<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED.
<PAGE>
FILED PURSUANT TO RULE 424(b)(5)
FILE NO. 333-82173
SUBJECT TO COMPLETION. DATED JULY 13, 1999.
Prospectus Supplement to Prospectus dated July 12, 1999.
[LOGO]
$80,000,000
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
% Senior Notes due , 20
------------
Southern Indiana Gas and Electric Company will pay interest on the Notes on
February 1 and August 1 of each year. The first interest payment will be made on
February 1, 2000. The Notes will mature on 20 . The Notes will be issued
only in denominations of $1,000 and integral multiples of $1,000. Until the
amount of other outstanding First Mortgage Bonds falls below certain levels, the
Notes will be secured by First Mortgage Bonds issued by Southern Indiana Gas and
Electric Company for that purpose. Southern Indiana Gas and Electric Company may
redeem the Notes, in whole or in part, at any time, at a redemption price equal
to the greater of (1) % of principal or (2) the sum of the remaining scheduled
payments of principal and interest on the Notes, 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 %, plus in each case accrued interest to
the redemption date, as set forth in this Prospectus Supplement.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
<TABLE>
<CAPTION>
Per Note Total
--------- -----------
<S> <C> <C>
Initial public offering price.........................................................% $
Underwriting discount.................................................................% $
Proceeds before expenses, to SIGECO...................................................% $
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from , 1999 and
must be paid by the purchaser if the Notes are delivered after ,
1999.
---------------
The underwriters expect to deliver the Notes in book-entry form only through
the facilities of The Depository Trust Company against payment in New York, New
York on , 1999.
GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
BANC ONE CAPITAL MARKETS, INC.
---------------
<PAGE>
Prospectus Supplement dated , 1999.
<PAGE>
SUMMARY INFORMATION
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or in the Prospectus
Supplement or in the financial statements or other documents incorporated in
this Prospectus by reference.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY ("SIGECO")
BUSINESS
Primarily generation, transmission, distribution and sale of electric energy
and the purchase of natural gas and its transportation, distribution and sale in
Indiana. On June 14, 1999, the parent holding company of SIGECO, SIGCORP, Inc.,
and Indiana Energy, Inc., a publicly owned holding company with subsidiaries and
affiliates engaged in natural gas distribution, gas portfolio administrative
services and marketing of natural gas, electric power and related services,
announced that they had signed a definitive merger agreement. SIGECO's
obligations with respect to the Notes and the Senior Note First Mortgage Bonds
will not change with the merger.
SERVICE AREA
SIGECO serves ten counties in southwestern Indiana. In 1998, SIGECO provided
electric service to 124,340 customers in Evansville and 74 other cities and
towns, and supplied gas service to 108,335 customers in Evansville and 64 other
nearby communities.
FINANCIAL INFORMATION
SIGECO's EBITDA for the twelve months ended March 31, 1999 was $130,349,000,
and the ratio of EBITDA to interest expense for the same period was 6.64x.
EBITDA represents earnings before interest expense, provision for income taxes,
depreciation and amortization and is presented herein because it is a widely
accepted indicator of a company's ability to service debt. EBITDA does not
represent net income or cash flow from operations as those items are defined by
generally accepted accounting principles, should not be considered by
prospective purchasers of the Notes as an alternative to net income and does not
necessarily indicate whether cash flows will be sufficient to fund cash needs.
CERTAIN TERMS OF THE NOTES
Please read the following information concerning the Notes in conjunction
with the statements under "Description of Senior Notes" in the accompanying
Prospectus, which the following information supplements and, in the event of any
inconsistencies, supersedes. Capitalized terms not defined in this Prospectus
Supplement are used as defined or otherwise provided in the accompanying
Prospectus.
GENERAL
We will offer $80,000,000 principal amount of our % Senior Notes due
, 20 .
INTEREST PAYMENTS
The Notes will bear interest from , 1999. Interest on the Notes will be
payable commencing February 1, 2000. Interest payments will be made
semi-annually on February 1 and August 1 to the person in whose name the Note is
registered at the close of business on the January 15 or July 15 immediately
preceding such February 1 or August 1. Principal and interest are payable at
Bankers Trust Company (the "Senior Note Trustee") in New York, New York.
SECURITY
As more fully described in the accompanying Prospectus, until the Release
Date, all of the Notes will be secured by Senior Note First Mortgage Bonds,
which we will issue and deliver to the Senior Note Trustee. On the Release Date,
the Notes will cease to be secured by Senior Note First Mortgage Bonds and will
become our unsecured general obligations.
RELEASE DATE
The Release Date will be the date that we have repaid, redeemed or otherwise
retired our First Mortgage Bonds, excluding Senior Note
S-1
<PAGE>
First Mortgage Bonds securing Senior Notes (including the Notes) and other First
Mortgage Bonds which do not in aggregate principal amount exceed the greater of
5% of our Net Tangible Assets or 5% of our Capitalization, provided that no
event of default has occurred and is continuing.
CERTAIN COVENANTS
The Notes will be issued under the Senior Note Indenture and the First
Supplemental Senior Note Indenture (the "Indentures") which contain covenants
that, among other things, limit our ability to incur certain additional liens or
engage in certain sale-leaseback transactions following the Release Date.
APPLICATION OF PROCEEDS
We will use the net proceeds from the sale of the Notes to repay a
$45,000,000 loan from Banc One, an affiliate of Banc One Capital Markets, Inc.
The proceeds of this loan were used to pay at maturity $45,000,000 aggregate
principal amount of our First Mortgage Bonds, 6% Series of 1993, due 1999. We
will use the balance of the proceeds of the Notes to reduce outstanding
short-term borrowings, $15,000,000 of which was loaned to us under a credit
facility with Banc One. At July 12, 1999, we had approximately $110,000,000 in
short-term borrowings (including the $45,000,000 loan referred to above) at an
average interest rate of 5.8%.
FORM AND DENOMINATION
The Notes will initially be represented by a Global Security registered in
the name of a nominee of the Depositary. See "Global Securities" below.
OPTIONAL REDEMPTION
We may redeem the Notes, in whole or in part, at any time, at a redemption
price equal to the greater of (1) % of principal or (2) the sum of the
remaining scheduled payments of principal and interest on the Notes, 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 %, plus in each case
accrued interest to the redemption date.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum 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.
"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.
"Independent Investment Banker" means Goldman, Sachs & Co. or, if such firm
is unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing selected by us and appointed
by the Senior Note Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, the
Reference Treasury Dealer Quotation for such redemption date.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average of the bid and asked prices
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) quoted in writing to the Senior Note Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such redemption date.
"Reference Treasury Dealer" means Goldman, Sachs & Co. and its respective
successors, PROVIDED, HOWEVER, that if Goldman, Sachs & Co. shall cease to be a
primary U.S. Government Securities dealer in New York City (a "Primary Treasury
Dealer"), we shall substitute for it another Primary Treasury Dealer.
If we elect to redeem less than all of the Notes, the Senior Note Trustee
will select, in such
S-2
<PAGE>
manner as 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 Depositary, its nominee or a successor depositary). 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 on the
Notes or the portions of them so called for redemption shall cease to accrue.
GLOBAL SECURITIES
The Notes will be represented by a Global Security that will be deposited
with, or on behalf of, The Depository Trust Company ("DTC"), and will be
available for purchase in denominations of $1,000 and any integral multiple of
that amount.
DTC is
- a limited-purpose trust company organized under the New York Banking Law,
- a "banking organization" within the meaning of the New York Banking Law,
- a member of the Federal Reserve System,
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934.
DTC holds securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts. This
book-entry system eliminates the need for physical movement of securities
certificates.
Participants in DTC include direct participants ("Direct Participants") and
indirect participants ("Indirect Participants"). Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to Indirect Participants, which include,
among others, securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly. The rules applicable to DTC and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Notes under DTC's system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of Notes ("Beneficial Owner") is in
turn to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase; rather,
Beneficial Owners are expected to receive written confirmations providing
details of the transaction as well as periodic statements of their holdings from
the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Notes, except in the event that use of the
book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
S-3
<PAGE>
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE HOLDER OF THE NOTES,
THE SENIOR NOTE TRUSTEE SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE OFFERED
NOTES FOR ALL PURPOSES, INCLUDING RECEIPT OF ALL PRINCIPAL OF, PREMIUM, IF ANY,
AND INTEREST ON SUCH NOTES, RECEIPT OF NOTICES, AND VOTING AND REQUESTING OR
DIRECTING THE SENIOR NOTE TRUSTEE TO TAKE OR NOT TO TAKE, OR CONSENT TO, CERTAIN
ACTIONS.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to applicable statutory or regulatory
requirements.
We will send any redemption notices to DTC. If we redeem less than all of
the Notes within an issue, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Notes.
Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Notes are
credited on the record date and includes an attached list identifying such
Direct Participants.
Principal of, and premium, if any, and interest payments on the Notes will
be made to DTC. DTC's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with the Direct Participants' respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on that date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the Participants
and not of DTC, the Senior Note Trustee or us, subject to applicable statutory
or regulatory requirements. Payment of principal, and premium, if any, and
interest to DTC is our responsibility, or the responsibility of the Senior Note
Trustee with funds we provide. Disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC has advised us that DTC's management is aware that some computer
applications, systems and the like for processing data that are dependent upon
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its participants and other
members of the financial community that it has developed and is implementing a
program so that its systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to security holders,
book- entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electric utility service providers,
among others. DTC has informed its participants and other members of the
financial community that it is contacting (and will continue to contact)
third-party vendors from whom DTC acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
S-4
<PAGE>
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to us or the Senior
Note Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, individual note certificates are required to be
printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC or its successor. In that event, individual note certificates will
be printed and delivered.
Neither SIGECO, the Senior Note Trustee nor any underwriter makes any
representation as to the accuracy of the above description of DTC's business,
organization and procedures, which is based on information received from sources
we believe to be reliable.
WE, THE UNDERWRITERS AND THE SENIOR NOTE TRUSTEE HAVE NO RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO
(A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DEPOSITARY
PARTICIPANT,
(B) THE PAYMENT BY ANY DEPOSITARY PARTICIPANT OF ANY AMOUNT DUE TO ANY
BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND
INTEREST ON, THE OFFERED BONDS,
(C) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC TO ANY DEPOSITARY
PARTICIPANT OR BY ANY DEPOSITARY PARTICIPANT TO ANY BENEFICIAL OWNER OF
ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE
MORTGAGE TO BE GIVEN TO HOLDERS OF THE NOTES, OR
(D) ANY OTHER ACTION TAKEN BY DTC OR ITS NOMINEE, CEDE & CO., AS HOLDER OF
THE NOTES.
A further description of DTC's procedures with respect to the Notes is set
forth under "Global Securities" in the accompanying Prospectus.
LEGAL MATTERS
Winthrop, Stimson, Putnam & Roberts of New York, New York, and Bamberger,
Foreman, Oswald & Hahn, LLP of Evansville, Indiana, will issue opinions about
certain legal matters relating to the Notes. The underwriters will be advised
about issues relating to the offering by their own legal counsel, Simpson
Thacher & Bartlett of New York, New York.
UNDERWRITING
SIGECO and the underwriters for the offering (the "Underwriters") named
below have entered into an underwriting agreement and a pricing agreement with
respect to the Notes.
Subject to certain conditions, each Underwriter has severally agreed to
purchase the principal amount of Notes indicated in the following table:
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT OF NOTES
- ------------------------------------------------------------------ --------------------------
<S> <C>
Goldman, Sachs & Co............................................... $
A.G. Edwards & Sons, Inc.......................................... $
Banc One Capital Markets, Inc..................................... $
------------
Total......................................................... $ 80,000,000
------------
------------
</TABLE>
Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any Notes sold by the Underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to % of the
principal amount of Notes. Any such securities dealers may resell any Notes
purchased from the Underwriters to certain other brokers or
S-5
<PAGE>
dealers at a discount from the initial public offering price of up to % of
the principal amount of Notes. If all the Notes are not sold at the initial
offering price, the Underwriters may change the offering price and the other
selling terms.
The Notes are a new issue of securities with no established trading market.
SIGECO has been advised by the Underwriters that the Underwriters intend to make
a market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
Notes than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Notes while the
offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased Notes sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
SIGECO estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$250,000.
In the ordinary course of their respective businesses, the Underwriters or
their affiliates from time to time provide commercial and investment banking and
other financial services to SIGECO. Banc One, an affiliate of Banc One Capital
Markets, Inc., has made loans to SIGECO which will be repaid with the proceeds
of this offering. See "Application of Proceeds." Because an affiliate of Banc
One Capital Markets, Inc. will receive more than 10% of the proceeds from the
sale of the Notes, not including underwriting compensation, this offering is
being conducted in compliance with the National Association of Securities
Dealers Conduct Rule 2710(c)(8).
SIGECO has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
S-6
<PAGE>
PROSPECTUS
$80,000,000
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
SENIOR NOTES
Southern Indiana Gas and Electric Company
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
(812)465-5300
TERMS OF SALE
The terms for each Senior Note that are not specified in the Prospectus will
be included in a Prospectus Supplement. We may sell the Senior Notes at one or
more times. Initially, we will issue our First Mortgage Bonds to the Senior Note
Trustee to secure payments due on the Senior Notes. When the aggregate principal
amount of our outstanding First Mortgage Bonds (other than Bonds securing these
or similar Notes) does not exceed the greater of five percent of our Net
Tangible Assets or five percent of our Capitalization, the Senior Notes will no
longer be secured by First Mortgage Bonds. The date that the Senior Notes are no
longer secured by First Mortgage Bonds is called the Release Date.
WE URGE YOU TO CAREFULLY READ THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT,
WHICH WILL DESCRIBE THE SPECIFIC TERMS OF THE OFFERING, BEFORE YOU MAKE YOUR
INVESTMENT DECISION.
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 July 12, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION................................................... 2
THE COMPANY........................................................................... 2
RECENT DEVELOPMENTS................................................................... 2
PROSPECTUS SUPPLEMENT................................................................. 3
USE OF PROCEEDS....................................................................... 3
CERTAIN CONSOLIDATED FINANCIAL INFORMATION............................................ 3
DESCRIPTION OF SENIOR NOTES........................................................... 4
GENERAL............................................................................. 4
SECURITY............................................................................ 6
RELEASE DATE........................................................................ 6
LIMITATION ON LIENS................................................................. 7
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS..................................... 9
FORM, EXCHANGE AND TRANSFER......................................................... 10
PAYMENT AND PAYING AGENTS........................................................... 10
REDEMPTION.......................................................................... 11
CONSOLIDATION, MERGER AND SALE OF ASSETS............................................ 11
EVENTS OF DEFAULT................................................................... 12
MODIFICATIONS AND WAIVER............................................................ 14
DEFEASANCE.......................................................................... 17
RESIGNATION OF SENIOR NOTE TRUSTEE.................................................. 17
MISCELLANEOUS....................................................................... 17
GLOBAL SECURITIES..................................................................... 18
DESCRIPTION OF FIRST MORTGAGE BONDS................................................... 19
GENERAL............................................................................. 19
INTEREST, MATURITY, REDEMPTION AND PAYMENT.......................................... 19
IMPROVEMENT AND SINKING FUND REQUIREMENT............................................ 19
MAINTENANCE AND REPLACEMENT REQUIREMENTS............................................ 19
PRIORITY AND SECURITY............................................................... 20
ISSUANCE OF ADDITIONAL BONDS........................................................ 20
LIMITATION ON DIVIDENDS............................................................. 21
MODIFICATION OF THE MORTGAGE........................................................ 21
REGARDING DEFAULT................................................................... 22
REGARDING THE TRUSTEE............................................................... 22
RELEASE AND SUBSTITUTION OF PROPERTY................................................ 22
EVIDENCE TO BE FURNISHED TO THE TRUSTEE UNDER THE MORTGAGE.......................... 23
PLAN OF DISTRIBUTION.................................................................. 23
EXPERTS............................................................................... 24
LEGAL OPINIONS........................................................................ 24
</TABLE>
i
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at the following locations: Room 1024, 450 Fifth
Street, NW, Washington, D.C. 20549; Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, Suite
1300, New York, N.Y. 10048. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all the Senior Notes. This Prospectus is part of a registration
statement we filed with the SEC.
- - The Company's Annual Report on Form 10-K for the year ended December 31,
1998.
- - The Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
You should rely only on the information incorporated by reference or
provided in this Prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these Senior Notes in any state where the offer is not permitted. You should not
assume that the information in this Prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
THE COMPANY
The company is a public utility serving ten counties in southwestern
Indiana. Retail electric service is supplied to Evansville and 74 other cities,
towns and communities, and adjacent rural areas. Wholesale electric service is
supplied to an additional eight communities. Gas service is supplied to
Evansville and 64 other nearby communities and their environs. At December 31,
1998, the company had 124,340 electric customers and 108,335 gas customers.
RECENT DEVELOPMENTS
On June 14, 1999, our parent holding company, SIGCORP, Inc., and Indiana
Energy, Inc. announced that they had signed a definitive merger agreement.
Indiana Energy, Inc. is a holding company whose chief subsidiary is a regulated
Indiana gas utility, Indiana Gas Company, Inc. Subject to the receipt of
approval from their respective shareholders and to necessary regulatory
approvals, the two holding companies will combine into a new holding company to
be named Vectren Corporation. If and when the merger is consummated, Indiana Gas
Company, Inc. and we will become separate subsidiaries of Vectren Corporation.
Our obligations with respect to the Senior Notes and our First Mortgage Bonds
will not change.
PROSPECTUS SUPPLEMENT
The Prospectus Supplement for each offering of Senior Notes will contain the
specific information and terms for that offering. The Prospectus Supplement may
also add, update, or change information contained in this Prospectus. It is
important for you to consider the information contained in this Prospectus and
the Prospectus Supplement in making your investment decision.
USE OF PROCEEDS
We expect to use the net proceeds from the sale of the Senior Notes for the
retirement of short-term debt.
1
<PAGE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CERTAIN CONSOLIDATED FINANCIAL INFORMATION
(THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, (1) TWELVE MONTHS
---------------------------------------------------------- ENDED MARCH 31,
1994 1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
INCOME SUMMARY:
Operating Revenues....................... $ 330,035 $ 338,698 $ 372,730 $ 358,106 $ 364,666 $ 370,205
Operating Income......................... $ 52,367 $ 53,873 $ 60,429 $ 62,456 $ 62,002 $ 61,369
Net Income............................... $ 41,025 $ 45,918 $ 42,841 $ 45,363 $ 43,542 $ 43,012
Net Income Applicable to Common Stock.... $ 39,920 $ 44,819 $ 41,744 $ 44,266 $ 42,447 $ 41,922
Ratio of Earnings to Fixed Charges (2)... 3.57 3.52 4.03 4.43 4.17 4.27
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1999(3)
--------------------------------------------
ACTUAL AS ADJUSTED(4)
--------------------- ---------------------
<S> <C> <C> <C> <C>
CAPITALIZATION SUMMARY:
Common Stockholder's Equity........................................ $ 324,593 53.0% $ 324,593 50.1%
Preferred Stock.................................................... 11,090 1.8 11,090 1.7
Redeemable Preferred Stock......................................... 7,500 1.2 7,500 1.2
Special Preferred Stock of Subsidiary.............................. 692 0.2 692 0.1
Long-Term Debt..................................................... 169,782 27.7 249,782 38.6
Current Maturities of Long-Term Debt............................... 45,000 7.3 0 0.0
Bonds Subject to Tender............................................ 53,700 8.8 53,700 8.3
---------- --------- ---------- ---------
Total Capitalization............................................. $ 612,357 100.0% $ 647,357 100.0%
</TABLE>
- ------------------------
(1) Derived from audited financial information.
(2) "Earnings" for purposes of these calculations have been computed by adding
to "income before extraordinary items" all taxes based on income or profits,
total interest charges and the estimated interest element of rentals charged
to income. "Fixed charges" include total interest charges and the estimated
interest element of rentals.
(3) Reference is made to the Balance Sheets, the Statements of Capitalization
and the Notes to Financial Statements that are contained in the documents
incorporated by reference herein for additional details concerning our
common stock, preferred stock, redeemable preferred stock and long-term
indebtedness, including maturities and interest rates payable on such
long-term indebtedness.
(4) As adjusted figures include our indebtedness represented by the Senior Notes
and the underlying Senior Note First Mortgage Bonds.
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<PAGE>
DESCRIPTION OF SENIOR NOTES
GENERAL
We will issue one or more new series of Senior Notes under a Senior Note
Indenture between us and a Senior Note Trustee whom we will name. The
information we are providing you in this Prospectus concerning the Senior Note
Indenture and related documents is only a summary of the information provided in
those documents. You should consult the Senior Notes themselves, the Senior Note
Indenture, any Supplemental Senior Note Indentures and other documents for more
complete information on the Senior Notes. These documents appear as exhibits to
the Registration Statement, or will appear as exhibits to a Current Report on
Form 8-K, which we will file later, and which will be incorporated by reference
into this Prospectus.
Until the Release Date, all of the Senior Notes will be secured by one or
more series of First Mortgage Bonds, which we will issue and deliver to the
Senior Note Trustee. For more information, see "Security" and "Release Date"
below.
ON THE RELEASE DATE, THE SENIOR NOTES
- - WILL CEASE TO BE SECURED BY FIRST MORTGAGE BONDS;
- - WILL BECOME OUR UNSECURED OBLIGATIONS; AND
- - WILL RANK AS EQUAL WITH OUR OTHER UNSECURED INDEBTEDNESS.
The Senior Note Indenture provides that, in addition to the Senior Notes
offered under this shelf registration process, additional Senior Notes may be
issued later, without limitation as to aggregate principal amount. Before the
Release Date, however, the amount of Senior Notes that we may issue cannot
exceed the amount of First Mortgage Bonds that we are able to issue under the
Mortgage. For more information, see "Description of First Mortgage
Bonds--Issuance of Additional Bonds" below.
You should consult the Prospectus Supplement relating to any particular
issue of Senior Notes for the following information:
- - the title of the Senior Notes;
- - any limit on aggregate principal amount of the Senior Notes or the series of
which they are a part;
- - the date on which the principal of the Senior Notes will be payable;
- - the rate, including the method of determination if applicable, at which the
Senior Notes will bear interest, if any; and
-- the date from which any interest will accrue;
-- the dates on which we will pay interest; and
-- the record date for any interest payable on any interest payment date;
- - the place where
-- the principal of, premium, if any, and interest on the Senior Notes will
be payable;
-- you may register transfer of the Senior Notes;
-- you may exchange the Senior Notes;
-- you may serve notices and demands upon us regarding the Senior Notes;
- - the Security Registrar for the Senior Notes and whether the principal of the
Senior Notes is payable without presentment or surrender of them;
- - the terms and conditions upon which we may elect to redeem any Senior Notes;
- - the terms and conditions upon which the Senior Notes must be redeemed or
purchased due to our obligations pursuant to any sinking fund or other
mandatory redemption provisions, or at the holder's option, including any
applicable exceptions to notice requirements;
- - the denominations in which we may issue Senior Notes;
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<PAGE>
- - the manner in which we will determine any amounts payable on the Senior Notes
which are to be determined with reference to an index or other fact or event
ascertainable outside the Senior Note Indenture;
- - the currency, if other than United States currency, in which payments on the
Senior Notes will be payable;
- - terms according to which elections can be made by us or the holder regarding
payments on the Senior Notes in currency other than the currency in which the
notes are stated to be payable;
- - the portion of the principal amount of the Senior Notes payable upon
declaration of acceleration of their maturity;
- - if payments are to be made on the Senior Notes in securities or other
property, the type and amount of the securities and other property or the
method by which the amount shall be determined;
- - the terms applicable to any rights to convert Senior Notes into or exchange
them for our securities or those of any other entity;
- - if we issue Senior Notes as Global Securities,
-- any limitations on transfer or exchange rights or the right to obtain
the registration of transfer;
-- any limitations on the right to obtain definitive certificates for the
Senior Notes; and
-- any other matters incidental to the Senior Notes;
- - whether we are issuing the Senior Notes as bearer securities;
- - any limitations on transfer or exchange of Senior Notes or the right to
obtain registration of their transfer, and the terms and amount of any
service charge required for registration of transfer or exchange;
- - any exceptions to the provisions governing payments due on legal holidays, or
any variations in the definition of Business Day, with respect to the Senior
Notes;
- - any additions to the Events of Default applicable to any Senior Notes and any
additions to our covenants for the benefit of the holders of the Senior
Notes;
- - if we are issuing any Senior Notes prior to the Release Date, the designation
of the series of Senior Note First Mortgage Bonds to be delivered to the
Senior Note Trustee as security for the Senior Notes;
- - any other terms of the Senior Notes not in conflict with the provisions of
the Senior Note Indenture; and
- - any other collateral security, assurance or guarantee for the Senior Notes.
For more information, see Section 301 of the Senior Note Indenture.
Senior Notes may be sold at a substantial discount below their principal
amount. You should consult the applicable Prospectus Supplement for a
description of certain special United States federal income tax considerations
which may apply to Senior Notes sold at an original issue discount or
denominated in a currency other than dollars.
Unless the applicable Prospectus Supplement states otherwise, the covenants
contained in the Senior Note Indenture will not afford holders of Senior Notes
protection in the event we have a change in control or are involved after the
Release Date in a highly-leveraged transaction.
SECURITY
Until the Release Date, described in the following section, all of the
Senior Notes will be secured by one or more series of First Mortgage Bonds,
which we will issue and deliver to the Senior Note Trustee. For more information
on the First Mortgage Bonds, see "Description of First Mortgage Bonds" below.
When we issue a series of Senior Notes prior to the Release Date, we will
simultaneously issue and deliver to the Senior Note Trustee, as security for all
of the Senior Notes, a series of Senior Note First Mortgage Bonds. These First
Mortgage Bonds will have the same stated interest rate (or interest
4
<PAGE>
calculated in the same manner), interest payment dates, stated maturity and
redemption provisions, and will be in the same aggregate principal amount, as
the series of Senior Notes we are issuing. For more information, see Sections
401, 402 and 403 of the Senior Note Indenture. Payments we make to the Senior
Note Trustee on a series of Senior Notes will satisfy our obligations with
respect to the corresponding payments due on the related series of Senior Note
First Mortgage Bonds.
Each series of Senior Note First Mortgage Bonds will be a series of First
Mortgage Bonds, all of which are secured by a lien on certain property we own.
For more discussion on the lien, see "Description of First Mortgage Bonds--
Priority and Security" below. In certain circumstances prior to the Release
Date, we may reduce the aggregate principal amount of Senior Note First Mortgage
Bonds held by the Senior Note Trustee. In no event, however, may we reduce that
amount to an amount lower than the aggregate outstanding principal amount of the
Senior Notes then outstanding. For more information, see Section 409 of the
Senior Note Indenture. Following the Release Date, we will close the Mortgage
and not issue any additional First Mortgage Bonds under the Mortgage. For more
information, see Section 403 of the Senior Note Indenture.
RELEASE DATE
ON THE RELEASE DATE, THE SENIOR NOTE FIRST MORTGAGE BONDS WILL NO LONGER
SECURE THE SENIOR NOTES, AND THE SENIOR NOTES WILL BECOME OUR UNSECURED GENERAL
OBLIGATIONS. For more information, see Section 403 of the Senior Note Indenture.
The Release Date means the date that we have repaid, redeemed or otherwise
retired all of our First Mortgage Bonds, excluding Senior Note First Mortgage
Bonds securing the Senior Notes and other First Mortgage Bonds which do not in
aggregate principal amount exceed the greater of 5% of our Net Tangible Assets
or 5% of our Capitalization (each as defined in the following section on
"Limitation on Liens"). Excluding this issuance, we currently have $193,115,000
aggregate principal amount of First Mortgage Bonds outstanding. If an event of
default under either the Senior Note Indenture or the First Mortgage Indenture
has occurred and is continuing on the date that the Release Date would otherwise
occur, the Release Date will be postponed until the event of default has been
cured.
The Senior Note Trustee will give the Senior Note holders notice when the
Release Date occurs. See "Description of Senior Notes-- Defeasance" below for a
discussion of another situation in which outstanding Senior Notes would not be
secured by Senior Note First Mortgage Bonds.
LIMITATION ON LIENS
In this section and in the following section on "Limitation on Sale and
Lease-Back Transactions," the following terms have the meanings indicated:
"Capitalization" means the total of all the following items appearing on, or
included in, our consolidated balance sheet: (i) liabilities for indebtedness
maturing more than 12 months from the date of determination; and (ii) common
stock, preferred stock, premium on capital stock, capital surplus, capital in
excess of par value, and retained earnings (however the foregoing may be
designated), less, to the extent not otherwise deducted, the cost of shares of
our capital stock held in our treasury. Capitalization shall be determined in
accordance with generally accepted accounting principles and practices
applicable to the type of business in which we are engaged and approved by
independent accountants regularly retained by us, and may be determined as of a
date not more than 60 days prior to the happening of the event for which the
determination is being made.
"Debt" means any outstanding debt for money borrowed evidenced by notes,
debentures, bonds or other securities, or guarantees of any debt.
"Net Tangible Assets" means the amount shown as total assets on our
consolidated balance sheet, less (i) intangible assets including, but without
limitation, such items as goodwill, trademarks, trade names, patents,
unamortized debt discount and expense and certain regulatory assets, and (ii)
appropriate adjustments, if any,
5
<PAGE>
on account of minority interests. Net Tangible Assets shall be determined in
accordance with generally accepted accounting principles and practices
applicable to the type of business in which we are engaged and approved by the
independent accountants regularly retained by us, and may be determined as of a
date not more than 60 days prior to the happening of the event for which such
determination is being made.
"Operating Property" means (i) any interest in real property we own and (ii)
any asset we own that is depreciable in accordance with generally accepted
accounting principles, excluding, in either case, any interest of ours as lessee
under any lease (except for a lease that results from a Sale and Lease-Back
Transaction) which has been or would be capitalized on the books of the lessee
in accordance with generally accepted accounting principles.
"Sale and Lease-Back Transaction" means any arrangement with any person
providing for the leasing to us of any Operating Property (except for temporary
leases for a term, including any renewal or potential renewal, of not more than
48 months), which Operating Property has been or is to be sold or transferred by
us to the person; PROVIDED, HOWEVER, Sale and Lease-Back Transaction shall not
include any arrangement first entered into prior to the date of the Senior Note
Indenture and shall not include any transaction pursuant to which we sell
Operating Property to, and thereafter purchase energy or services from, any
entity, which transaction is ordered or authorized by any regulatory authority
having jurisdiction over us or our operations or is entered into pursuant to any
plan or program of industry restructuring ordered or authorized by any such
regulatory authority.
"Value" means, with respect to a Sale and Lease-Back Transaction, as of any
particular time, the amount equal to the greater of (i) our net proceeds from
the sale or transfer of the property leased pursuant to the Sale and Lease-Back
Transaction or (ii) the net book value of the property, as determined by us in
accordance with generally accepted accounting principles at the time of entering
into the Sale and Lease-Back Transaction, in either case multiplied by a
fraction, the numerator of which shall be equal to the number of full years of
the term of the lease that is part of the Sale and Lease-Back Transaction
remaining at the time of determination and the denominator of which shall be
equal to the number of full years of the term, without regard, in any case, to
any renewal or extension options contained in the lease.
The Senior Note Indenture provides that, from and after the Release Date, so
long as any Senior Notes are outstanding, we may not issue, assume, guarantee
(including any contingent obligation to purchase) or permit to exist any Debt
that is secured by any mortgage, security interest, pledge or lien ("Lien") of
or upon any Operating Property owned by us, whether owned at the date of the
Senior Note Indenture or subsequently acquired, without effectively securing the
Senior Notes (together with, if we shall so determine, any other indebtedness of
ours ranking equally with the Senior Notes) equally and ratably with the Debt
(but only so long as the Debt is so secured).
The foregoing restriction will not apply to:
- - Liens on any Operating Property existing at the time of its acquisition and
not created in contemplation of the acquisition;
- - Liens on Operating Property of a corporation existing at the time the
corporation is merged into or consolidated with us, or at the time the
corporation disposes of substantially all of its properties (or those of a
division) to us provided that the Lien is not extended to property owned by
us immediately prior to the merger, consolidation, or other disposition and
is not created in contemplation of the merger, consolidation or other
disposition;
- - Liens on Operating Property to secure the cost of acquisition, construction,
development or substantial repair, alteration or improvement of that property
or to secure indebtedness incurred to provide funds for any of these purposes
or for reimbursement of funds previously expended for any of these purposes,
provided the Liens are created or assumed contemporaneously with, or
6
<PAGE>
within 18 months after, the acquisition or the completion of substantial
repair or alteration, construction, development or substantial improvement or
within 6 months thereafter pursuant to a commitment for financing arranged
with a lender or investor within that 18-month period;
- - Liens in favor of the United States or any state or any department, agency or
instrumentality or political subdivision of the United States or any state,
or for the benefit of holders of securities issued by any of these entities,
to secure any Debt incurred for the purpose of financing all or any part of
the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving our Operating Property;
or
- - Any extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or part, of any Lien referred to in the exceptions
listed above, provided, however, that the principal amount of Debt secured
thereby and not otherwise authorized by those exceptions listed above, shall
not exceed the principal amount of Debt, plus any premium or fee payable in
connection with any such extension, renewal or replacement, so secured at the
time of such extension, renewal or replacement.
In addition, notwithstanding the foregoing restrictions, from and after the
Release Date we may issue, assume or guarantee Debt secured by a Lien which
would otherwise be subject to the foregoing restrictions up to an aggregate
amount which, together with all other of our secured Debt (not including secured
Debt permitted under any of the foregoing exceptions) and the Value of all Sale
and Lease-Back Transactions existing at such time (other than Sale and
Lease-Back Transactions the proceeds of which have been applied to the
retirement of certain indebtedness, Sale and Lease-Back Transactions in which
the property involved would have been permitted to be subjected to a Lien under
any of the foregoing exceptions and Sale and Lease-Back Transactions that are
permitted by the first sentence of "Limitations on Sale and Lease-Back
Transactions" below), does not exceed the greater of 10% of our Net Tangible
Assets or 10% of our Capitalization. The foregoing restrictions do not limit our
ability to place Liens on (i) the capital stock of any of our subsidiaries or
(ii) the assets of any of our subsidiaries.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Senior Note Indenture provides that so long as the Senior Notes are
outstanding from and after the Release Date, we may not enter into or permit to
exist any Sale and Lease-Back Transaction with respect to any Operating Property
(except for temporary leases for a term, including any renewal or potential
renewal, of not more than 48 months), if the purchaser's commitment is obtained
more than 18 months after the later of the completion of the acquisition,
construction or development of the Operating Property or the placing in
operation of the Operating Property or of the Operating Property as constructed
or developed or substantially repaired, altered or improved. This restriction
will not apply if (a) we would be entitled pursuant to any of the provisions
listed as exceptions to the restriction applicable to "Limitation on Liens"
above to issue, assume, guarantee or permit to exist Debt secured by a Lien on
the Operating Property without equally and ratably securing the Senior Notes,
(b) after giving effect to the Sale and Lease-Back Transaction, we could incur
pursuant to the provisions described in the last paragraph under "Limitation on
Liens," at least $1.00 of additional Debt secured by Liens (other than Liens
permitted by clause (a)), or (c) we apply within 180 days an amount equal to, in
the case of a sale or transfer for cash, the net proceeds (not less than the
fair value of the Operating Property so leased) and, otherwise, an amount equal
to the fair value (as determined by our Board of Directors) of the Operating
Property so leased, to the retirement of Senior Notes or other Debt of the
Company ranking equally with the Senior Notes, subject to reduction for Senior
Notes delivered and the Debt retired during the 180-day period otherwise than
pursuant to mandatory sinking fund or prepayment provisions and payments at
stated maturity.
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<PAGE>
FORM, EXCHANGE AND TRANSFER
Unless the applicable Prospectus Supplement states otherwise, we will issue
Senior Notes only in fully registered form without coupons and in denominations
of $1,000 and integral multiples of that amount. For more information, see
Sections 201 and 302 of the Senior Note Indenture.
Holders may present Senior Notes for exchange or for registration of
transfer, duly endorsed or accompanied by a duly executed instrument of
transfer, at the office of the Security Registrar or at the office of any
Transfer Agent we may designate. Exchanges and transfers are subject to the
terms of the Senior Note Indenture and applicable limitations for global
securities. We may designate ourselves the Security Registrar. No charge will be
made for any registration of transfer or exchange of Senior Notes, but we may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection with the transaction. Any transfer or exchange will
become effective upon the Security Registrar or Transfer Agent, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. For more information, see Section 305 of the Senior Note
Indenture.
The applicable Prospectus Supplement will state the name of any Transfer
Agent, in addition to the Security Registrar initially designated by the Company
for any Senior Notes. We may at any time designate additional Transfer Agents or
withdraw the designation of any Transfer Agent or make a change in the office
through which any Transfer Agent acts. We must, however, maintain a Transfer
Agent in each place of payment for the Senior Notes of each series. For more
information, see Section 702 of the Senior Note Indenture.
We will not be required to
- - issue, register the transfer of, or exchange any Senior Note or any Tranche
of any Senior Note during a period beginning at the opening of business 15
days before the day of mailing of a notice of redemption of any Senior Note
or any Tranche of any Senior Note called for redemption and ending at the
close of business on the day of mailing; or
- - register the transfer of, or exchange any Senior Note selected for redemption
except the unredeemed portion of any Senior Note being partially redeemed.
For more information, see Section 305 of the Senior Note Indenture.
PAYMENT AND PAYING AGENTS
Unless the applicable Prospectus Supplement states otherwise, we will pay
interest on a Senior Note on any interest payment date to the person in whose
name the Senior Note is registered at the close of business on the regular
record date for the interest payment. For more information, see Section 307 of
the Senior Note Indenture.
Unless the applicable Prospectus Supplement provides otherwise, we will pay
principal and any premium and interest on Senior Notes at the office of the
Paying Agent whom we will designate for this purpose. Unless the applicable
Prospectus Supplement states otherwise, the corporate trust office of the Senior
Note Trustee in New York City will be designated as our sole Paying Agent for
payments with respect to Senior Notes of each series. Any other Paying Agents
initially designated by us for the Senior Notes of a particular series will be
named in the applicable Prospectus Supplement. We may at any time add or delete
Paying Agents or change the office through which any Paying Agent acts. We must,
however, maintain a Paying Agent in each place of payment for the Senior Notes
of a particular series. For more information, see Section 702 of the Senior Note
Indenture.
All money we pay to a Paying Agent for the payment of the principal and any
premium or interest on any Senior Note which remains unclaimed at the end of two
years after payment is due will be repaid to us. After that date, the holder of
that Senior Note may look to us for these payments. For more information, see
Section 703 of the Senior Note Indenture.
8
<PAGE>
REDEMPTION
You should consult the applicable Prospectus Supplement for any terms
regarding optional or mandatory redemption of Senior Notes. Except for the
provisions in the applicable Prospectus Supplement regarding Senior Notes
redeemable at the holder's option, Senior Notes may be redeemed only upon notice
by mail not less than 30 nor more than 60 days prior to the redemption date.
Further, if less than all the Senior Notes of a series, or any Tranche of a
series, are to be redeemed, the Senior Notes to be redeemed will be selected by
the method provided for the particular series. In the absence of a selection
provision, the Senior Note Trustee will select a fair and appropriate method of
random selection. For more information, see Sections 503 and 504 of the Senior
Note Indenture.
A notice of redemption we provide may state:
- - that redemption is conditioned upon receipt by the Paying Agent on or before
the redemption date of money sufficient to pay the principal and any premium
and interest on the Senior Notes; and
- - that if the money has not been received, the notice will be ineffective and
we will not be required to redeem the Senior Notes.
For more information, see Section 504 of the Senior Note Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, nor may we
transfer or lease substantially all of our assets and property to any person,
unless:
- - the corporation formed by the consolidation or into which we are merged, or
the person which acquires by conveyance or transfer, or which leases,
substantially all of our property and assets:
-- is organized and validly existing under the laws of any domestic
jurisdiction;
-- expressly assumes our obligations on the Senior Notes and under the
Senior Note Indenture; and
-- prior to the Release Date, expressly assumes our obligations under the
Senior Note First Mortgage Bonds and under the Mortgage;
- - immediately after the transaction becomes effective, no Event of Default, and
no event which would become an Event of Default, shall have occurred and be
continuing; and
- - we will have delivered to the Senior Note Trustee an Officer's Certificate
and Opinion of Counsel as provided in the Senior Note Indenture.
For more information, see Section 1201 of the Senior Note Indenture.
EVENTS OF DEFAULT
"Event of Default" under the Senior Note Indenture with respect to Senior
Notes of any series means any one of the following:
- - failure to pay any interest due on the Senior Notes within 30 days;
- - failure to pay principal or premium when due on a Senior Note;
- - breach of or failure to perform any covenant or warranty of ours in the
Senior Note Indenture with respect to the particular series of Senior Notes
for 60 days (subject to extension under certain circumstances for another 120
days) after we receive notice from the Senior Note Trustee, or we and the
Senior Note Trustee receive notice from the holders of at least 33% in
principal amount of the Senior Notes of that series outstanding under the
Senior Note Indenture according to the provisions of the Senior Note
Indenture;
- - prior to the Release Date, the occurrence of a Default under the Mortgage
(see "Description of the First Mortgage Bonds-- Events of Default" below);
- - certain events of bankruptcy, insolvency or reorganization; and
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<PAGE>
- - any other Event of Default set forth in the applicable Prospectus Supplement.
For more information, see Section 901 of the Senior Note Indenture.
An Event of Default with respect to a particular series of Senior Notes does
not necessarily constitute an Event of Default with respect to the Senior Notes
of any other series issued under the Senior Note Indenture.
If an Event of Default with respect to a particular series of Senior Notes
occurs and is continuing, either the Senior Note Trustee or the holders of at
least 33% in principal amount of the outstanding Senior Notes of that series may
declare the principal amount of all of the Senior Notes of that series to be due
and payable immediately. If the Senior Notes of that series are discount notes
or similar Senior Notes, only the portion of the principal amount as specified
in the applicable Prospectus Supplement may be immediately due and payable. If
an Event of Default occurs and is continuing with respect to all series of
Senior Notes (including all Events of Default relating to bankruptcy, insolvency
or reorganization), the Senior Note Trustee or the holders of at least 33% in
principal amount of the outstanding Senior Notes of all series, considered
together, may declare an acceleration of the principal amount of all Senior
Notes. In the event of an acceleration prior to the Release Date with respect to
all Senior Notes, the Senior Note Trustee will make a demand for acceleration of
all amounts due under all of the Senior Note First Mortgage Bonds, but this
demand will only result in such an acceleration if allowed by the acceleration
provisions of the First Mortgage.
At any time after a declaration of acceleration with respect to the Senior
Notes of a particular series, and before a judgment or decree for payment of the
money due has been obtained, and before the acceleration of the Senior Note
First Mortgage Bonds, the Event or Events of Default giving rise to the
declaration of acceleration will, without further action, be deemed to have been
waived, and the declaration and its consequences will be deemed to have been
rescinded and annulled, if
- - we have paid or deposited with the Senior Note Trustee a sum sufficient to
pay
-- all overdue interest on all Senior Notes of the particular series;
-- the principal of and any premium on any Senior Notes of that series
which have become due otherwise than by the declaration of acceleration
and any interest at the rate prescribed in the Senior Notes;
-- interest upon overdue interest at the rate prescribed in the Senior
Notes, to the extend payment is lawful;
-- all amounts due to the Senior Note Trustee under the Senior Note
Indenture; and
- - any other Event of Default with respect to the Senior Notes of the particular
series, other than the failure to pay the principal of the Senior Notes of
that series which has become due solely by the declaration of acceleration,
has been cured or waived as provided in the Senior Note Indenture.
For more information, see Section 902 of the Senior Note Indenture.
The Senior Note Indenture includes provisions as to the duties of the Senior
Note Trustee in case an Event of Default occurs and is continuing. Consistent
with these provisions, the Senior Note Trustee will be under no obligation to
exercise any of its rights or powers at the request or direction of any of the
holders, unless those holders have offered to the Senior Note Trustee reasonable
indemnity. For more information, see Section 1003 of the Senior Note Indenture.
Subject to these provisions of indemnification, the holders of a majority in
principal amount of the outstanding Senior Notes of any series may direct the
time, method and place of conducting any proceeding for any remedy available to
the Senior Note Trustee, or exercising any trust or power conferred on the
Senior Note Trustee, with respect to the Senior Notes of that series. For more
information, see Section 912 of the Senior Note Indenture.
No Senior Note holder may institute any proceeding regarding the Senior Note
Indenture,
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<PAGE>
or for the appointment of a receiver or a trustee, or for any other remedy under
the Senior Note Indenture unless
- - the holder has previously given to the Senior Note Trustee written notice of
a continuing Event of Default with respect to Senior Notes of that particular
series,
- - the holders of a majority in aggregate principal amount of the outstanding
Senior Notes of all series with respect to which an Event of Default is
continuing have made a written request to the Senior Note Trustee, and have
offered reasonable indemnity to the Senior Note Trustee to institute the
proceeding as trustee, and
- - the Senior Note Trustee has failed to institute the proceeding, and has not
received from the holders of a majority in principal amount of the
outstanding Senior Notes of that series a direction inconsistent with the
request, within 60 days after notice, request and offer of reasonable
indemnity.
For more information, see Section 907 of the Senior Note Indenture.
The preceding limitations do not apply, however, to a suit instituted by a
Senior Note holder for the enforcement of payment of the principal of or any
premium or interest on the Senior Note on or after the applicable due date
stated in the Senior Note. For more information, see Section 908 of the Senior
Note Indenture.
We must furnish annually to the Senior Note Trustee a statement by an
appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the Senior Note Indenture. Our compliance is to
be determined without regard to any grace period or notice requirement under the
Senior Note Indenture. For more information, see Section 706 of the Senior Note
Indenture.
MODIFICATIONS AND WAIVER
The Company and the Senior Note Trustee, without the consent of the holders
of the Senior Notes, may enter into one or more supplemental Senior Note
Indentures for any of the following purposes:
- - to evidence the assumptions by an permitted successor of our covenants in the
Senior Note Indenture and the Senior Notes:
- - to add one or more covenants or other provisions for the benefit of the
holders of outstanding Senior Notes or to surrender any right or power
conferred upon us by the Senior Note Indenture;
- - to add any additional Events of Default;
- - to change or eliminate any provision of the Senior Note Indenture or add any
new provision to it (but if this action will adversely affect the interests
of the holders of any particular series of Senior Notes in any material
respect, the action will become effective with respect to that series only
when there is no Senior Note of that series remaining outstanding under the
Senior Note Indenture);
- - to provide collateral security for the Senior Notes;
- - to establish the form or terms of Senior Notes according to the provisions of
the Senior Note Indenture;
- - to evidence the acceptance of appointment of a successor Senior Note Trustee
under the Senior Note Indenture with respect to one or more series of the
Senior Notes and to add to or change any of the provisions of the Senior Note
Indenture as necessary to provide for the administration of the trusts under
the Senior Note Indenture by more than one trustee;
- - to provide for the procedures required to permit us to use a non-certificated
system of registration for any Senior Notes series;
- - to change any place where
-- the principal of and any premium and interest on any Senior Notes is
payable,
-- any Senior Notes may be surrendered for registration of transfer or
exchange, or
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<PAGE>
-- notices and demands to or upon us regarding Senior Notes and the Senior
Note Indenture may be served; or
- - to cure any ambiguity or inconsistency (but any of these changes or additions
will not adversely affect the interests of the holders of Senior Notes of any
series in any material respect).
For more information see Section 1301 of the Senior Note Indenture.
The holders of at least a majority in aggregate principal amount of the
outstanding Senior Notes of any series may waive
- - compliance by us with certain provisions of the Senior Note Indenture (see
Section 707 of the Senior Note Indenture); and
- - any past default under the Senior Note Indenture, except a default in the
payment of principal, premium, or interest, and certain covenants and
provisions of the Senior Note Indenture that cannot be modified or amended
without consent of the holder of each outstanding Senior Note of the series
affected (see Section 913 of the Senior Note Indenture).
The Trust Indenture Act of 1939 may be amended after the date of the Senior
Note Indenture to require changes to the Senior Note Indenture. In this event,
the Senior Note Indenture will be deemed to have been amended so as to effect
the changes, and we and the Senior Note Trustee may, without the consent of any
holders, enter into one or more Supplemental Senior Note Indentures to evidence
or effect the amendment. For more information, see Section 1301 of the Senior
Note Indenture.
Except as provided in this section, the consent of the holders of a majority
in aggregate principal amount of the outstanding Senior Notes, considered as one
class, is required to change in any manner the Senior Note Indenture pursuant to
one or more supplemental Senior Note Indentures. If less than all of the series
of Senior Notes outstanding are directly affected by a proposed supplemental
Senior Note Indenture, however, only the consent of the holders of a majority in
aggregate principal amount of the outstanding Senior Notes of all series
directly affected, considered as one class, will be required. Furthermore, if
the Senior Notes of any series have been issued in more than one Tranche and if
the proposed supplemental Senior Note Indenture directly affects the rights of
the holders of one or more, but not all Tranches, only the consent of the
holders of a majority in aggregate principal amount of the outstanding Senior
Notes of all Tranches directly affected, considered as one class, will be
required. In addition, an amendment or modification
- - may not, without the consent of the holder of the Senior Note
-- change the maturity of the principal of, or any installment of principal
of or interest on, any Senior Note,
-- reduce the principal amount or the rate of interest, or the amount of
any installment of interest, or change the method of calculating the
rate of interest,
-- reduce any premium payable upon the redemption of the Senior Note,
-- reduce the amount of the principal of any Senior Note originally issued
at a discount from the stated principal amount that would be due and
payable upon a declaration of acceleration of maturity,
-- change the currency or other property in which a Senior Note or premium
or interest on a Senior Note is payable,
-- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity (or, in the case of redemption, on or after
the redemption date) of any Senior Note;
- - may not reduce the percentage of principal amount requirement for consent of
the holders for any supplemental Senior Note Indenture, or for any waiver of
compliance with any provision of or any default under the Senior Note
Indenture, or reduce the requirements for quorum or voting, without
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<PAGE>
the consent of the holder of each outstanding Senior Note of each series or
Tranche effected;
- - may not prior to the Release Date
-- impair the interest of the Senior Note Trustee in the Senior Note First
Mortgage Bonds,
-- reduce the principal amount of any series of Senior Note First Mortgage
Bonds to an amount less than that of the related series of Senior Notes,
or
-- alter the payment provisions of the Senior Note First Mortgage Bonds in
a manner adverse to the holders of the Senior Notes; and
- - may not modify provisions of the Senior Note Indenture relating to
supplemental Senior Note Indentures, waivers of certain covenants and waivers
of past defaults with respect to the Senior Notes of any series, or any
Tranche of a series, without the consent of the holder of each outstanding
Senior Note affected.
A supplemental Senior Note Indenture will be deemed not to affect the rights
under the Senior Note Indenture of the holders of any series or Tranche of the
Senior Notes if the supplemental Senior Note Indenture
- - changes or eliminates any covenant or other provision of the Senior Note
Indenture expressly included solely for the benefit of one or more other
particular series of Senior Notes or Tranches thereof; or
- - modifies the rights of the holders of Senior Notes of any other series or
Tranches with respect to any covenant or other provision.
For more information, see Section 1302 of the Senior Note Indenture.
If we solicit from holders of the Senior Notes any type of action, we may at
our option fix in advance a record date for the determination of the holders
entitled to vote on the action. We shall have no obligation, however, to do so.
If we fix a record date, the action may be taken before or after the record
date, but only the holders of record at the close of business on the record date
shall be deemed to be holders for the purpose of determining whether holders of
the requisite proportion of the outstanding Senior Notes have authorized the
action. For that purpose, the outstanding Senior Notes shall be computed as of
the record date. Any holder action shall bind every future holder of the same
security and the holder of every security issued upon the registration of
transfer of or in exchange for or in lieu of the security in respect of anything
done or permitted by the Senior Note Trustee or us in reliance on that action,
whether or not notation of the action is made upon the security. For more
information, see Section 104 of the Senior Note Indenture.
DEFEASANCE
Unless the applicable Prospectus Supplement provides otherwise, any Senior
Note, or portion of the principal amount of a Senior Note, will be deemed to
have been paid for purposes of the Senior Note Indenture, and, at our election,
our entire indebtedness in respect to the Senior Note (or portion thereof) will
be deemed to have been satisfied and discharged, if we have irrevocably
deposited with the Senior Note Trustee or any Paying Agent other than us, in
trust, money, certain Eligible Obligations, or a combination of the two,
sufficient to pay principal of any premium and interest due and to become due on
the Senior Note or portions thereof. For more information, see Section 801 of
the Senior Note Indenture. For this purpose, unless the applicable Prospectus
Supplement provides otherwise, "Eligible Obligations" include direct obligations
of, or obligations unconditionally guaranteed by, the United States, entitled to
the benefit of full faith and credit of the United States, and certificates,
depositary receipts or other instruments which evidence a direct ownership
interest in these obligations or in any specific interest or principal payments
due in respect to those obligations.
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<PAGE>
RESIGNATION OF SENIOR NOTE TRUSTEE
The Senior Note Trustee may resign at any time by giving written notice to
us or may be removed at any time by an action of the holders of a majority in
principal amount of outstanding Senior Notes delivered to the Senior Note
Trustee and us. No resignation or removal of the Senior Note Trustee and no
appointment of a successor trustee will become effective until a successor
trustee accepts appointment in accordance with the requirements of the Senior
Note Indenture. So long as no Event of Default or event which would become an
Event of Default has occurred and is continuing, and except with respect to a
Senior Note Trustee appointed by an action of the holders, if we have delivered
to the Senior Note Trustee a resolution of our Board of Directors appointing a
successor trustee and the successor trustee has accepted the appointment in
accordance with the terms of the Senior Note Indenture, the Senior Note Trustee
will be deemed to have resigned and the successor trustee will be deemed to have
been appointed as trustee in accordance with the Senior Note Indenture. For more
information, see Section 1010 of the Senior Note Indenture.
MISCELLANEOUS
NOTICES
We will give notices to holders of Senior Notes by mail to their address as
they appear in the Security Register. For more information, see Section 106 of
the Senior Note Indenture.
TITLE
The Senior Note Trustee and its agents, and we and our agents, may treat the
person in whose name a Senior Note is registered as the absolute owner of that
Senior Note, whether or not that Senior Note may be overdue, for the purpose of
making payment and for all other purposes. For more information, see Section 308
of the Senior Note Indenture.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the laws of the State of New York. For more
information, see Section 112 of the Senior Note Indenture.
GLOBAL SECURITIES
We may issue some or all of the Senior Notes of any series as Global
Securities. We will register each Global Security in the name of a depositary
identified in the applicable Prospectus Supplement. The Global Securities will
be deposited with a depositary or nominee or custodian for the depositary and
will bear a legend regarding restrictions on exchanges and registration of
transfer as discussed below and any other matters to be provided pursuant to the
Senior Note Indenture.
As long as the depositary or its nominee is the registered holder of a
Global Security, that person will be considered the sole owner and holder of the
Global Security and the Senior Notes represented by it for all purposes under
the Senior Notes and the Senior Note Indenture. Except in limited circumstances,
owners of a beneficial interest in a Global Security
- - will not be entitled to have the Global Security or any Senior Notes
represented by it registered in their names;
- - will not receive or be entitled to receive physical delivery of certificated
Senior Notes in exchange for the Global Security; and
- - will not be considered to be the owners or holders of the Global Security or
any Senior Notes represented by it for any purposes under the Senior Notes or
the Senior Note Indenture.
We will make all payments of principal and any premium and interest on a
Global Security to the depositary or its nominee as the holder of the Global
Security. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions
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<PAGE>
having accounts with the depositary or its nominee, called "participants" for
purposes of this discussion, and to persons that hold beneficial interests
through participants. When a Global Security is issued, the depositary will
credit on its book entry, registration and transfer system the principal amounts
of Senior Notes represented by the Global Security to the accounts of its
participants. Ownership of beneficial interests in a Global Security will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by
- - the depositary, with respect to participant's interests or;
- - any participant, with respect to interests of persons held by the
participants on their behalf.
Payments by participants to owners of beneficial interests held through such
participants will be the responsibility of such participants. The depositary may
from time to time adopt various policies and procedures governing payments,
transfers, exchanges, and other matters relating to beneficial interests in a
Global Security. None of the following will have any responsibility or liability
for any aspect of the depositary or any participant's records relating to, or
for payments made on account of, beneficial interest in a Global Security, or
for maintaining, supervising or reviewing any records relating to these
beneficial interests:
- - the Southern Indiana Gas and Electric Company;
- - the Trustee under the First Mortgage Indenture;
- - the Trustee under the Senior Note Indenture; or
- - any agent of each of the above.
DESCRIPTION OF FIRST MORTGAGE BONDS
GENERAL
First Mortgage Bonds will be issued to the Senior Note Trustee to secure
each issuance of Senior Notes. See "Description of Senior Notes--Security"
above.
We will issue the First Mortgage Bonds under a Mortgage and Deed of Trust,
dated as of April 1, 1932 with Bankers Trust Company, New York, N.Y., as Trustee
(the "Trustee") pursuant to an indenture or indentures which will supplement the
Mortgage and Deed of Trust. In the following discussion, we will refer to the
Mortgage and Deed of Trust and all indentures that supplement it as the
"Mortgage".
We will refer to all of our First Mortgage Bonds, including those already
issued and those to be issued as "First Mortgage Bonds." The information we are
providing you in this Prospectus concerning the First Mortgage Bonds and the
Mortgage is only a summary of the information provided in those documents. You
should consult the Mortgage and other documents for more complete information.
These documents appear as exhibits to the Registration Statement, or will appear
as exhibits to a Current Report on Form 8-K, which we will file, and which will
be incorporated by reference into this Prospectus.
INTEREST, MATURITY, REDEMPTION AND PAYMENT
These terms will be correlated to the terms of the related Senior Notes that
the particular First Mortgage Bonds secure. See the accompanying Prospectus
Supplement.
IMPROVEMENT AND SINKING FUND REQUIREMENT
The Mortgage (Section 36A) requires the annual deposit with the Trustee of
cash equal to 1% of the maximum principal amount of all First Mortgage Bonds
outstanding at any one time subsequent to July 1, 1948 (less First Mortgage
Bonds retired directly or indirectly as a result of the sale of property or
cancelled pursuant to the provisions of Section 36B described below). We may
withdraw the cash upon certification of the amount of unfunded property
additions which would support the issuance of a principal amount of First
Mortgage Bonds equal to 100% of the amount of cash withdrawn or the cash may be
applied to the purchase or redemption of First Mortgage Bonds.
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<PAGE>
MAINTENANCE AND REPLACEMENT REQUIREMENTS
The Mortgage (Section 36B) requires the annual deposit with the Trustee of
an amount in cash or in principal amount of First Mortgage Bonds or of
outstanding prior lien bonds (or in lieu thereof the certification of unfunded
property additions) equal to the amount, if any, by which 15% of the gross
earnings during the preceding calendar year exceeds the aggregate amounts
expended during that period for repairs, maintenance and replacements. Gross
earnings are computed after deducting the costs of electric energy and gas
purchased for resale. A credit balance established in any year may be utilized
to meet the requirements during a later period or to effect the withdrawal of
deposited cash or First Mortgage Bonds or to unfund property previously
certified to the Trustee.
The Mortgage provides that, effective at such times as all First Mortgage
Bonds issued prior to January 1, 1977 are no longer outstanding, the Mortgage
may be amended to change the above requirement, insofar as it is based upon a
comparison with 15% of the gross earnings during the preceding calendar year, to
a comparison with 2.25% of our depreciable property, as defined, on December 31
of the preceding calendar year (Section 3 of the Supplemental Indenture dated as
of January 15, 1977).
PRIORITY AND SECURITY
Each First Mortgage Bond ranks PARI PASSU as to security with all other
First Mortgage Bonds outstanding under the Mortgage, which, in the opinion of
our legal counsel, Messrs. Bamberger, Foreman, Oswald and Hahn, is a first lien
on substantially of our physical property, permits and franchises, subject only
to excepted encumbrances, as defined in the Mortgage (Section 2). The Mortgage
permits the acquisition of property subject to prior liens existing at the time
of acquisition and the use of such property additions as a basis for the
issuance of additional bonds in an amount which, together with certain other
items, does not exceed 15% of the aggregate principal amount of First Mortgage
Bonds to be outstanding under the Mortgage (Section 24).
ISSUANCE OF ADDITIONAL BONDS
The Mortgage permits the issuance of additional First Mortgage Bonds (a) to
the extent of 60% of the cost or then fair value to us, whichever is less, of
unfunded property additions (as defined in the Mortgage, Sections 4 and 5)
(Section 23); (b) to refund unfunded prior lien bonds (as defined in the
Mortgage, Section 6) (Section 24); (c) to refund First Mortgage Bonds (Section
27); or (d) upon the deposit of cash equal to the principal amount of First
Mortgage Bonds requested to be issued (Section 28). Deposited cash may be
withdrawn in lieu of the authentication of First Mortgage Bonds to which we
would otherwise be entitled or against 60% of unfunded property additions
certified to the Trustee or against the deposit of First Mortgage Bonds or the
deposit or reduction of prior lien bonds or may be applied to the purchase or
redemption of First Mortgage Bonds (Sections 29 and 30).
Additional First Mortgage Bonds may not be issued under (a) or (d) above (or
under certain circumstances under (c) above) unless net earnings (as defined in
the Mortgage, Section 7) for twelve consecutive months within the fifteen
preceding calendar months shall have been at least equal to twice the annual
interest requirements on, and at least 10% of, the principal amount of all First
Mortgage Bonds outstanding, including those proposed to be issued and all
outstanding prior lien indebtedness (Section 25). At December 31, 1998, such
coverages were at least 2.4 times and 16%, respectively. Net earnings are
computed before charges for renewals, replacements and depreciation, but after
deducting the greater of (i) 10% of gross operating revenues for such period, or
(ii) the amount by which 15% of gross operating revenues for such period exceeds
the amount expended for current repairs and maintenance. Gross operating
revenues are computed after deducting the cost of electric energy and gas
purchased for resale.
The First Mortgage Bonds issued to the Senior Note Trustee are expected to
be issued against unfunded property additions or retired bonds. Unfunded
property additions at March 31, 1999 amounted to $310,288,123.
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<PAGE>
LIMITATION ON DIVIDENDS
The Mortgage in effect restricts our payment of cash dividends on our Common
Stock to the accumulated surplus available for distribution to the Common Stock
earned subsequent to December 31, 1947, subject to reduction if amounts deducted
from earnings for current repairs and maintenance and provisions for renewals,
replacements and depreciation of all of our property are less than amounts
specified in the Mortgage (Section 1.02 of the Supplemental Indenture dated as
of July 1, 1948, as supplemented). No amount was restricted against cash
dividends on Common Stock at March 31, 1999 under this provision.
The Amended Articles of Incorporation in effect restricts our payment of
cash dividends on Common Stock to accumulated surplus available for distribution
to the Common Stock earned subsequent to December 31, 1935, and requires that,
immediately after such dividends, there shall remain to the credit of earned
surplus an amount at least equal to two times the annual dividend requirements
on all then outstanding Preferred Stock and Preferred Stock, No Par Value. See
Art. VI, Terms of Capital Stock, General Provisions (B). The amount restricted
against cash dividends on Common Stock at March 31, 1999 under this restriction
was $2,154,682, leaving $244,181,106 unrestricted for the payment of dividends.
In addition, the Amended Articles of Incorporation provides that surplus
otherwise available for the payment of dividends on Common Stock shall be
restricted to the extent that such surplus is included in a calculation required
to permit us to issue, sell or dispose of preferred stock or other stock senior
to the Common Stock. See Art. VI, Terms of Capital Stock, General Provisions
(E)(4).
An order of the Securities and Exchange Commission dated October 12, 1944
under the Public Utility Holding Company Act of 1935 in effect restricts our
payment of cash dividends on Common Stock to 75% of net income available for
distribution to the Common Stock, earned subsequent to December 31, 1943, if the
percentage of Common Stock equity to total capitalization and surplus, as
defined, is less than 25%. At March 31, 1999, the ratio of Common Stock equity
to total capitalization and surplus amounted to approximately 53%.
MODIFICATION OF THE MORTGAGE
The Mortgage may be modified or amended by us with the consent of the
holders of all the outstanding First Mortgage Bonds issued prior to January 15,
1977 and the consent of the holders of 66 2/3% of the principal amount of all
outstanding First Mortgage Bonds. No amendment without the consent of the holder
of a First Mortgage Bond would (1) extend the maturity of, or reduce the rate of
interest on, or otherwise modify the terms of payment of principal or interest
on, or impair the right of such holder to institute suit on or after the due
date for the enforcement of the payment of principal or interest on, that First
Mortgage Bond or (2) deprive the holder of the lien of the Mortgage or permit
the creation of any lien ranking prior to or equal with the lien of the Mortgage
on any of the mortgaged property or (3) reduce the percentage of bondholders
whose consent is required with respect to the matters specified in (1) and (2)
above (Section 4 of the Supplemental Indenture dated as of January 15, 1977).
The Mortgage permits an amendment to the Mortgage which authorizes us,
effective at such time as all First Mortgage Bonds issued on or prior to May 31,
1986 are no longer outstanding, to designate First Mortgage Bonds of any series
(rather than the First Mortgage Bonds of the earliest maturing series that are
redeemable) as the First Mortgage Bonds to be redeemed pursuant to Section 36B
of the Mortgage and to do so at any time (rather than only after three years)
that cash for such purpose is on deposit with the Trustee pursuant to the
provisions of that Section. (Section 5 of the Supplemental Indenture dated as of
June 1, 1986). The Senior Note First Mortgage Bonds will not be redeemable
except in conjunction with the retirement of the Senior Notes that they secure.
REGARDING DEFAULT
Under the Mortgage, the following are defined as "completed defaults":
- - failure to pay principal of any First Mortgage Bond or prior lien bond when
due;
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<PAGE>
- - failure for 90 days to pay interest due upon any First Mortgage Bonds;
- - failure to pay interest due upon any prior lien bonds, continued for the
period of grace, if any (not exceeding 90 days) specified in the instrument
securing such prior lien bond;
- - the institution of voluntary proceedings involving bankruptcy or insolvency
or appointment of a receiver for us or our property or general assignment for
the benefit of creditors or the pendency of similar proceedings for 90 days
if brought by others; and
- - failure for 90 days, after notice from the Trustee, to perform any other
covenant, agreement or condition with respect to the Mortgage (Section 66). A
failure by us to deposit or direct the application of money for the
redemption of First Mortgage Bonds called for redemption also constitutes a
completed default (Section 52).
Upon the occurrence and continuation of a completed default, the Trustee of
the holders of not less than 20% of the First Mortgage Bonds then outstanding
may accelerate the maturity of all First Mortgage Bonds, subject to the right of
the holders of a majority of the First Mortgage Bonds to annul the acceleration
if the default has been cured and no foreclosure sale has occurred (Section 66).
REGARDING THE TRUSTEE
Bankers Trust Company, Trustee under the Mortgage, is a depositary of the
Company.
The Trustee is required to take action at the request of the holders of
First Mortgage Bonds only when requested to do so by the holders of a majority
in principal amount of the First Mortgage Bonds then outstanding. Before
proceeding to enforce the lien of the Mortgage, the Trustee may require that it
be properly indemnified to its satisfaction (Section 93).
RELEASE AND SUBSTITUTION OF PROPERTY
The Mortgage (Section 58) provides that, subject to various limitations,
property may be released from the lien thereof, whether or not sold or otherwise
disposed of by us, upon the basis of cash deposited with the Trustee, purchase
money obligations or First Mortgage Bonds delivered to the Trustee, prior lien
bonds delivered to the Trustee or reduced or assumed, or unfunded property
additions certified to the Trustee.
The Mortgage (Section 60) permits the cash proceeds of released property to
be withdrawn against unfunded property additions certified to the Trustee or
against the deposit of First Mortgage Bonds or the deposit or reduction of prior
lien bonds or to be applied to the purchase or redemption of First Mortgage
Bonds.
EVIDENCE TO BE FURNISHED TO THE TRUSTEE UNDER THE MORTGAGE
Compliance with Mortgage provisions is evidenced by written statements of
our officers or persons selected or paid by us (such as an engineer with respect
to the value of property being certified or released, an accountant with respect
to a net earnings certificate and counsel with respect property titles and
compliance with the Mortgage generally). In certain major matters (as required
by Section 314(d) of the Trust Indenture Act of 1939, as amended) the accountant
or engineer must be independent. We are required to file a treasurer's
certificate with the Trustee on or before May 1 of each year indicating that we
have complied with all the provisions of the Mortgage and are not in default
with respect to any of the covenants contained in the Mortgage (Section 3.06 of
the Supplemental Indenture dated as of July 1, 1948). Various other certificates
and papers are required to be filed annually and upon the happening of various
events.
PLAN OF DISTRIBUTION
We intend to sell the Senior Notes in a public offering through the
underwriters or dealers named on the cover of the applicable Prospectus
Supplement.
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<PAGE>
The applicable Prospectus Supplement will set forth the terms under which
the Senior Notes are offered, including
- - the purchase price and the net proceeds to us from the sale;
- - any underwriting discounts and other items constituting underwriters
compensation;
- - the initial public offering price; and
- - any discounts or concessions allowed, re-allowed or paid to dealers.
We or any underwriters or dealers may change from time to time any initial
public offering price and any discounts or concessions allowed or re-allowed or
paid to dealers.
The Senior Notes will be acquired by the underwriters for their own account
and may be resold in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of the sale. Unless the applicable Prospectus Supplement states
otherwise, the obligations of any underwriter to purchase the Senior Notes will
be subject to certain conditions, and the underwriter will be obligated to
purchase the Senior Notes, except that in certain cases involving a default by
an underwriter, less than all of the Senior Notes may be purchased.
The applicable Prospectus Supplement will state whether we will authorize
underwriters or dealers to solicit offers by certain specified institutions to
purchase Senior Notes at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified future date. These contracts will be subject to the
conditions set forth in the Prospectus Supplement. Additionally, the Prospectus
Supplement will set forth the commission payable for solicitation of those
contracts.
The underwriters may be entitled under agreements entered into with the
Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933.
EXPERTS
The financial statements and schedules incorporated in this prospectus and
elsewhere in the Registration Statement by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, which is incorporated herein by reference, and have
been so incorporated in reliance upon the authority of that firm as experts in
accounting and auditing in giving that report.
LEGAL OPINIONS
Winthrop, Stimson, Putnam & Roberts of New York, New York, our outside
counsel, will issue opinions about the legality of the offered securities for
us. The underwriters will be advised about legal matters relating to any
offering by their own legal counsel, Simpson Thacher & Bartlett of New York, New
York.
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No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
only the Notes offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this prospectus is
current only as of its date.
------------------
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
Summary Information....................................................... S-2
Certain Terms of the Notes................................................ S-2
Legal Matters............................................................. S-6
Underwriting.............................................................. S-7
Prospectus
Where You Can Find More Information....................................... 2
The Company............................................................... 2
Recent Developments....................................................... 2
Prospectus Supplement..................................................... 3
Use of Proceeds........................................................... 3
Certain Consolidated Financial Information................................ 3
Description of Senior Notes............................................... 4
Global Securities......................................................... 18
Description of First Mortgage Bonds....................................... 19
Plan of Distribution...................................................... 23
Experts................................................................... 24
Legal Opinions............................................................ 24
</TABLE>
$80,000,000
SOUTHERN INDIANA GAS
AND
ELECTRIC COMPANY
% Senior Notes due 20
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[LOGO]
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GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
BANC ONE CAPITAL MARKETS, INC.
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