-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BeSOS8sGl0RZtKzIo8vjaGNu215vUpWM6rcOlYcJTRJ3etdwRHckeyEoe0jXyy/h UZeIN3aFsLy9yWQCrBSZVA== 0000950112-94-000209.txt : 19940131 0000950112-94-000209.hdr.sgml : 19940131 ACCESSION NUMBER: 0000950112-94-000209 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE ELECTRIC & GAS CO CENTRAL INDEX KEY: 0000081033 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 221212800 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 33 SEC FILE NUMBER: 033-51309 FILM NUMBER: 94503412 BUSINESS ADDRESS: STREET 1: 80 PARK PLZ STREET 2: PO BOX 570 CITY: NEWARK STATE: NJ ZIP: 07101 BUSINESS PHONE: 2014307000 424B5 1 PSE&G PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED DECEMBER 8, 1993) 600,000 SHARES PUBLIC SERVICE ELECTRIC AND GAS COMPANY 6.75% CUMULATIVE PREFERRED STOCK--$25 PAR ------------------------ The New Preferred Stock--$25 Par may not be redeemed prior to February 1, 1999. Thereafter, the New Preferred Stock--$25 Par may be redeemed at the option of the Company upon not less than 30 days' notice at any time at $25.00 per share, plus accumulated dividends. The ability of corporate holders of the New Preferred Stock--$25 Par to claim a dividends received deduction for Federal income tax purposes with respect to dividends paid on the New Preferred Stock-- $25 Par will be limited as provided in Section 244(a) of the Internal Revenue Code of 1986, as amended. See "Certain Terms of the New Preferred Stock--$25 Par--Federal Income Tax-Dividends Received Deduction." Application will be made to list the New Preferred Stock--$25 Par on the New York Stock Exchange. Listing will be subject to meeting the requirements of such Exchange including those relating to distribution. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC(1) DISCOUNT COMPANY(1)(2) Per Share.................................... $25.00 $.68 $24.32 Total........................................ $15,000,000 $408,000 $14,592,000
(1) Plus accumulated dividends, if any, from February 3, 1994. (2) Before deducting expenses payable by the Company estimated at $50,000. ------------------------ The New Preferred Stock--$25 Par is offered by the Underwriter, subject to prior sale, when, as and if issued by the Company and accepted by the Underwriter and subject to certain other conditions. The Underwriter reserves the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. It is expected that delivery of the New Preferred Stock--$25 Par will be made in New York, New York on or about February 3, 1994. ------------------------ KIDDER, PEABODY & CO. INCORPORATED ------------------------ The date of this Prospectus Supplement is January 27, 1994. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW PREFERRED STOCK--$25 PAR OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------------ Public Service Electric and Gas Company ("Company") is offering with this Prospectus Supplement and accompanying Prospectus 600,000 shares of its 6.75% Cumulative Preferred Stock--$25 Par ("New Preferred Stock--$25 Par"). The Company is also offering 600,000 shares of its 6.92% Cumulative Preferred Stock (Par Value $100 per share). At the same time, The Pollution Control Financing Authority of Salem County (New Jersey) is offering $50,000,000 principal amount of its Pollution Control Revenue Bonds, 1994 Series A (Public Service Electric and Gas Company Project), to be secured and serviced by a like principal amount of the Company's First and Refunding Mortgage Bonds, Pollution Control Series O. Each offering is a separate transaction and is not contingent on any other offering. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company with the Securities and Exchange Commission are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed pursuant to the Securities Exchange Act of 1934 ("1934 Act"). 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993, filed pursuant to the 1934 Act. 3. The Company's Current Reports on Form 8-K dated March 25, 1993, May 27, 1993, June 9, 1993, December 1, 1993 and January 21, 1994, filed pursuant to the 1934 Act. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of the New Preferred Stock--$25 Par offered hereby shall be deemed to be incorporated by reference in this Prospectus Supplement and Prospectus and to be a part hereof from the date of filing of such documents. The Company hereby undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents not specifically incorporated by reference herein. Requests for such copies should be directed to the Director--Investor Relations, Public Service Electric and Gas Company, 80 Park Plaza, T6B, P.O. Box 570, Newark, New Jersey 07101 (telephone (201) 430-6503). S-2 USE OF PROCEEDS The net proceeds from the sale of the New Preferred Stock--$25 Par will be used by the Company to redeem all of the outstanding 150,000 shares of its 8.08% Cumulative Preferred Stock (Par Value $100 per share) called for redemption on March 1, 1994. COVERAGE RATIOS The Company's Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements for each of the years indicated are as follows: YEAR ENDED DECEMBER 31, - ----------------------------------------------------- 1989 1990 1991 1992 1993 - --------- --------- --------- --------- --------- 2.88 2.79 2.86 2.43 2.89
The Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements represent, on a pre-tax basis, the number of times Earnings cover Fixed Charges plus Preferred Stock Dividend Requirements. Earnings consist of net income, to which have been added fixed charges and taxes based on income of the Company and its subsidiaries. Fixed Charges consist of interest charges and an interest factor in rentals. Preferred Stock Dividend Requirements represent the pre-tax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. CERTAIN TERMS OF THE NEW PREFERRED STOCK--$25 PAR The following supplemental information concerning the New Preferred Stock--$25 Par should be read in conjunction with the statements under "Description of the New Preferred Stock" in the accompanying Prospectus. DIVIDEND RIGHTS The holders of the New Preferred Stock--$25 Par are entitled to receive, when and as declared by the Company's board of directors, cash dividends at the annual rate set forth on the cover of this Prospectus Supplement, and no more, cumulative and payable initially for the period from February 3, 1994 through March 31, 1994, and thereafter quarterly with respect to each calendar quarterly period, on or before the last day of each March, June, September and December. No dividends may be paid on stock of the Company except out of its earned surplus. REDEMPTION PROVISIONS All or any of the shares of the New Preferred Stock--$25 Par may be redeemed at the option of the Company upon not less than 30 days' notice at any time upon payment in cash of $25.00 per share, plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not such dividends shall have been earned or declared; provided, however, that prior to February 1, 1999 none of the shares of the New Preferred Stock--$25 Par may be redeemed. OTHER PROVISIONS The holders of preferred stock are not entitled to any pre-emptive or other subscription rights. No sinking fund is provided for the New Preferred Stock--$25 Par. The shares of the New Preferred Stock--$25 Par, when duly issued and paid for in accordance with the Purchase Agreement hereinafter mentioned, will be fully paid and non-assessable. S-3 FEDERAL INCOME TAX--DIVIDENDS RECEIVED DEDUCTION The New Preferred Stock--$25 Par constitutes "preferred stock" and is being issued to redeem the Company's 8.08% Cumulative Preferred Stock (Par Value $100 per share) which also constitutes "preferred stock" and was issued to refund First and Refunding Mortgage Bonds of the Company issued prior to October 1, 1942. Therefore, the following Federal income tax consequences shall apply to an investment in the New Preferred Stock--$25 Par. In the opinion of Ivins, Philips & Barker, Chartered, of Washington, D.C., special tax counsel for the Company, the ability of corporate holders of the New Preferred Stock--$25 Par to claim a dividends received deduction for Federal income tax purposes will be governed by Section 244(a) of the Internal Revenue Code of 1986, as amended ("Code"). Section 244(a) of the Code provides that a corporate recipient shall be allowed a dividends received deduction equal to 70% of the excess of (a) the amount of the dividend received with respect to the New Preferred Stock--$25 Par, over (b) the amount derived by multiplying the amount of such dividend received by a fraction, the numerator of which is 14%, and the denominator of which is the highest rate of corporate income tax specified in Section 11(b) of the Code. PENNSYLVANIA PERSONAL PROPERTY TAX In the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, Pennsylvania, Pennsylvania counsel to the Company, the New Preferred Stock--$25 Par is exempt under Pennsylvania law, as presently in effect, from all personal property taxes in Pennsylvania. ------------------------ Transfer agents for the New Preferred Stock--$25 Par are the transfer clerks at the office of the Company, 80 Park Plaza, P.O. Box 570, Newark, NJ 07101 and First Chicago Trust Company of New York, 30 West Broadway, New York, NY 10007. Registrars for the New Preferred Stock--$25 Par are First Fidelity Bank, National Association, 765 Broad Street, Newark, NJ 07101 and First Chicago Trust Company of New York, 30 West Broadway, New York, NY 10007. UNDERWRITING The Company has agreed to sell to Kidder, Peabody & Co. Incorporated (the "Underwriter"), and the Underwriter has agreed to purchase, all of the shares of New Preferred Stock--$25 Par at $24.32 per share. The Purchase Agreement provides that the obligations of the Underwriter are subject to certain conditions as therein set forth. The Company has been advised by the Underwriter that it proposes initially to offer the New Preferred Stock--$25 Par to the public at the offering price set forth on the cover page of this Prospectus Supplement, and to certain dealers at such price less a concession not in excess of $.60 per share. The Underwriter may allow and such dealers may reallow a discount not in excess of $.25 per share to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. There is presently no trading market for the New Preferred Stock--$25 Par and there is no assurance that a market will develop. Although it is under no obligation to do so, the Underwriter presently intends to act as a market maker for the New Preferred Stock--$25 Par in the secondary trading market and may discontinue market making at any time without notice. The Company has agreed to indemnify the Underwriter against certain civil liabilities, including certain liabilities under the Securities Act of 1933, as amended. S-4 PUBLIC SERVICE ELECTRIC AND GAS COMPANY CUMULATIVE PREFERRED STOCK-$25 PAR --------------------- This Prospectus is to be used by Public Service Electric and Gas Company (the "Company") in connection with its sale from time to time in one or more series of not more than 10,000,000 shares of its Cumulative Preferred Stock-$25 Par. Such new Cumulative Preferred Stock will be offered for sale pursuant to the competitive bidding procedures set forth in the Company's Terms and Conditions Relating to Bids for such new Cumulative Preferred Stock, copies of which are available from the Company. The bids are to specify the dividend rate for the new Cumulative Preferred Stock, the purchase price and the compensation per share to be paid by the Company to the Underwriters. The number of shares of such new Cumulative Preferred Stock to be issued after a bidding therefor is referred to herein as the "New Preferred Stock." Pursuant to said Terms and Conditions Relating to Bids, at least twenty-four hours prior to the time designated for the opening of bids by the Company, the Company will notify prospective bidders or, in the case of a group of bidders, the representative of the group, in writing of (1) the date and time for the receipt of bids, (2) whether bids will be received in writing, by telephone confirmed in writing, or either in writing or by telephone confirmed in writing, (3) the number of shares of New Preferred Stock, (4) the minimum and maximum prices per share which may be specified in the bid as the purchase price for the New Preferred Stock, (5) the terms and conditions upon which the New Preferred Stock may be redeemed, (6) the date from which dividends on the New Preferred Stock will be cumulative and (7) such other provisions as may be necessary or desirable to establish the terms and conditions of the New Preferred Stock and the terms of bidding therefor. Thereafter, the Company may also notify such bidders or representative, orally, confirmed in writing, not less than 30 minutes prior to the time designated for receiving bids, of any reduced number of shares of New Preferred Stock for which the Company may elect to receive bids. In certain cases, the ability of corporate holders of the New Preferred Stock to claim a dividends received deduction for Federal income tax purposes with respect to dividends paid on the New Preferred Stock will be limited as provided in Section 244(a) of the Internal Revenue Code of 1986, as amended. See "Description of the New Preferred Stock--Federal Income Tax-Dividends Received Deduction" The specific designation, purchase price, dividend payments, and redemption or other particular terms of the New Preferred Stock will be set forth in an accompanying Prospectus Supplement. --------------------- In the opinion of Ballard Spahr Andrews & Ingersoll, Pennsylvania Counsel for the Company, the New Preferred Stock is exempt under Pennsylvania law, as presently in effect, from all personal property taxes in Pennsylvania. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- THE DATE OF THIS PROSPECTUS IS DECEMBER 8, 1993. AVAILABLE INFORMATION Public Service Electric and Gas Company (the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. and at its regional offices at 500 West Madison Street, Chicago, Illinois and Seven World Trade Center, New York, New York. Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. Such material can also be inspected at the New York Stock Exchange, Inc. where certain of the Company's securities are listed. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company with the Commission are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed pursuant to the 1934 Act. 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993, filed pursuant to the 1934 Act. 3. The Company's Current Reports on Form 8-K dated March 25, 1993, May 27, 1993, June 9, 1993 and December 1, 1993, filed pursuant to the 1934 Act. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of the New Preferred Stock offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statements contained in a document incorporated or deemed to be incorporated by reference herein shall be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein or in the accompanying Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company hereby undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents not specifically incorporated by reference herein. Requests for such copies should be directed to the Director--Investor Relations, Public Service Electric and Gas Company, 80 Park Plaza, T6B, P.O. Box 570, Newark, New Jersey 07101 (telephone (201) 430-6503). 2 THE COMPANY The Company is an operating public utility company providing electric and gas service in areas of New Jersey in which about 70% of the State's population resides. The Company is the principal subsidiary of Public Service Enterprise Group Incorporated ("Enterprise"), which owns all of the Company's common stock. The Company's service area is a corridor of approximately 2,600 square miles running diagonally across the State of New Jersey from Bergen County in the northeast to an area below Camden in the southwest. The territory is heavily populated and includes New Jersey's six largest cities and many residential communities as well as commercial and industrial areas. The Company's executive offices are located at 80 Park Plaza, P.O. Box 570, Newark, New Jersey 07101-0570 (telephone (201) 430-7000). USE OF PROCEEDS The net proceeds from the sale of the New Preferred Stock will be added to the general funds of the Company and will be used for general corporate purposes, including the refunding and redemption of certain of its higher cost redeemable preferred stock, the payment of construction expenditures and the reimbursement of its treasury of funds expended therefor and/or the payment of its short-term obligations incurred for such purposes. COVERAGE RATIOS The Company's Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements for each of the years indicated is as follows:
YEAR ENDED DECEMBER 31, - ------------------------------------------------------- TWELVE MONTHS ENDED 1988 1989 1990 1991 1992 SEPTEMBER 30, 1993 - ----------- --------- --------- --------- --------- --------------------- 2.87 2.88 2.79 2.86 2.43 2.83
The Ratios of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements represent, on a pre-tax basis, the number of times Earnings cover Fixed Charges plus Preferred Stock Dividend Requirements. Earnings consist of net income, to which have been added fixed charges and taxes based on income of the Company and its subsidiaries. Fixed Charges consist of interest charges and an interest factor in rentals. Preferred Stock Dividend Requirements represent the pre-tax earnings necessary to pay such dividends, computed at the effective tax rates for the applicable periods. 3 DESCRIPTION OF THE NEW PREFERRED STOCK The following statement briefly summarizes certain provisions of Articles IV and V of the Company's Restated Certificate of Incorporation, as amended, and as proposed to be amended to create the New Preferred Stock, copies of which Restated Certificate of Incorporation and amendments thereto (hereinafter called the "Charter"), and the proposed amendment creating the New Preferred Stock, are filed as Exhibits 3a(1) through 3a(5) to the registration statement of which this Prospectus is a part (the "Registration Statement"). For a complete statement of such provisions reference is made to such exhibits, and to the particular Articles and Subdivisions of the Charter, hereinafter referred to, and the following statement is qualified in its entirety by such reference. The Charter authorizes the issuance of two classes of preferred stock (hereinafter collectively called the "preferred stock") consisting of 7,500,000 shares of Preferred Stock having a par value of $100 per share (hereinafter called "Preferred Stock ($100 Par)") and 10,000,000 shares of Preferred Stock-$25 Par. All shares of Preferred Stock ($100 Par) and Preferred Stock-$25 Par which are redeemed by the Company are cancelled and, upon such cancellation, are restored to the status of authorized but unissued shares, not classified as to series. The Preferred Stock ($100 Par) and the Preferred Stock-$25 Par rank equally with respect to dividends and distribution of assets upon liquidation or dissolution of the Company. All series of each class of preferred stock rank equally with all other series of the same class, and all series of the same class must be alike in all respects, except for variations and differences between series as to rate of dividends, redemption provisions, amounts payable upon liquidation or dissolution, any sinking fund and any conversion rights, all as determined by the Company's Board of Directors. If any dividends or the amounts payable on liquidation or dissolution of the Company are not paid in full upon all shares of preferred stock, all shares of preferred stock shall participate ratably, as to the payment of dividends, in proportion to the sums which would be payable thereon if all dividends thereon were paid in full, and, in case of liquidation or dissolution of the Company, in proportion to the sums which would be payable on such liquidation or dissolution if all sums payable thereon to holders of all shares of preferred stock were discharged in full. As of September 30, 1993, there were 5,799,942 shares of Preferred Stock ($100 Par) and no shares of Preferred Stock-$25 Par issued and outstanding. DIVIDEND RIGHTS See the accompanying Prospectus Supplement. So long as any shares of preferred stock are outstanding, no dividend (other than dividends payable in shares of common stock) may be paid on or set apart for the common stock, nor may any shares thereof be purchased, redeemed or otherwise acquired for value by the Company or any subsidiary, unless (i) the Company is not in arrears in respect of any dividends on, or sinking fund for any series of, preferred stock; (ii) full dividends on all outstanding shares of preferred stock for the then current quarterly dividend period have been declared and set apart; and (iii) after giving effect to the payment of such dividend or such purchase, redemption or other acquisition, the capital of the Company represented by its common stock, plus its surplus, exceeds the aggregate of the amounts payable on involuntary liquidation or dissolution of the Company in respect of all shares of preferred stock then outstanding. No dividends may be paid on stock of the Company except out of its earned surplus. 4 VOTING RIGHTS If dividends upon any shares of preferred stock are in arrears in an amount at least equal to the annual dividend thereon, the holders of preferred stock, voting separately as a single class, are entitled to elect a majority of the Company's Board of Directors. Such voting rights of the holders of preferred stock to elect directors shall continue until all accumulated and unpaid dividends thereon have been paid, whereupon all such voting rights shall cease, subject to being again revived from time to time. Stockholders of all classes, including holders of preferred stock when entitled to vote, are entitled to cumulative voting in the election of directors. Without the consent of the holders of two-thirds of the preferred stock then outstanding, voting as a single class, the Company may not issue preferred stock unless (1) net earnings of the Company available for the payment of interest charges, after provisions for all taxes, for any 12 consecutive months out of the 15 preceding months, shall have been at least 1 1/2 times the aggregate of the annual interest requirements on its indebtedness to be outstanding immediately after the issuance of such shares and the annual dividend requirements on all preferred stock to be then outstanding, and (2) the capital of the Company represented by its common stock, plus its surplus, shall exceed the aggregate of the amounts payable on involuntary liquidation or dissolution of the Company in respect of all shares of its preferred stock to be outstanding immediately after the issuance of such additional shares. When voting as a single class the holders of Preferred Stock ($100 Par) are entitled to one vote per share, and the holders of Preferred Stock-$25 Par are entitled to 1/4 vote per share. Without the consent of the holders of two-thirds of each class of outstanding preferred stock, the Company may not adopt any amendment to the Charter which would (1) create or authorize any class of stock ranking prior to or equally with such class as to dividends or distribution of assets on liquidation or dissolution of the Company, or (2) adversely affect the rights or preferences of the holders of any shares of such class, provided, that if any such amendment adversely affects less than all series of such class only the consent of the holders of two-thirds of each series so affected is required, and that no consent of the holders of either class of preferred stock is required for increasing the amount of authorized preferred stock. Without the consent of the holders of a majority of each class of outstanding preferred stock, the Company may not consolidate or merge with or into any other corporation unless none of the rights or preferences of the holders of such class will be adversely affected thereby, and unless the corporation resulting therefrom will have outstanding immediately thereafter no stock, except the preferred stock, ranking prior to or equally with such class as to dividends or distribution of assets on liquidation or dissolution of the Company. Except as otherwise required by law, the holders of the common stock have all other voting rights in the Company. Public Service Enterprise Group Incorporated is the owner of all of the outstanding common stock of the Company. LIQUIDATION RIGHTS On liquidation or dissolution of the Company (not including a consolidation or merger to which the Company is a party), before any payment or distribution is made to the holders of the common stock, the holder of each share of preferred stock of each series is entitled to be paid (1) if such liquidation or dissolution be involuntary, the par value thereof, or, (2) if such liquidation or dissolution be voluntary, 5 the amount established by the Board of Directors in respect of the shares of such series, which in the case of each outstanding series is the optional redemption price then in effect, plus in each case an amount equal to all accumulated and unpaid dividends thereon to the date of such payment, whether or not such dividends shall have been earned or declared, and no more. REDEMPTION AND SINKING FUND PROVISIONS (IF ANY) See the accompanying Prospectus Supplement for details of the redemption and sinking fund provisions (if any) applicable to the New Preferred Stock. OTHER PROVISIONS The holders of preferred stock are not entitled to any pre-emptive or other subscription rights. The shares of the New Preferred Stock, when duly issued and paid for in accordance with the Purchase Agreement hereinafter mentioned, will be fully paid and non-assessable. FEDERAL INCOME TAX--DIVIDENDS RECEIVED DEDUCTION The Company presently has outstanding 150,000 shares of its 8.08% Cumulative Preferred Stock (Par Value $100 per share). This series of preferred stock is what is commonly referred to as "old money" preferred stock since it was issued to refund or replace bonds of the Company issued prior to October 1, 1942. In the opinion of Ivins, Phillips and Barker, Chartered, special tax counsel to the Company, under current Federal income tax law, to the extent that any of the New Preferred Stock is issued to refund or replace "old money" preferred stock, the ability of corporate holders of such New Preferred Stock to claim a dividends received deduction for Federal income tax purposes with respect to dividends relating thereto will be limited as provided in Section 244(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, Section 244(a) of the Code limits the dividends received deduction to which a corporate holder would otherwise be entitled to an amount equal to 70 percent of the excess of (a) the amount of dividend received over (b) the amount derived by multiplying the amount of the dividend received by a fraction, the numerator of which is 14 percent, and the denominator of which is the highest rate of corporate income tax specified in Section 10(b) of the Code. See the accompanying Prospectus Supplement for a discussion of use of proceeds for the New Preferred Stock and for any additional Federal income tax considerations. PENNSYLVANIA PERSONAL PROPERTY TAX In the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA, Pennsylvania counsel to the Company, the New Preferred Stock is exempt under Pennsylvania law, as presently in effect, from all personal property taxes in Pennsylvania. ------------------------ Transfer agents for the New Preferred Stock are the transfer clerks at the office of the Company, 80 Park Plaza, P.O. Box 570, Newark, NJ 07101 and First Chicago Trust Company of New York, 30 West Broadway, New York, NY 10007. Registrars for the New Preferred Stock are First Fidelity Bank, N.A., New Jersey, 765 Broad Street, Newark, NJ 07101 and First Chicago Trust Company of New York, 30 West Broadway, New York, NY 10007. 6 PLAN OF DISTRIBUTION The Company will sell each series of the New Preferred Stock through the competitive bidding procedures set forth in the Company's Terms and Conditions Relating to Bids for the New Preferred Stock ("Terms and Conditions") filed as Exhibit 1a to the Registration Statement. Notice of the bidding for the New Preferred Stock will be provided, in accordance with the Terms and Conditions, to prospective bidders or, in the case of a group of bidders, to the representative of the group, who have notified the Company that they intend to submit a bid and wish to be provided notice of the time and date of bidding. Upon the acceptance of a bid for each series of the New Preferred Stock, a Purchase Agreement, substantially in the form of Exhibit 1b to the Registration Statement, will become effective providing for the issuance and sale of such New Preferred Stock pursuant to a firm commitment underwriting on the terms set forth therein. The purchase price for each series of the New Preferred Stock and the proceeds to the Company from such sale and the terms of any re-offering of such New Preferred Stock, including the name or names of any Underwriters, any underwriting discounts and other terms constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers will be set forth in an accompanying Prospectus Supplement. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The form of Purchase Agreement provides that the consummation of the purchase of each series of the New Preferred Stock will be subject to certain conditions precedent and that the Company will indemnify each Underwriter for certain civil liabilities, including liabilities under the Securities Act of 1933 (the "1933 Act"). LEGAL OPINIONS The legality of the New Preferred Stock will be passed on for the Company by R. Edwin Selover, Esq., Senior Vice President and General Counsel, or James T. Foran, Esq., General Corporate Counsel, of the Company, who may rely on the opinion of Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA, as to matters of Pennsylvania law. Messrs. Selover and Foran are full-time employees of the Company. Brown & Wood, of New York, New York, will pass on the legality of the New Preferred Stock for the Underwriters and may rely on the opinion of Counsel of the Company as to matters of New Jersey law and on the opinion of Ballard Spahr Andrews & Ingersoll as to matters of Pennsylvania law. 7 EXPERTS Ballard Spahr Andrews & Ingersoll, of Philadelphia, PA, have reviewed the statement as to exemption of the New Preferred Stock from personal property taxes in Pennsylvania on the cover page of this Prospectus and under DESCRIPTION OF THE NEW PREFERRED STOCK--Pennsylvania Personal Property Tax. Such statement, as to matters of law and legal conclusions, is made in reliance on the authority of Ballard Spahr Andrews & Ingersoll as experts. Ivins, Phillips and Barker, Chartered, of Washington, D.C. have reviewed the statements as to Federal income tax matters on the cover page of this Prospectus and under DESCRIPTION OF THE NEW PREFERRED STOCK--Federal Income Tax-Dividends Received Deduction. Such statements, as to matters of law and legal conclusions, are made in reliance on the authority of Ivins, Phillips and Barker as experts. The consolidated financial statements, the consolidated financial statement schedules and selected financial data incorporated in this Prospectus by reference to the Company's Annual Report on Form 10-K have been so incorporated in reliance on the report of Deloitte & Touche, independent auditors, given upon the authority of that firm as experts in accounting and auditing. 8 - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ------------------------ TABLE OF CONTENTS PAGE ----------- PROSPECTUS SUPPLEMENT Incorporation of Certain Documents by Reference................................... S-2 Use of Proceeds............................... S-3 Coverage Ratios............................... S-3 Certain Terms of the New Preferred Stock--$25 Par........................................... S-3 Underwriting.................................. S-4 PROSPECTUS Available Information......................... 2 Incorporation of Certain Documents by Reference..................................... 2 The Company................................... 3 Use of Proceeds............................... 3 Coverage Ratios............................... 3 Description of the New Preferred Stock....................................... 4 Plan of Distribution.......................... 7 Legal Opinions................................ 7 Experts....................................... 8 LOGO PSE&G PUBLIC SERVICE ELECTRIC AND GAS COMPANY 600,000 SHARES 6.75% CUMULATIVE PREFERRED STOCK--$25 PAR ------------------------ PROSPECTUS SUPPLEMENT ------------------------ KIDDER, PEABODY & CO. INCORPORATED JANUARY 27, 1994 - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----