred stock, the board of directors, within the limitations and
restrictions stated in Article Sixth of the articles of incorporation, may fix
the number of shares, dividend rights, dividend rate, conversion rights, voting
rights (in addition to the voting rights provided in the articles of
incorporation), rights and terms of redemption (including sinking fund
provisions), redemption price or prices and/or voluntary liquidation
preferences. All shares of preferred stock will be fully paid and nonassessable
and will not have any preemptive or similar rights.
We will set forth in a prospectus supplement the following terms of
each series of preferred stock offered through this prospectus:
o the designation of the series;
o the total number of shares;
o the price or prices at which shares will be offered and sold;
o the dividend rate and dividend payment dates;
o any mandatory or optional sinking fund, purchase fund or similar
provisions;
o the dates, prices and other terms of any optional or mandatory redemption;
o any voluntary liquidation preferences;
o the procedures for auction and remarketing, if any, of the shares;
o any listing of the shares on a securities exchange; and
o any other specific terms, preferences, rights, limitations or restrictions.
Rank of the Preferred Stock
Unless we state otherwise in a prospectus supplement, all series of
preferred stock, whether of cumulative preferred stock or $100 cumulative
preferred stock, will rank equally as to dividends and payments upon
liquidation, dissolution or winding up. The preferred stock ranks senior to all
of the preference stock and common stock. Currently, we have no equity
securities outstanding or authorized that would rank senior to the preferred
stock.
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Dividend Rights
Each series of preferred stock is entitled to receive, in preference to
the holders of preference stock and common stock, as declared by the Southern
California Edison board of directors, cumulative quarterly cash dividends at the
rate fixed for such series and no more. (Article Sixth, Section 2(a).)
Whenever dividends on any shares of the preferred stock are in default,
we may not:
o pay or declare any dividend on the preference stock or common stock, except
a dividend payable in preference stock or common stock;
o purchase or redeem any shares of preference stock or common stock, except
with the proceeds of any sale of shares of preference stock or common
stock; or
o redeem less than all of the preferred stock or purchase any shares of
preferred stock, except through offers to all holders of preferred stock in
proportion to the par values and market prices per share of the respective
classes.
(Article Sixth, Section 2(a), 2(e).)
The indenture securing Southern California Edison's first and refunding
mortgage bonds provides, in substance, that Southern California Edison cannot
pay any cash dividends except out of surplus at December 31, 1921, and out of
earnings since then. None of Southern California Edison's present earnings
reinvested in the business are restricted by this provision. Southern California
Edison does not expect this provision to have any adverse effect on its ability
to pay dividends on the preferred stock.
Voting Rights
Each share of cumulative preferred stock is entitled to six votes and
each share of $100 cumulative preferred stock is entitled to two votes on all
matters submitted to a vote of shareholders. (Article Sixth, Section 2(c).)
Votes may not be cumulated in electing directors. The preferred capital stock of
Southern California Edison may be increased or diminished at a meeting of
shareholders by a vote of at least two-thirds of the entire subscribed or issued
capital stock. (Article Fifth, Section 1.) Because Edison International owns and
can vote all the shares of the common stock, which comprise more than 80 percent
of the total shareholder votes, the holders of the preferred stock will not be
able to elect any directors or influence the outcome of any other matters
submitted to a vote of shareholders, except as described below.
The holders of cumulative preferred stock and/or the holders of $100
cumulative preferred stock are entitled to vote as separate classes, or as
series within either class, on certain matters affecting their interests. The
affirmative vote or written consent of the holders of at least two-thirds of the
shares of the affected class or series is required to:
o amend the articles of incorporation to change certain basic terms of the
class or series with respect to dividends, redemption, liquidation,
conversion, voting or priority; or
o authorize, create or increase in amount any stock ranking senior to the
class or series.
(Article Sixth, Section 2(c)(1), 2(c)(3).)
The affirmative vote or written consent of the holders of at least a
majority of both the cumulative preferred stock and the $100 cumulative
preferred stock, as separate classes, is required to:
o increase the amount of either class, or authorize, create or increase in
amount any stock ranking on a parity with the preferred stock;
o merge or consolidate Southern California Edison, or sell, lease or convey
all or substantially all of the property or business of Southern California
Edison, or part with control of it; or
o issue any additional shares of preferred stock, or of any class ranking
senior to or on a parity with the preferred stock, unless the consolidated
income of Southern California Edison and its
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subsidiaries for any 36 consecutive months within the last 39 months is at
least one and one-half times the total of the interest requirements on
outstanding debt and dividend requirements on outstanding preferred stock
for three years.
(Article Sixth, Section 2(c)(2), 2(c)(4).)
However, such vote or consent of the holders of preferred stock will
not be required if, at or prior to the time when any of the actions mentioned
above takes place, all of the preferred stock the consent of which would
otherwise be required is redeemed in accordance with the articles of
incorporation.
If there is a default in the payment of six or more quarterly
dividends, whether consecutive or not, on any series of preferred stock or
preference stock, then the holders of the preferred stock and preference stock,
voting together as a single class, will have the right to elect two directors
until the dividends have been paid or declared and set apart for payment.
(Article Fifth, Section 2.)
Liquidation Rights
If Southern California Edison ever liquidates, dissolves or winds up
its affairs, the holders of preferred stock will be entitled to receive
liquidation payments before any distribution is made to holders of preference
stock or common stock. The amount of the payments may vary depending on whether
the liquidation is voluntary or involuntary. The holders of each series of
preferred stock will be entitled to receive:
o in the event of an involuntary liquidation, the par value of the shares of
the series; or
o in the event of a voluntary liquidation, the liquidation preference fixed
by the board of directors at the time the series was issued;
together, in either event, with any accrued dividends not previously received.
The voluntary liquidation preference for each series of preferred stock now
outstanding is an amount equal to the redemption price for the series at the
time of the liquidation, together with any accrued dividends not previously
paid. If the amounts payable to the holders of all outstanding shares of
preferred stock are not paid in full, the holders of preferred stock will share
ratably in any distribution of assets in proportion to the full amounts to which
they would otherwise be respectively entitled. (Article Sixth, Section 2(b).)
Redemption
The Southern California Edison board of directors may elect to redeem
all or part of any series of preferred stock at any time, subject to any
limitations set when the series is authorized. The redemption prices for each
series of preferred stock will be set when we issue the series and will include
an amount equal to all accumulated and unpaid dividends on the shares to be
redeemed. We must publish notice in newspapers in Los Angeles, California and
Manhattan in New York, New York between 30 and 60 days before the redemption
date. We also will mail a notice to holders of the shares to be redeemed at
their addresses on our books between 30 and 60 days before the redemption date.
If we choose to redeem less than all the shares of any series, the Southern
California Edison board of directors will either determine the shares to be
redeemed by lot or redeem the shares pro rata. If we give notice of redemption
and deposit sufficient funds into a trust fund to redeem shares of preferred
stock, those shares will not accrue dividends after the redemption date and will
no longer be considered to be outstanding shares. (Article Sixth, Section 2(d).)
Other Provisions
Holders of shares of preferred stock will not have any conversion or
preemptive rights. The preferred stock, when issued, will be fully paid and
nonassessable.
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Registration and Transfer
Transfers of the preferred stock will be effected by Wells Fargo Bank
Minnesota, N.A., 161 N. Concord Exchange, South St. Paul, Minnesota 55075. The
registrar for the preferred stock will be Norwest Bank Minnesota, N.A.
Description of Preferred Securities
This section and following sections discuss the general terms and
conditions of the preferred securities that we and the trusts may offer through
this prospectus, as well as provisions of the related trust agreements,
guarantee agreements and expense agreements to be entered into by Southern
California Edison. Those agreements contain the full legal text of the matters
described in this and following sections. Because these sections are summaries,
they do not describe every aspect of the preferred securities or the related
agreements. These summaries are subject to and qualified by all the provisions
of the applicable agreements, including definitions of terms used in the
agreements. We also include references in parentheses to certain sections of the
agreements. Whenever we refer to particular sections or defined terms of the
agreements in this prospectus or in a prospectus supplement, these sections or
defined terms are incorporated by reference herein or in the prospectus
supplement. These summaries also are subject to and qualified by the description
of the particular terms of the preferred securities in the applicable prospectus
supplement.
General
Southern California Edison will enter into an amended and restated
trust agreement (referred to as a "trust agreement" in this prospectus) for each
of SCE Trust I and SCE Trust II before each trust issues any preferred
securities. Each trust agreement will authorize the regular trustees to issue on
behalf of each trust one series of preferred securities that will have the terms
described in a prospectus supplement. The proceeds from the sale of a trust's
preferred and common securities will be used by the trust to purchase a series
of subordinated debt securities issued by Southern California Edison. The
subordinated debt securities will be held in trust by the property trustee for
the benefit of the holders of the preferred and common securities.
(Sections 2.4 to 2.6.)
Southern California Edison also will enter into a guarantee agreement
(referred to as a "preferred securities guarantee" in this prospectus) with each
trust, under which Southern California Edison will agree to make payments of
distributions and payments on redemption or liquidation with respect to a
trust's preferred securities, but only to the extent the trust has funds
available to make those payments and has not made the payments. See "Description
of Preferred Securities Guarantees" below.
The assets of a trust available for distribution to the holders of its
preferred securities will be limited to payments from Southern California Edison
under the series of subordinated debt securities held by the trust. If Southern
California Edison fails to make a payment on the subordinated debt securities,
the trust will not have sufficient funds to make related payments, including
distributions, on its preferred securities.
Each preferred securities guarantee, when taken together with Southern
California Edison's obligations under the related series of subordinated debt
securities, the subordinated indenture, the related trust agreement and the
related expense agreement (as described below), will provide a full and
unconditional guarantee by Southern California Edison of amounts due on the
preferred securities issued by a trust.
Each trust agreement will be qualified as an indenture under the Trust
Indenture Act of 1939. Each property trustee will act as indenture trustee for
the preferred securities to be issued by the applicable trust, in order to
comply with the provisions of the Trust Indenture Act of 1939.
Each series of preferred securities will have the terms, including
those regarding distributions, redemption, voting, liquidation rights and the
other preferred, deferred or other special rights or other restrictions, as
described in the relevant trust agreement or made part of the trust agreement by
the Trust Indenture Act of 1939 or the Delaware Business Trust Act. The terms of
the preferred securities will mirror the terms of the subordinated debt
securities held by the trust.
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The prospectus supplement relating to the preferred securities of a
trust will describe the specific terms of the preferred securities, including:
o the name of the preferred securities;
o the dollar amount and number of securities issued;
o any provision relating to deferral of distribution payments;
o the annual distribution rate(s), or method of determining the rate(s), the
payment date(s) and the record dates used to determine the holders who are
to receive distributions;
o the date from which distributions will be cumulative;
o the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which the preferred securities
will be purchased or redeemed, in whole or in part;
o the terms and conditions, if any, upon which the applicable series of
subordinated debt securities may be distributed to holders of the preferred
securities;
o the voting rights, if any, of holders of the preferred securities;
o any securities exchange on which the preferred securities will be listed;
o whether the preferred securities are to be issued in book-entry form and
represented by one or more global certificates and, if so, the depository
for the global certificates and the specific terms of the depositary
arrangements; and
o any other relevant rights, preferences, privileges, limitations or
restrictions of the preferred securities.
Each prospectus supplement will describe various United States federal
income tax considerations applicable to the purchase, holding and disposition of
the series of preferred securities covered by the prospectus supplement.
Liquidation Distribution Upon Dissolution
Unless otherwise specified in an applicable prospectus supplement, each
trust agreement states that the related trust shall be dissolved:
o on the expiration of the term of the trust;
o upon the bankruptcy, dissolution or liquidation of Southern California
Edison;
o upon direction by Southern California Edison to the property trustee to
dissolve the trust and distribute the related subordinated debt securities
directly to the holders of the preferred and common securities of the
trust;
o upon the redemption of all of the preferred securities of the trust in
connection with the redemption of all of the related subordinated debt
securities; or
o upon entry of a court order for the dissolution of the trust.
(Sections 9.1 and 9.2)
Unless otherwise specified in an applicable prospectus supplement, in
the event of a dissolution other than as described in the fourth bullet point
above, after the trust satisfies all liabilities to its creditors as provided by
applicable law, each holder of the preferred or common securities will be
entitled to receive:
o the related subordinated debt securities in an aggregate principal amount
equal to the aggregate liquidation amount of the preferred or common
securities held by the holder; or
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o if such a distribution of related subordinated debt securities is
determined by the property trustee not to be practical, cash equal to the
aggregate liquidation amount of the preferred or common securities held by
the holder, plus accumulated and unpaid distributions to the date of
payment.
If the trust cannot pay the full amount due on its preferred and common
securities because insufficient assets are available for payment, then the
amounts payable by the trust on its preferred and common securities will be paid
on a pro rata basis. However, if an event of default under the related
subordinated indenture has occurred and is continuing, the total amounts due on
the preferred securities will be paid before any distribution on the common
securities. (Section 9.4)
Events of Default
An "event of default" under a trust agreement occurs if:
o an event of default occurs under the subordinated indenture relating to a
series of subordinated debt securities (see "Description of Debt
Securities--Events of Default and Remedies for Subordinated Debt
Securities" above);
o the trust does not pay any distribution on its preferred or common
securities within 30 days of when it is due;
o the trust does pay any redemption payment on its preferred or common
securities when it is due;
o the trustees remain in breach of any other covenant or warranty in the
trust agreement for 90 days after receiving notice from the holders of at
least 25 percent in aggregate liquidation amount of the outstanding
preferred securities; or
o the property trustee files for bankruptcy or becomes subject to specified
proceedings involving bankruptcy, insolvency or reorganization, and we fail
to appoint a successor property trustee within 60 days.
(Section 1.1.)
Southern California Edison and the regular trustees of a trust must
file annually with the property trustee for the trust a certificate stating
whether or not they are in compliance with all the applicable conditions and
covenants under the related trust agreement. (Section 8.15.)
If an event of default occurs under the subordinated indenture, and the
indenture trustee and the holders of not less than 25 percent in principal
amount of the related subordinated debt securities outstanding fail to declare
the principal of all of such subordinated debt securities to be immediately due
and payable, the holders of at least 25 percent in aggregate liquidation amount
of the outstanding preferred securities of the applicable trust will have the
right to declare such principal immediately due and payable, by providing notice
to Southern California Edison and the indenture trustee. (Section 5.14(b).)
If Southern California Edison fails to pay principal, premium, if any,
or interest on a series of subordinated debt securities when payable, then a
holder of the related preferred securities may directly sue Southern California
Edison, to the fullest extent permitted by law, to collect its pro rata share of
payments owed. (Section 5.14(c).)
Consolidation, Merger or Amalgamation of the Trusts
A trust may not consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any corporation or other body, except as described below or as
described above under the heading "Liquidation Distribution Upon Dissolution." A
trust may, with the consent of the holders of at least a majority in aggregate
liquidation amount of its outstanding preferred securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to another trust, if:
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o the successor entity either
|X| expressly assumes all of the obligations of the trust relating to its
preferred securities; or
|X| substitutes for the trust's preferred securities other securities
having substantially the same terms as the preferred securities, so
long as those successor securities rank the same as the preferred
securities for distributions and payments upon liquidation, redemption
and otherwise;
o Southern California Edison expressly appoints a trustee of the successor
entity who has substantially the same powers and duties as the property
trustee of the trust as the holder of the particular series of subordinated
debt securities;
o the preferred securities are listed or traded, or any successor securities
will be listed upon notice of issuance, on the same national securities
exchange or other organization on which the preferred securities are then
listed or traded;
o the transaction does not cause the preferred securities or any successor
securities to be downgraded by any national rating agency;
o the transaction does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities or any successor
securities in any material way;
o the successor entity has a purpose substantially identical to that of the
trust;
o prior to the transaction, Southern California Edison has received an
opinion of counsel from a nationally recognized law firm stating that:
|X| the transaction does not adversely affect the rights, preferences and
privileges of the holders of the trust's preferred securities or any
successor securities in any material way; and
|X| following the transaction, neither the trust nor the successor entity
will be required to register as an investment company under the
Investment Company Act of 1940; and
|X| Southern California Edison owns all of the common securities of the
successor entity and guarantees the obligations of the successor
entity under the successor securities at least to the extent provided
under the applicable preferred securities guarantee.
In addition, unless all of the holders of the preferred securities
approve otherwise, a trust may not consolidate, amalgamate, merge with or into,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if the transaction
would cause the trust or the successor entity to be classified other than as a
grantor trust for United States federal income tax purposes. (Section 9.5.)
Voting Rights; Amendment of Trust Agreement
Unless otherwise specified in an applicable prospectus supplement, the
holders of preferred securities will have no voting rights except as discussed
below and under the headings "Consolidation, Merger or Amalgamation of the
Trusts" and "Description of the Preferred Securities Guarantees--Amendments and
Assignment" above, and as otherwise required by law and the trust agreement for
the trust. On any matter as to which voting rights exist, the holders of
preferred securities will be entitled to one vote for each liquidation amount
(as provided in the applicable trust agreement) of preferred securities they
hold. (Sections 6.1 and 6.4.)
If any proposed amendment to the trust agreement of a trust provides
for, or the regular trustees of the trust otherwise propose to effect:
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o any action that would adversely affect the powers, preferences or special
rights of the trust's preferred securities in any material respect, whether
by way of amendment to the trust agreement or otherwise; or
o the dissolution, winding-up or termination of the trust other than pursuant
to the terms of its trust agreement,
then the holders of the trust's preferred securities as a class will be entitled
to vote on the amendment or proposal. In that case, the amendment or proposal
will be effective only if approved by the holders of at least a majority in
aggregate liquidation amount of the preferred securities. (Section 6.1(c).)
The trust agreement of a trust may be amended from time to time by
Southern California Edison and the regular trustees of the trust, without the
consent of the holders of preferred securities of the trust, to:
o cure any ambiguity, correct or supplement any provision which may be
inconsistent with any other provision, or make provisions not inconsistent
with any other provisions with respect to matters or questions arising
under the trust agreement, in each case to the extent that the amendment
does not adversely affect the interests of any holder of preferred
securities of the trust in any material respect; or
o modify, eliminate or add to any provisions to the extent necessary to
ensure that the trust will not be classified as other than a grantor trust
for United States federal income tax purposes or to ensure that the trust
will not be required to register as an "investment company" under the
Investment Company Act of 1940.
Except as provided in the next paragraph, other amendments to the trust
agreement of a trust may be made by Southern California Edison and the trustees
of the trust upon:
o approval of the holders of a majority in aggregate liquidation amount of
the outstanding preferred securities of the trust; and
o receipt by the trustees of the trust of an opinion of counsel to the effect
that such amendment will not affect the trust's status as a grantor trust
for United States federal income tax purposes or the trust's exemption from
the Investment Company Act of 1940.
Notwithstanding the foregoing, without the consent of each affected
holder of common or preferred securities of a trust, the trust agreement of the
trust may not be amended to:
o change the amount or timing of any distribution on the common or preferred
securities of the trust or otherwise adversely affect the amount of any
distribution required to be made in respect of such securities as of a
specified date; or
o restrict the right of a holder of any such securities to institute suit for
the enforcement of any such payment on or after such date.
In addition, no amendment may be made to a trust agreement if the
amendment would:
o cause the related trust to be characterized as other than a grantor trust
for United States federal income tax purposes;
o cause the related trust to be deemed to be an "investment company" which is
required to be registered under the Investment Company Act of 1940; or
o impose any additional obligation on Southern California Edison, the
property trustee or the Delaware trustee without its consent.
Neither the property trustee nor the Delaware trustee is required to
enter into any amendment to a trust agreement that affects its own rights,
duties and immunities under the trust agreement. The property trustee is
entitled to receive an opinion of counsel and an officer's certificate stating
that any amendment
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complies with the trust agreement and any conditions precedent to the
amendment have been satisfied. (Section 10.2.)
Without obtaining the prior approval of the holders of a majority in
aggregate liquidation amount of the preferred securities of a trust, the
trustees of the trust may not:
o direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee for the subordinated debt
securities held by the trust or executing any trust or power conferred on
the property trustee with respect to such securities;
o waive any default that is waivable under the subordinated indenture;
o cancel an acceleration of the principal of the subordinated debt
securities; or
o consent to any amendment, modification or termination of the subordinated
indenture or the subordinated debt securities where such consent is
required.
However, if a consent under the subordinated indenture requires the
consent of each affected holder of subordinated debt securities, then the
property trustee must obtain the prior consent of each holder of preferred
securities. The trustees of the trust may not revoke any action previously
authorized by a vote of the holders of the preferred securities except by a
subsequent vote of the holders of the preferred securities. In addition, before
taking any of the foregoing actions, the property trustee must obtain an opinion
of counsel stating that the action will not cause the trust to be classified as
other than a grantor trust for United States federal income tax purposes.
(Section 6.1(b).)
The property trustee of a trust will notify all preferred securities
holders of the trust of any notice of default received from the indenture
trustee with respect to the subordinated debt securities held by the trust.
(Section 8.2.)
Removal and Replacement of Trustees
The holder of a trust's common securities may remove or replace any of
the regular trustees and, unless an event of default has occurred and is
continuing under the subordinated indenture, the property and Delaware trustees
of the trust. If such an event of default has occurred and is continuing, only
the holders of a majority in aggregate liquidation amount of the trust's
preferred securities may remove or replace the property and Delaware trustees.
The resignation or removal of any trustee of the trusts will be effective only
on the acceptance of appointment by the successor trustee in accordance with the
provisions of the trust agreement for the trust. (Sections 8.10 and 8.11.)
Information Concerning the Property Trustees
For matters relating to compliance with the Trust Indenture Act of
1939, the property trustee of each trust will have all of the duties and
responsibilities of an indenture trustee under the Trust Indenture Act of 1939.
Each property trustee, other than during the occurrence and continuance of a
default under the applicable trust agreement, undertakes to perform only the
duties as are specifically set forth in the applicable trust agreement and,
after a default, must use the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, a property trustee is under no obligation to exercise any of the
powers given it by the applicable trust agreement at the request of any holder
of preferred securities unless it is offered reasonable security or indemnity
against the costs, expenses and liabilities that it might incur. If the property
trustee is required to decide between alternative courses of action, construe
ambiguous provisions in the applicable trust agreement or is unsure of the
application of any provision of the applicable trust agreement, and the matter
is not one on which the holders of preferred securities are entitled to vote,
then the property trustee will take such action as it deems advisable and in the
best interests of the holders of the preferred and common securities. In this
event, the property trustee will have no liability except for its own bad faith,
negligence or willful misconduct. (Sections 8.1 and 8.3.)
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The property trustee for each of the trusts is the same entity and will
also serve as the indenture trustee under the subordinated indenture and the
guarantee trustee under each of the guarantee agreements. Southern California
Edison and certain of its affiliates maintain deposit accounts and banking
relationships with the property trustee.
Miscellaneous
The trustees of each trust are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
o it will not be deemed to be an "investment company" required to be
registered under the Investment Company Act of 1940;
o it will be classified as a grantor trust for United States federal income
tax purposes; and
o the subordinated debt securities held by it will be treated as indebtedness
of Southern California Edison for United States federal income tax
purposes.
Southern California Edison and the trustees of each trust are
authorized to take any action (so long as it is consistent with applicable law
or the applicable certificate of trust or trust agreement) that Southern
California Edison and the trustees of the trust determine to be necessary or
desirable for such purposes.
(Section 2.7(d).)
Registered holders of preferred securities have no preemptive or
similar rights. (Section 5.14(a).)
A trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
(Section 2.7(b).)
Governing Law
Each trust agreement and the related preferred securities will be
governed by and construed in accordance with the laws of the State of Delaware.
(Section 10.4.)
Description of Preferred Securities Guarantees
General
Southern California Edison will execute a guarantee agreement, referred
to herein as a "preferred securities guarantee," for the benefit of the holders
of preferred securities, at the time that a trust issues those preferred
securities. Each preferred securities guarantee will be qualified as an
indenture under the Trust Indenture Act of 1939. The Chase Manhattan Bank will
act as indenture trustee, referred to herein as the "guarantee trustee," under
each preferred securities guarantee for the purposes of compliance with the
Trust Indenture Act of 1939.
The guarantee trustee will hold each preferred securities guarantee
for the benefit of the preferred securities holders of the applicable trust.
(Section 3.1.)
Southern California Edison will irrevocably agree, as described in each
preferred securities guarantee, to pay in full, to the holders of the preferred
securities issued by the applicable trust, the preferred securities guarantee
payments (as defined below), except to the extent previously paid, when and as
due, regardless of any defense, right of set-off or counterclaim which the trust
may have or assert. The following payments, to the extent not paid by a trust,
referred to herein as "preferred securities guarantee payments," will be covered
by the applicable preferred securities guarantee:
o any accumulated and unpaid distributions required to be paid on the
applicable preferred securities, to the extent that the trust has funds
available to make the payment;
o the redemption price, to the extent that the trust has funds available to
make the payment; and
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o upon a voluntary or involuntary dissolution, termination, winding-up or
liquidation of the trust (other than in connection with a distribution of
subordinated debt securities to holders of the preferred securities), the
lesser of:
|X| the aggregate of the liquidation amounts specified in the prospectus
supplement for each preferred security plus all accumulated and unpaid
distributions on the preferred security to the date of payment, to the
extent the trust has funds available to make the payment; and
|X| the amount of assets of the trust remaining available for distribution
to holders of its preferred securities upon liquidation of the trust.
Southern California Edison's obligation to make a preferred securities
guarantee payment may be satisfied by directly paying the required amounts to
the holders of the preferred securities or by causing the trust to pay the
amounts to the holders. (Sections 5.1 to 5.7.)
Status of the Preferred Securities Guarantees
Each preferred securities guarantee will constitute an unsecured
obligation of Southern California Edison and will rank:
o subordinate and junior in right of payment to all of Southern California
Edison's other liabilities except those that rank equally or are
subordinate by their terms; and
o equal with any other preferred securities guarantee now or hereafter issued
by Southern California Edison on behalf of the holders of preferred
securities issued by any other trust.
Each preferred securities guarantee will constitute a guarantee of
payment and not of collection (in other words, the holder of the guaranteed
security may sue Southern California Edison, or seek other remedies, to enforce
its rights under the preferred securities guarantee without first suing any
other person or entity). A preferred securities guarantee will not be discharged
except by payment of the preferred securities guarantee payments in full to the
extent not otherwise paid or upon distribution to the applicable preferred
securities holders of the related subordinated debt securities pursuant to the
applicable trust agreement. (Sections 5.5, 6.1 and 6.2.)
Amendments and Assignment
Except with respect to any changes which do not adversely affect the
rights of holders of preferred securities in any material respect (in which case
no consent of the holders will be required), a preferred securities guarantee
may be amended only with the prior approval of the holders of at least a
majority in aggregate liquidation amount of the preferred securities. A
description of the way to obtain any approval appears under the heading
"Description of Preferred Securities--Voting Rights; Amendment of Trust
Agreements" above. All guarantees and agreements contained in a preferred
securities guarantee will be binding on Southern California Edison's successors,
assigns, receivers, trustees and representatives and are for the benefit of the
holders of the applicable preferred securities. (Sections 8.1 and 8.2.)
Events of Default
An event of default under a preferred securities guarantee occurs if
Southern California Edison fails to make any of its required payments when due
or fails to perform any of its other obligations under the preferred securities
guarantee for more than 30 days. (Section 1.1.)
The holders of at least a majority in aggregate liquidation amount of
the preferred securities relating to each preferred securities guarantee will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the guarantee trustee relating to the preferred
securities guarantee or to direct the exercise of any trust or power given to
the guarantee trustee under the preferred securities guarantee. In addition, any
holder of preferred securities may bring a legal proceeding directly against
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Southern California Edison to enforce its rights under the preferred securities
guarantee, without first taking legal action against the guarantee trustee, the
trust or any other person. (Section 5.4.)
Information Concerning Guarantee Trustees
The guarantee trustee under a preferred securities guarantee, other than
during the occurrence and continuance of a default under the preferred
securities guarantee, will perform only the duties that are specifically
described in the preferred securities guarantee. After such a default, the
guarantee trustee will exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, a guarantee trustee is under no obligation to exercise any of
its powers as described in the applicable preferred securities guarantee at the
request of any holder of covered preferred securities unless it is offered
security and indemnity satisfactory to it against the costs, expenses and
liabilities that it might incur. (Sections 3.1 and 3.2.)
Termination of the Preferred Securities Guarantees
Each preferred securities guarantee will terminate upon full payment of
the redemption price of all the applicable preferred securities, distribution of
the related subordinated debt securities to the holders of the preferred
securities, or full payment of the amounts payable in accordance with the
applicable trust agreement upon liquidation of the applicable trust. Each
preferred securities guarantee will continue to be effective or will be
reinstated if at any time any holder of preferred securities issued by the
applicable trust must restore payment of any sums paid under the preferred
securities or the preferred securities guarantee. (Section 7.1.)
Governing Law
The preferred securities guarantees will be governed by and construed
in accordance with the laws of the State of California, except that the rights,
duties, immunities and indemnities of the guarantee trustee shall be governed by
the laws of the State of New York. (Section 8.6.)
Description of Expense Agreements
Southern California Edison will execute an expense agreement at the
same time that a trust issues preferred securities. Under the expense agreement,
Southern California Edison will irrevocably and unconditionally guarantee to
each creditor of the trust the full amount of the trust's costs, expenses and
liabilities, other than the amounts owed to holders of its preferred and common
securities pursuant to the terms of those securities. The creditors of the trust
will be entitled to enforce the expense agreement.
(Section 1.1.)
Southern California Edison's obligations under the expense agreement
will be subordinated in right of payment to the same extent as the preferred
securities guarantee. The expense agreement will contain provisions regarding
amendment, termination, assignment, succession and governing law similar to
those contained in the preferred securities guarantee.
Relationship among Preferred Securities, Preferred Securities
Guarantees and Subordinated Debt Securities Held by Each Trust
Payments of distributions and redemption and liquidation payments due
on each series of preferred securities (to the extent the applicable trust has
funds available for the payments) will be guaranteed by Southern California
Edison to the extent described under the heading "Description of Preferred
Securities Guarantees" above. No single document executed by Southern California
Edison in connection with the issuance of any series of preferred securities
will provide for its full, irrevocable and unconditional guarantee of the
preferred securities. It is only the combined operation of Southern California
Edison's obligations under the applicable preferred securities guarantee, trust
agreement, subordinated indenture, subordinated debt securities and expense
agreement that has the effect of providing a full, irrevocable and unconditional
guarantee of a trust's obligations under its preferred securities.
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As long as Southern California Edison makes payments of interest and
other payments when due on the subordinated debt securities held by a trust, the
payments will be sufficient to cover the payment of distributions and redemption
and liquidation payments due on the preferred securities issued by that trust,
primarily because:
o the aggregate principal amount of the subordinated debt securities will be
equal to the sum of the aggregate liquidation amounts of the preferred and
common securities;
o the interest rate and interest and other payment dates on the subordinated
debt securities will match the distribution rate and distribution and other
payment dates for the preferred securities;
o Southern California Edison has agreed to pay for any and all costs,
expenses and liabilities of each trust except the trust's obligations under
its preferred securities; and
o each trust agreement provides that the related trust will not engage in any
activity that is not consistent with the limited purposes of the trust.
If and to the extent that Southern California Edison does not make
payments on the subordinated debt securities, the trust will not have funds
available to make payments of distributions or other amounts due on its
preferred securities. In those circumstances, a holder of preferred securities
of the trust will not be able to rely upon the preferred securities guarantee
for payment of these amounts. Instead, the holder may directly sue Southern
California Edison or seek other remedies to collect its pro rata share of
payments owed. If a holder sues Southern California Edison to collect payment,
then Southern California Edison will assume the holder's rights as a holder of
preferred securities under the trust's trust agreement to the extent Southern
California Edison makes a payment to the holder in any legal action.
A holder of any preferred security may sue Southern California Edison,
or seek other remedies, to enforce its rights under the applicable preferred
securities guarantee without first suing the applicable guarantee trustee, the
trust which issued the preferred security or any other person or entity.
Experts
The consolidated financial statements and related schedules of Southern
California Edison incorporated by reference in this prospectus and the
registration statement of which this prospectus is a part have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
Validity of the Securities and Preferred Securities Guarantees
The validity of the debt securities, the preferred stock, the preferred
securities and the preferred securities guarantees offered by this prospectus
will be passed upon for Southern California Edison by Stephen E. Pickett, its
Vice President and General Counsel, Barbara E. Mathews, its Assistant General
Counsel, or Kenneth S. Stewart, its Assistant General Counsel, and for any
underwriters by Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los
Angeles, California 90071. As to matters of New York law, Mr. Pickett, Ms.
Mathews or Mr. Stewart will rely upon the opinion of Gibson, Dunn & Crutcher
LLP. Richards, Layton & Finger, P.A. will pass upon certain matters of Delaware
law relating to the validity of the preferred securities for Southern California
Edison and the trusts.
Mr. Pickett, Ms. Mathews and Mr. Stewart are salaried employees of
Southern California Edison and share in the benefits available to employees. As
of June 30, 2000, their direct or indirect interests in shares of Edison
International's common stock were: Mr. Pickett -- 197,586 shares, Ms. Mathews --
94,948 shares, and Mr. Stewart -- 58,603 shares. These shares include those
beneficially owned through an employee stock savings plan and a dividend
reinvestment plan, and options awarded under an executive incentive plan. They
own no securities of Southern California Edison or the trusts.
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From time to time, Gibson, Dunn & Crutcher LLP performs legal services
for the Company and its affiliates relating to special matters.
Plan of Distribution
We may sell the securities described in this prospectus from time to
time in one or more transactions:
o to purchasers directly;
o to underwriters for public offering and sale by them;
o through agents;
o through dealers; or
o through a combination of any of the foregoing methods of sale.
We may distribute the securities from time to time in one or more
transactions at:
o a fixed price or prices, which may be changed;
o market prices prevailing at the time of sale;
o prices related to such prevailing market prices; or
o negotiated prices.
Direct Sales
We may sell the securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act of 1933, as amended, with respect to any resale of the securities. We will
describe in a prospectus supplement the terms of any sale of securities.
To Underwriters
The applicable prospectus supplement will name any underwriter involved
in a sale of securities. Underwriters may offer and sell securities at a fixed
price or prices, which may be changed, or from time to time at market prices or
at negotiated prices. Underwriters may be deemed to have received compensation
from us from sales of securities in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may be involved in any at the market
offering of equity securities by or on our behalf.
Underwriters may sell securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed from
time to time) from the purchasers for whom they may act as agent.
Unless otherwise provided in a prospectus supplement, the obligations
of any underwriters to purchase securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all the securities
if any are purchased.
Through Agents and Dealers
We will name any agent involved in a sale of securities, as well as any
commissions payable by us to such agent, in a prospectus supplement. Unless we
indicate differently in the applicable prospectus supplement, any such agent
will be acting on a reasonable efforts basis for the period of its appointment.
If we use a dealer in the sale of the securities, we will sell the
securities to the dealer. The dealer may then resell the securities to the
public at varying prices to be determined by the dealer at the time of resale.
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Delayed Delivery Contracts
If we so specify in the applicable prospectus supplement, we will
authorize underwriters, dealers and agents to solicit offers by certain
institutions to purchase the securities pursuant to contracts providing for
payment and delivery on future dates. Institutions with whom the contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of Southern California Edison. Such contracts will be subject to only
those conditions set forth in the applicable prospectus supplement and the
condition that the purchase by an institution of the securities covered under
any such contract shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which that institution is subject.
The underwriters, dealers and agents will not be responsible for the
validity or performance of the contracts. We will set forth in the prospectus
supplement relating to the contracts the price to be paid for the securities,
the commissions payable for solicitation of the contracts and the date in the
future for delivery of the securities.
General Information
Underwriters, dealers and agents participating in a sale of the
securities may be deemed to be underwriters as defined in the Securities Act of
1933, and any discounts and commissions received by them and any profit realized
by them on resale of the securities may be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. We may have agreements with
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act of 1933, and to
reimburse them for certain expenses.
Underwriters or agents and their associates may be customers of, engage
in transactions with or perform services for us or our affiliates in the
ordinary course of business.
Unless we indicate differently in a prospectus supplement, we will not
list the securities on any securities exchange. The securities will be a new
issue of securities with no established trading market. Any underwriters that
purchase securities for public offering and sale may make a market in such
securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. We make no assurance
as to the liquidity of or the trading markets for any securities.
To facilitate a debt securities offering, any underwriter may engage in
over-allotment, stabilizing transactions, short covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
o Over-allotment involves sales in excess of the offering size, which creates a
short position.
o Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum.
o Short covering positions involve purchases of the securities in the open
market after the distribution is completed to cover short positions.
o Penalty bids permit the underwriters to reclaim a selling concession from a
dealer when the securities originally sold by the dealer are purchased in a
covering transaction to cover short positions.
Those activities may cause the price of the debt securities to be
higher than it otherwise would be. If commenced, the activities may be
discontinued by the underwriters at any time.
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Where You Can Find More Information
Available Information
We file reports, proxy statements and other information with the
Securities and Exchange Commission. You can inspect and copy these reports,
proxy statements and other information at the Public Reference Room maintained
by the Securities and Exchange Commission, and at their Regional Offices as
follows:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center, Suite 1400
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2551
You may also obtain copies of this information by mail at prescribed
rates from the Public Reference Section of the Securities and Exchange
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You can
obtain further information on the operation of the Securities and Exchange
Commission's Public Reference Room by calling them at 1-800-SEC-0330.
The Securities and Exchange Commission also maintains an Internet web
site that contains reports, proxy statements and other information about
issuers, such as Southern California Edison, who file electronically with the
Securities and Exchange Commission. The address of that web site is
http://www.sec.gov.
We have listed some series of our preferred stock on the American Stock
Exchange and the Pacific Exchange. You may inspect reports, proxy statements and
other information concerning Southern California Edison at the offices of the
exchanges as follows:
American Stock Exchange Pacific Exchange
86 Trinity Place 301 Pine Street
New York, New York 10006-1881 San Francisco, CA 94104
You may also review reports, proxy statements and other information
about Southern California Edison at our offices at 2244 Walnut Grove Avenue,
Rosemead, California 91770. You may view and obtain copies of some of those
reports and other information on the web site maintained by Southern California
Edison's parent, Edison International, at http://www.edison.com.
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission. You may obtain the full registration
statement from the Securities and Exchange Commission or us, as indicated below.
We filed forms or copies of the articles of incorporation, indentures and other
documents establishing the terms of the offered securities as exhibits to the
registration statement. Statements in this prospectus or any supplement about
these documents are summaries. You should refer to the actual documents for a
more complete description of the relevant matters.
Incorporation by Reference
The rules of the Securities and Exchange Commission allow us to
"incorporate by reference" into this prospectus, which means that we can
disclose important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the Securities and Exchange Commission will
automatically update and supersede the earlier information. This prospectus
incorporates by reference the documents listed below that we have previously
filed or may file in the future with the Securities and Exchange Commission.
These documents contain important information about Southern California Edison.
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o Our Annual Report on Form 10-K for the year ended December 31, 1999.
o Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000.
o The "Description of Registrant's Securities to be Registered" on page 2 of
our Registration Statement on Form 8-A dated February 13, 1999, which
incorporates by reference the material appearing under the headings
"Description of the Preferred Stock" in the prospectus dated February 21,
1990, and "Certain Terms of the New Stock" in the prospectus supplement
dated January 21, 1992, contained in our registration statement on Form S-3
(Registration Number 33-33406).
o All additional documents that we file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 between the date
of this prospectus and the end of the offering of the securities described
in this prospectus. Those documents include Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy
statements mailed to our shareholders.
Upon request, we will provide a copy of any of these filings without
charge to each person to whom a copy of this prospectus has been delivered. You
may request a copy of these filings by writing or calling us at:
Southern California Edison Company
2244 Walnut Grove Avenue
P.O. Box 800
Rosemead, California 91770
Attention: Corporate Governance
Telephone (626) 302-2662
Fax (626) 302-2610
<PAGE>
Southern California Edison Company
$ _______________
VARIABLE RATE NOTES DUE 200
_________________
PROSPECTUS SUPPLEMENT
NOVEMBER __, 2000
__________________
Joint Book Running Managers
CHASE SECURITIES INC. LEHMAN BROTHERS
Co-Managers
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
