-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gq4TL++T0DUb+9P/6/1reuPWZMqtyskYaOl8W3j8+Km+m1lEnJmnSAmj9TIxXJuz +tMVAmAlJL/81WC6CitXUQ== 0000928385-96-000765.txt : 19960620 0000928385-96-000765.hdr.sgml : 19960620 ACCESSION NUMBER: 0000928385-96-000765 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960619 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALTIMORE GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000009466 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 520280210 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-50331 FILM NUMBER: 96582918 BUSINESS ADDRESS: STREET 1: GAS & ELECTRIC BLDG STREET 2: CHARLES CTR CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4107835920 424B2 1 DEFINITIVE MATERIALS PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(2) (TO PROSPECTUS DATED JUNE 14, 1996) Registration No. 33-50331 $125,000,000 BALTIMORE GAS AND ELECTRIC COMPANY REMARKETED FLOATING RATE SERIES DUE SEPTEMBER 1, 2006 FIRST REFUNDING MORTGAGE BONDS --------------- Interest on the New Bonds offered hereby (the "Remarketed New Bonds") shall accrue from, and begin on, June 24, 1996, and shall initially be payable quarterly in arrears beginning September 3, 1996 and on December 1, 1996, March 1, 1997, June 1, 1997 and September 1, 1997. The initial Interest Period on the Remarketed New Bonds is the period from and including June 24, 1996, to but excluding September 1, 1997. The interest rate on each Remarketed New Bond during the initial Interest Period will be: (i) a rate for the period from and including June 24, 1996 to but excluding September 3, 1996, equal to LIBOR determined on June 20, 1996 in accordance with the following formula: a + ((x/y)*(b-a)) where: a = LIBOR with an Index Maturity of 2 months b = LIBOR with an Index Maturity of 3 months x = the actual number of days from and including June 24, 1996 to but excluding September 3, 1996 minus 60 days y = thirty days and (ii) from September 3, 1996 to but excluding September 1, 1997, reset quarterly on September 3, 1996, December 1, 1996, March 1, 1997 and June 1, 1997 equal to LIBOR with an Index Maturity of 3 months. Thereafter, the interest rate will equal the Base Rate plus or minus the applicable Spread determined as described below. Effective September 1 of each year beginning 1997 (each an "Annual Remarketing Date"), the remarketing agent will reset for the following Interest Period the Interest Reset Dates (which will be daily, weekly, monthly, quarterly, semi-annually, or annually), the Base Rate (which will be LIBOR or the Federal Funds Rate), the Spread, the Index Maturity, the Interest Determination Dates, and the interest payment dates, all in accordance with the Remarketing Procedures described under "CERTAIN TERMS OF REMARKETED NEW BONDS--Remarketing Procedures" in this Prospectus Supplement. Words beginning with a capital letter and not defined are defined later in this Prospectus Supplement or in the accompanying Prospectus dated June 14, 1996. The Remarketed New Bonds will be redeemable at the option of Baltimore Gas and Electric Company (the "Company") at 100% of the principal amount plus accrued interest, if any, to the date of redemption on any Annual Remarketing Date. The recordholder of each Remarketed New Bond will also have the right to tender the Remarketed New Bonds during each annual Tender Period to the remarketing agent at 100% of the principal amount on any Annual Remarketing Date. During the Remarketing Period, the remarketing agent will use its best efforts to remarket the tendered Remarketed New Bonds at 100% of the principal amount. The remarketing agent will also have the right but not the obligation to purchase tendered Remarketed New Bonds at 100% of the principal amount. The Company is required unconditionally to repurchase and retire any tendered Remarketed New Bonds not remarketed or purchased by the remarketing agent on the Annual Remarketing Date at 100% of the principal amount plus accrued interest, if any. The Company's First Refunding Mortgage Bonds are entitled to the benefit of a 1% annual sinking fund which may be satisfied by bonds of any series including the Remarketed New Bonds. The Remarketed New Bonds may not be redeemed for the sinking fund prior to August 1, 1999. See "CERTAIN TERMS OF REMARKETED NEW BONDS" in this Prospectus Supplement and "DESCRIPTION OF NEW BONDS" in the accompanying Prospectus dated June 14, 1996 for other important information about the Remarketed New Bonds. The Remarketed New Bonds initially will be represented by a global bond ("Book-Entry Bonds") registered in the name of a nominee of The Depository Trust Company, as Depositary, but may, under limited circumstances, be exchangeable for certificates issued in definitive form ("Definitive Bonds"). Beneficial interests in Book-Entry Bonds will trade in the Depositary's Same- Day Funds Settlement System, and secondary market trading activity in such interests will settle in same-day funds. Beneficial interests in Book-Entry Bonds will be shown on, and transfers thereof will be effected through, records maintained by the Depositary (with respect to participants' interests) and its participants. See "DESCRIPTION OF NEW BONDS--Book-Entry System" in the accompanying Prospectus dated June 14, 1996. --------------- 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 UNDERWRITER'S PROCEEDS TO PUBLIC(1) DISCOUNT(2)(3) COMPANY(4) - -------------------------------------------------------------------------------- Per Bond.............................. 100.00% 0.10% 99.90% - -------------------------------------------------------------------------------- Total................................. $125,000,000 $125,000 $124,875,000
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) Plus accrued interest, if any, from June 24, 1996 to date of delivery. (2) The Underwriter will also be the remarketing agent, and the Company has agreed to make certain annual payments to the remarketing agent based upon the outstanding principal amount of the Remarketed New Bonds on any Annual Remarketing Date. See "UNDERWRITING" in this Prospectus Supplement. (3) The Company has agreed to indemnify the Underwriter and the remarketing agent against, and to provide contribution regarding, certain liabilities, including liabilities under the Securities Act of 1933, as amended. (4) Before deduction of expenses payable by the Company, estimated at $400,000. The Remarketed New Bonds are subject to receipt and acceptance by Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter"), to prior sale and to the Underwriter's right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that delivery of the global bond will be through the facilities of The Depository Trust Company made on or about June 24, 1996. --------------- MERRILL LYNCH & CO. --------------- The date of this Prospectus Supplement is June 17, 1996. IN CONNECTION WITH THIS OFFERING THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES 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. ---------------- CERTAIN TERMS OF REMARKETED NEW BONDS The Remarketed New Bonds are to be issued under a Supplemental Indenture dated as of June 15, 1996. MATURITY AND INTEREST RATE The Remarketed New Bonds are to mature on September 1, 2006 (the "Maturity Date"). Interest on the Remarketed New Bonds shall accrue from, and begin on, June 24, 1996 (the "Issue Date"), and shall initially be payable quarterly in arrears beginning September 3, 1996 and on December 1, 1996, March 1, 1997, June 1, 1997 and September 1, 1997. The initial Interest Period on the Remarketed New Bonds is the period from and including June 24, 1996, to but excluding September 1, 1997. The interest rate on each Remarketed New Bond during the initial Interest Period will be: (i) a rate for the period from and including June 24, 1996 to but excluding September 3, 1996, equal to LIBOR determined on June 20, 1996 in accordance with the following formula: a + ((x/y) * (b-a)) where: a = LIBOR with an Index Maturity of 2 months b = LIBOR with an Index Maturity of 3 months x = the actual number of days from and including June 24, 1996 to but excluding September 3, 1996 minus 60 days y = thirty days and (ii) from September 3, 1996 to but excluding September 1, 1997, reset quarterly on September 3, 1996, December 1, 1996, March 1, 1997 and June 1, 1997 equal to LIBOR with an Index Maturity of 3 months. Thereafter, effective September 1 of each year beginning in 1997, the remarketing agent will reset for the following Interest Period the Interest Reset Dates (which will be daily, weekly, monthly, quarterly, semi-annually, or annually), the Base Rate (which will be LIBOR or the Federal Funds Rate), the Spread, the Index Maturity, the Interest Determination Dates and the interest payment dates, all in accordance with the Remarketing Procedures described below. For each global bond representing Book-Entry Bonds, payment of interest will be made on each interest payment date and payment of principal and interest will be made on any redemption date or on the Maturity Date by the Trustee as paying agent by wire transfer of immediately available funds to a separate account of the Depositary or its nominee at the Federal Reserve Bank of New York, provided that, in the case of payments made on the Maturity Date of such global bond, the global bond is presented to the Trustee in time for the Trustee to make such payments in accordance with its normal procedures. Payments to Beneficial Owners of Book-Entry Bonds will be made through the Depositary and its participants. For further information on Book-Entry Bonds and a description of the payment of principal and interest on Definitive Bonds, see "DESCRIPTION OF NEW BONDS--Book-Entry System" in the accompanying Prospectus dated June 14, 1996. Each Remarketed New Bond will accrue interest from the Issue Date until the principal thereof is paid or duly made available for payment. Interest payments on Remarketed New Bonds will equal the amount of interest accrued from and including the immediately preceding interest payment date in respect of which interest has been paid or duly made available for payment (from and including the Issue Date, if no interest has been paid or duly made available for payment) to but excluding the applicable interest payment date or the Maturity Date, as the case may be. Interest will be payable to the persons in whose names the Remarketed New Bonds are S-2 registered at the close of business on the fifteenth day of the calendar month next preceding such interest payment date. After the initial Interest Period, each Remarketed New Bond shall accrue interest at the rate determined by reference to the applicable Base Rate plus or minus the applicable Spread. The "Spread" is the number of basis points to be added to or subtracted from the related Base Rate applicable to such Remarketed New Bond. However, in no event will the interest rate on the Remarketed New Bonds be higher than the maximum rate permitted by applicable law. Bankers Trust Company has been appointed the "Calculation Agent," and will calculate the interest rate based on the formula set forth in the Remarketed New Bonds, as described later under "Calculation of Base Rate" in this Prospectus Supplement. Upon the request of the holder of any Remarketed New Bond, the Calculation Agent will provide the interest rate then in effect, and if different, the interest rate which will become effective as a result of a determination made on the most recent Interest Determination Date with respect to such Remarketed New Bond. Interest on Remarketed New Bonds will be determined by reference to the applicable Base Rate, which will, as described below, be either (i) the Federal Funds Rate, or (ii) LIBOR. As specified in the Remarketing Procedures described herein, the remarketing agent will specify whether the rate of interest for a subsequent Interest Period will be reset daily, weekly, monthly, quarterly, semi-annually or annually. If any Interest Reset Date for any Remarketed New Bond would otherwise be a day that is not a business day, such Interest Reset Date will be postponed to the next succeeding business day, except that in the case of a Remarketed New Bond as to which LIBOR is the Base Rate and such business day falls in the next succeeding calendar month, such Interest Reset Date will be the immediately preceding business day. The interest rate applicable to each Interest Reset Date will be the rate determined as of the applicable Interest Determination Date. Unless otherwise specified by the remarketing agent during the Base Rate and Spread Adjustment Period, the "Interest Determination Date" with respect to the Federal Funds Rate will be the business day immediately preceding the applicable Interest Reset Date; and the "Interest Determination Date" with respect to LIBOR will be the second London business day immediately preceding the applicable Interest Reset Date. The interest payment dates for the applicable Interest Period will be specified in accordance with the Remarketing Procedures. If an Annual Remarketing Date, or any interest payment date other than the Maturity Date, for any Remarketed New Bond would otherwise be a day that is not a business day, such Annual Remarketing Date or interest payment date will be postponed to the next succeeding business day, except that in the case of a Remarketed New Bond as to which LIBOR is an applicable Base Rate and such business day falls in the next succeeding calendar month, such interest payment date will be the immediately preceding business day. If any redemption date or the Maturity Date of a Remarketed New Bond falls on a day that is not a business day, the required payment of principal and interest will be made on the next succeeding business day as if made on the date such payment was due, and no interest will accrue on such payment for the period from and after any redemption date or the Maturity Date to the date of such payment on the next succeeding business day. As used herein, "Interest Period" means the period from the Issue Date, in the case of the initial Interest Period, to but excluding the next succeeding Annual Remarketing Date and thereafter, from each Annual Remarketing Date to but excluding the next succeeding Annual Remarketing Date. "Interest Reset Dates" means each date on which the interest rate is reset, which may be daily, weekly, monthly, quarterly, semi-annually or annually. "Business day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in The City of New York or the City of Baltimore; provided, however, that, with respect to Remarketed New Bonds as to which LIBOR is the applicable interest rate, such day is also a London business day. "London business day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. The "Index Maturity" means the period to maturity of the instrument or obligation with respect to which the related Base Rate will be calculated. S-3 REMARKETING PROCEDURES The Remarketed New Bonds will be remarketed annually until maturity or redemption on September 1 of each year beginning in 1997 in accordance with the following remarketing procedures (the "Remarketing Procedures"). The Remarketing Procedures may be amended from time to time in accordance with the terms of the remarketing agreement filed as an exhibit to Registration Statement No. 33-50331 of which this Prospectus Supplement is a part. Each remarketing will take place over a 45-day period consisting of a Base Rate and Spread Adjustment Period (which means the period not earlier than 45 nor later than 30 calendar days prior to each Annual Remarketing Date), Tender Period (which means the period not earlier than 30 nor later than 15 calendar days prior to each Annual Remarketing Date) and a Remarketing Period (which means the period not earlier than 15 nor later than 10 calendar days prior to each Annual Remarketing Date). Base Rate and Spread Adjustment Period. During the Base Rate and Spread Adjustment Period, the remarketing agent will, after canvassing the market and considering prevailing market conditions, establish the Base Rate and Spread (the "Applicable Interest Rate") and the reset and payment frequency for the subsequent Interest Period. By 10:00 a.m. on the 30th calendar day prior to the Annual Remarketing Date (or if such day is not a business day, the business day immediately preceding such day), the remarketing agent shall deliver to the Trustee and the Company an officer's certificate establishing the Applicable Interest Rate, the interest payment dates, the Interest Reset Dates, the Index Maturity and the Interest Determination Dates for such subsequent Interest Period. The Trustee shall provide such information to the Depositary, as the recordholder of the Remarketed New Bonds. If the remarketing agent fails to deliver timely such officer's certificate, the Applicable Interest Rate in effect for the subsequent Interest Period will be that in effect during the immediately preceding Interest Period. Tender Period. During the Tender Period, the recordholder and any Beneficial Owner of such Remarketed New Bonds must notify the remarketing agent of its election either (i) to tender some or all of the principal amount thereof or (ii) to hold some or all of the principal amount of such Remarketed New Bonds for the next Interest Period, provided that such election may be made only with respect to a principal amount of $1,000 or a greater integral multiple thereof. Recordholders who fail to make such an election shall be deemed to have elected to continue to hold all of such untendered principal amount for the succeeding Interest Period and the interest rate thereon will automatically be reset to the new Applicable Interest Rate. ANY NOTICE GIVEN TO THE REMARKETING AGENT TO TENDER OR HOLD REMARKETED NEW BONDS IS IRREVOCABLE. Notwithstanding the preceding paragraph, only the Depositary or its nominee may exercise the tender option in respect of Book-Entry Bonds. Accordingly, Beneficial Owners of Book-Entry Bonds that desire to have all or any portion of their interest in Book-Entry Bonds tendered must instruct the Direct Participant or Indirect Participant through which they own their interest to direct the Depositary to exercise the tender option on their behalf. In order to ensure that such Book-Entry Bonds are tendered within the applicable period, the Beneficial Owner must instruct the Participant through which it owns its interest before such Participant's deadline for accepting instructions for that Tender Period. Different firms may have different deadlines for accepting instructions from their customers. Accordingly, Beneficial Owners should consult the Participants through which they own their interest for the respective deadlines for such Participants. All instructions given to Participants from Beneficial Owners of Book-Entry Bonds relating to the option to tender Remarketed New Bonds are irrevocable. Remarketing Period. During the Remarketing Period, the remarketing agent will attempt, on a best efforts basis, to remarket the tendered Remarketed New Bonds at a price of 100% of the aggregate principal amount so tendered. There is no assurance that the remarketing agent will be able to remarket the entire principal amount of Remarketed New Bonds tendered in a remarketing. The remarketing agent also shall have the option but not the obligation to purchase any tendered Remarketed New Bonds at such price. In the event that the remarketing agent is unable to remarket some or all of the tendered Remarketed New Bonds and opts not to purchase the tendered Remarketed New Bonds, the Company is obligated to unconditionally repurchase and retire on the Annual Remarketing Date the remaining unsold tendered Remarketed New Bonds at a price of 100% of the principal amount, plus accrued interest, if any, to the applicable Annual Remarketing Date. S-4 REDEMPTION PROVISIONS Upon at least thirty days' notice and in the manner set forth in the Mortgage, the Remarketed New Bonds will be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount thereof together with interest accrued to the date of redemption on any Annual Remarketing Date. Also, the Remarketed New Bonds are subject to redemption by operation of the Sinking Fund under the Mortgage beginning on August 1, 1999 at 100% of principal amount, together with accrued interest to the date of redemption. REMARKETING AGENT The remarketing agent will be Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Company and the remarketing agent will enter into a remarketing agreement, the form of which is filed as an exhibit to Registration Statement No. 33-50331. Performance by the remarketing agent is subject to certain conditions set forth in the remarketing agreement. Remarketed New Bonds tendered in a remarketing may also be subject to purchase by the remarketing agent, although the remarketing agent is not obligated to purchase any Remarketed New Bonds. The Company has agreed to indemnify the remarketing agent against certain liabilities including liabilities under the Securities Act of 1933, as amended, and to contribute to payments that the remarketing agent may be required to make in respect thereof. Questions and inquiries relating to the Remarketed New Bonds can be directed to the remarketing agent at Merrill Lynch, Pierce, Fenner & Smith Incorporated, 250 Vesey Street, 7th Floor, New York, New York 10281, Attention: Floating Rate Note Desk, Telephone: (212) 449-4545. CALCULATION OF BASE RATE Each Base Rate shall be calculated in accordance with the following provisions: Federal Funds Rate. "Federal Funds Rate" means, with respect to any Interest Determination Date relating to a Remarketed New Bond for which the interest rate is determined with reference to the Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the rate on such date for United States dollar federal funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not published by 3:00 p.m., New York time, on the related calculation date, the rate on such Federal Funds Rate Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is not published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the related calculation date, then the Federal Funds Rate on such Federal Funds Rate Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight United States dollar federal funds arranged by three leading brokers of federal funds transactions in The City of New York (which may include the Calculation Agent or its affiliates) selected by the Calculation Agent prior to 9:00 a.m., New York City time, on such Federal Funds Rate Interest Determination Date; provided, however, that if the brokers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Rate determined as of such Federal Funds Rate Interest Determination Date will be the Federal Funds Rate in effect on such Federal Funds Rate Interest Determination Date. LIBOR. "LIBOR" means the rate determined in accordance with the following provisions: (i) With respect to any Interest Determination Date relating to a Remarketed New Bond for which the interest rate is determined with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be the rate for deposits in U.S. dollars having the applicable Index Maturity, commencing on such Interest Reset Date, that appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If no such rate appears, as applicable, LIBOR on such LIBOR Interest Determination Date will be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which no rate appears on Telerate Page 3750 as specified in clause (i) above, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in U.S. dollars for the period of the applicable Index S-5 Maturity, commencing on the applicable Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such market at such time. If at least two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in The City of New York, on such LIBOR Interest Determination Date by three major banks selected by the Calculation Agent for loans in U.S. dollars to leading European banks, having the applicable Index Maturity and in a principal amount that is representative for a single transaction in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Telerate Page 3750" means the display on the Dow Jones Telerate Service designated as Page 3750 (or any successor service) for the purpose of displaying the London interbank rates of major banks for U.S. dollar deposits. The interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. All percentages resulting from any calculation on Remarketed New Bonds will be rounded to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in or resulting from such calculation on Remarketed New Bonds will be rounded to the nearest cent. With respect to each Remarketed New Bond, accrued interest is calculated by multiplying its principal amount by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day in the applicable interest payment period. The interest factor for each such day will be computed by dividing the interest rate applicable to such day by 360. UNDERWRITING Subject to the terms and conditions of the Purchase Agreement between the Company and the Underwriter, the Company has agreed to sell, and the Underwriter has agreed to purchase all of the Remarketed New Bonds. The Purchase Agreement provides that the obligations of the Underwriter are subject to certain conditions. The nature of the Underwriter's obligations is such that it is committed to purchase all of the Remarketed New Bonds if any are purchased. The Underwriter proposes to offer the Remarketed New Bonds directly to the public at the public 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 .075% of the principal amount. Such dealers may reallow a concession not in excess of .05% of such principal amount to certain other dealers. After the initial public offering, the offering price and other selling terms may be changed. The Company has agreed to pay the remarketing agent an annual fee in accordance with the terms of the remarketing agreement. There is currently no trading market for the Remarketed New Bonds. The Underwriter may, but is not obligated to, make a market in the Remarketed New Bonds and no assurance is given that a market for the Remarketed New Bonds will develop. S-6 The Company has agreed to indemnify the Underwriter against certain liabilities including liabilities under the Securities Act of 1933, as amended, and to contribute to payments that the Underwriter may be required to make in respect thereof. An affiliate of the Underwriter, Merrill Lynch Money Markets Inc., acts as the Company's commercial paper dealer. S-7 [THIS PAGE INTENTIONALLY LEFT BLANK] - ------------------------------------------------------------------------------- P R O S P E C T U S - ------------------------------------------------------------------------------- BALTIMORE GAS AND ELECTRIC COMPANY $125,000,000 FIRST REFUNDING MORTGAGE BONDS Baltimore Gas and Electric Company (the "Company") intends from time to time to sell up to $125,000,000 aggregate principal amount of its First Refunding Mortgage Bonds (the "New Bonds") on terms to be determined at the time of offering. The specific designation, aggregate principal amount, maturity, rate (or method of calculation) and times of payment of interest, redemption, tender and sinking fund terms, remarketing provisions, other specific terms and any listing on a securities exchange of each series of the New Bonds in respect of which this Prospectus is being delivered will be set forth in a Prospectus Supplement (the "Prospectus Supplement"), together with the terms of offering of the New Bonds. The securities will be offered as set forth under "PLAN OF DISTRIBUTION." See "DESCRIPTION OF NEW BONDS" for other important information about the New Bonds. ---------------- 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 June 14, 1996. AVAILABLE INFORMATION 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"). Reports, proxy and information statements, and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at certain of its Regional Offices at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511, and at7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Certain securities of the Company are listed on the New York, Chicago, Pacific and Philadelphia Stock Exchanges. Reports, proxy and information statements and other information concerning the Company can be inspected at such exchanges. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, filed by the Company with the Commission under the 1934 Act (File No. 1-1910), are incorporated in this Prospectus by reference as of their respective dates of filing and shall be deemed to be a part hereof: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "1995 Form 10-K"). (b) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. (c) The Company's Current Report on Form 8-K filed February 6, 1996. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Prospectus and prior to the termination of the offering of the securities 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. THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THE PROSPECTUS INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO CHARLES W. SHIVERY, VICE PRESIDENT, BALTIMORE GAS AND ELECTRIC COMPANY, P.O. BOX 1475, BALTIMORE, MARYLAND 21203, (410) 234-5511. 2 THE COMPANY The Company, incorporated under the law of the State of Maryland on June 20, 1906, is a public utility primarily engaged in the business of producing, purchasing and selling electricity, and purchasing, transporting and selling natural gas within the State of Maryland. The Company is qualified to do business in the Commonwealth of Pennsylvania where it is participating in the ownership and operation of two electric generating plants and the District of Columbia where its federal affairs office is located. The Company also owns two-thirds of the outstanding capital stock, including one-half of the voting securities, of Safe Harbor Water Power Corporation, a hydroelectric producer on the Susquehanna River at Safe Harbor, Pennsylvania. The Company is engaged in diversified businesses primarily through four wholly owned subsidiaries, Constellation Holdings, Inc. and its subsidiaries (collectively, the Constellation Companies), BGE Home Products & Services, Inc. (HP&S) and its subsidiary Maryland Environmental Systems, Inc. (MES), BGE Energy Projects & Services, Inc. (EP&S), and BNG, Inc. The Constellation Companies' businesses are concentrated in three major areas--power generation projects, financial investments, and real estate projects (including senior living facilities). HP&S and MES are engaged in the sales and service of gas and electric appliances, kitchen remodeling, the installation and servicing of heating and air conditioning systems, and plumbing. EP&S provides a broad range of customized energy services to major customers which include electrical system improvements, lighting and mechanical engineering services, campus and multi-building systems, brokering and associated financial contracts and district chilled water systems. BNG, Inc. engages in natural gas brokering. The executive offices of the Company are located in the Gas and Electric Building, 39 N. Lexington Street, Baltimore, Maryland 21201; its mailing address is P. O. Box 1475, Baltimore, Maryland 21203; and its telephone number is (410) 234-5000. The Company and Potomac Electric Power Company ("Pepco") on September 22, 1995, signed an Agreement and Plan of Merger that provides for the merger of both companies into Constellation Energy Corporation (a new company created for use in the merger upon satisfaction of various conditions and the receipt of required regulatory approvals. For details about the pending merger, see the Company's Report on Form 10-Q for the quarter ended March 31, 1996, and 1995 Form 10-K (see "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE") as well as the Registration Statement on Form S-4 (Registration No. 33-64799) which is filed as an exhibit to this registration statement by incorporation by reference. USE OF PROCEEDS The net proceeds from the sale of the New Bonds offered hereby will be used to meet capital requirements or for other general corporate purposes relating to the Company's utility business which may include the repayment of commercial paper borrowings incurred primarily to finance, on a temporary basis, the Company's utility construction, other capital expenditures and operations. The Company's average commercial paper balance and interest rate for the twelve months ended March 31, 1996 were $200,912,000 and 5.84%, respectively. To the extent that the net proceeds from the sale of the New Bonds are not immediately so used, they will be temporarily invested in short- term, interest-bearing obligations. For further information with respect to the Company's utility construction, other capital expenditures and operations, reference is made to the information incorporated by reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," and the Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Reports on Forms 10-K and 10-Q that are incorporated by reference. 3 RATIO OF EARNINGS TO FIXED CHARGES The Ratio of Earnings to Fixed Charges for each of the periods indicated is as follows:
TWELVE MONTHS ENDED ---------------------------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, --------- --------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- 3.47 3.21 3.14 3.00 2.65 2.27
The Ratio of Earnings to Fixed Charges for future periods will be included in the Company's Reports on Forms 10-Q and 10-K. Such Reports are incorporated by reference into this Prospectus at the time they are filed. DESCRIPTION OF NEW BONDS GENERAL The New Bonds will be issued in one or more series under and will be secured by an indenture between the Company and Bankers Trust Company, Trustee (the "Trustee"), dated February 1, 1919, as subsequently supplemented, amended and restated and as it is to be supplemented by a supplemental indenture for each series of New Bonds (such indenture, as so supplemented, amended and restated, the "Mortgage"). This Prospectus includes brief outlines of certain provisions contained in the Mortgage. Such outlines do not purport to be complete and are qualified in their entirety by express reference to the Mortgage, which is incorporated by reference as an Exhibit to the Registration Statement. The Mortgage may be inspected at the offices of the Corporate Trust and Agency Group of Bankers Trust Company, Four Albany Street, New York, New York 10015. Each series of New Bonds will have a stated principal amount, maturity date, interest rate(s) (or the method of determining such rate(s)), and other specific terms as may be determined at the time of sale, all of which will be set forth in the Prospectus Supplement relating to such series. For each series of New Bonds issued in the form of variable rate remarketed new bonds (the "Remarketed New Bonds"), there will also be other provisions, including interest rate resets, remarketing provisions, the Company's annual right to redeem the Remarketed New Bonds, and the holders' annual right to tender the Remarketed New Bonds (in which case the remarketing agent will use its best efforts to remarket the tendered Remarketed New Bonds and may at its option purchase the tendered Remarketed New Bonds; any tendered Remarketed New Bonds not remarketed or purchased by the remarketing agent must be repurchased and retired by the Company); these other provisions are described generally in the section of this Prospectus titled "Additional Provisions Applicable to Remarketed New Bonds" and a specific description will be set forth in the Prospectus Supplement relating to such series. New Bonds may be issued, as indicated in the applicable Prospectus Supplement, in definitive form ("Definitive Bonds") or may be represented by a permanent global Bond or Bonds ("Book-Entry Bonds") registered in the name of a depositary or its nominee (the "Depositary"). See "Book-Entry System" below. Interest, payable at the times and, at the rate(s) (or the method of determining such rate(s)) set forth in such Supplement (subject to certain exceptions provided in the Mortgage) will be paid to the persons in whose names the Definitive Bonds are registered at the close of business on the record date set forth therein and, at the option of the Company, may be paid by checks mailed to such persons at their registered addresses. The Definitive Bonds will be issued as registered bonds in denominations of $1,000 and multiples thereof, and will be exchangeable for other Definitive Bonds of the same series in equal aggregate principal amounts without charge to the holders except for any applicable tax or governmental charge. The Mortgage does not contain any covenant or other provision that specifically is intended to afford holders of the New Bonds special protection in the event of a highly leveraged transaction. 4 BOOK-ENTRY SYSTEM The Depository Trust Company The Depository Trust Company, New York, New York ("DTC"), will act as securities depositary for the Book-Entry Bonds. The Book-Entry Bonds will be issued as a fully-registered security in the name of Cede & Co., DTC's partnership nominee. One fully-registered global certificate of the Book-Entry Bonds will be issued in principal amount equal to the aggregate principal amount for each series of the Book-Entry Bonds of like tenor and having the same date of issue and maturity, and will be deposited with DTC. 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, as amended. DTC holds securities that its participants (the "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, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). 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 others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Ownership of Bonds Purchases of the Book-Entry Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Book-Entry Bonds on DTC's records. The ownership interest of each actual purchaser of each Book-Entry Bond ("Beneficial Owner") is in turn to be recorded on the Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Book-Entry Bonds 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 Book-Entry Bonds, except in the event that the use of the system for the Book-Entry Bonds is discontinued under the circumstances described below under "Discontinuance of Book-Entry Only System." To facilitate subsequent transfers, all Book-Entry Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Book-Entry Bonds 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 Book-Entry Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Book-Entry Bonds 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. 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 any statutory or regulatory requirements as may be in effect form time to time. Neither DTC nor Cede & Co. will consent or vote with respect to securities. Under its usual procedures, DTC mails an omnibus proxy to the Company 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 securities are credited on the record date (identified in a listing attached to the omnibus proxy). 5 So long as a nominee of DTC is the registered owner of the Book-Entry Bonds, references herein to the Bondholders or the holders or owners of the Book- Entry Bonds shall mean DTC and shall not mean the Beneficial Owners of the Book-Entry Bonds. The Company and the Trustee will recognize DTC or its nominee as the holder of all of the Book-Entry Bonds for all purposes, including the payment of the principal or Redemption Price of and interest on the Book-Entry Bonds, as well as the giving of notices and any consent or direction required or permitted to be given to or on behalf of the Bondholders under the Indenture. Neither the Company nor the Trustee will have any responsibility or obligation to Participants or Beneficial Owners with respect to payments or notices to Participants or Beneficial Owners. Payments on and Redemption of Bonds So long as New Bonds are held by DTC under a book-entry system, principal and interest payments on the Book-Entry Bonds will be made to DTC. DTC's practice is to credit Direct Participant's accounts on the date on which such principal or interest is payable in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such 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 such Participant and not of DTC, the Trustee, or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Trustee, 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 Participants. So long as New Bonds are held by DTC under a book-entry system, the Trustee will send any notice of redemption with respect to the Book-Entry Bonds only to Cede & Co. Any failure of DTC to advise any Direct Participant, or of any Direct Participant to notify any Indirect Participant or any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the proceedings for the redemption of the Book-Entry Bonds. If fewer than all of the Book-Entry Bonds are selected for redemption, DTC's practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed. Any such selection of Direct Participants to which any such partial redemption will be credited will not be governed by the Mortgage and will not be made by the Company or the Trustee. The Company and the Trustee cannot give any assurances that DTC or the Participants will distribute payments of the principal or Redemption Price of and interest on the Book-Entry Bonds paid to DTC or its nominee, as the registered owner of the Book-Entry Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in the manner described in this Prospectus. DTC may charge the Participants a sum sufficient to cover any tax, fee or other governmental charge that may be imposed for every transfer and exchange of a beneficial interest in the Book-Entry Bonds, and the Participants may seek reimbursements therefor from the Beneficial Owners. Discontinuance of Book-Entry Only System If DTC is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within 90 days, the Company will issue Definitive Bonds in exchange for the Book-Entry Bonds represented by such fully-registered global certificate. In addition, the Company may at any time and in its sole discretion determine not to use DTC's book-entry system, and, in such event, will issue Definitive Bonds in exchange for the Book-Entry Bonds represented by such fully-registered global certificate. OPTIONAL REDEMPTION PROVISIONS The Prospectus Supplement for each series of New Bonds will indicate if such series is subject to redemption at the option of the Company prior to maturity. If so, the Prospectus Supplement will include the terms of such redemption, which will be made upon thirty days' notice and in the manner provided in the Mortgage. Any series of New Bonds issued as Remarketed New Bonds will be redeemable annually at the option 6 of the Company at 100% of principal plus accrued interest, and the holder will have an annual right to tender the Remarketed New Bonds at such price, all as described later in the Prospectus under the heading "Additional Provisions Applicable to Remarketed New Bonds--Annual Remarketing Date, Redemption and Tender Provisions." The provisions of this paragraph do not apply to redemptions pursuant to operation of the sinking fund described below. (For applicable provisions of the Mortgage, see Article X, Section 2, and supplemental indenture relating to such series of New Bonds, paragraph 2.) SINKING FUND PROVISIONS The Prospectus Supplement for each series of New Bonds will indicate if such Bonds are to be redeemable for the Sinking Fund, and if so, the date (if any) prior to which no such redemption can be made and the applicable sinking fund redemption price. The Mortgage requires that (1) the Company create a Sinking Fund by payment to the Trustee annually on August 1 a sum equal to 1% of the largest amount of all first refunding mortgage bonds outstanding under the Mortgage ("Bonds") at any time during the preceding twelve months, and (2) the Trustee apply these payments to purchase Bonds (except for Bonds which have provisions excluding them from being purchased for the Sinking Fund) at the lowest obtainable prices. The Trustee may purchase Bonds for the Sinking Fund in the open market or through responses to invitations for sealed proposals, including from the Company, if such purchases are possible at or below the applicable redemption price. If not, the Trustee will acquire Bonds for the Sinking Fund directly through the redemption provisions to which Bonds are subject. The lowest obtainable price cannot exceed the specified sinking fund redemption price or, if none, the applicable regular redemption price. In determining the lowest prices obtainable in the purchase of Bonds for the Sinking Fund and in selecting Bonds for redemption through the Sinking Fund, the Trustee may take into consideration the interest rates, dates of maturity, resultant yields to maturity and any other characteristics deemed relevant by the Trustee. Accordingly, Bonds, including New Bonds, subject to retirement by operation of the Sinking Fund may or may not, in fact, be so retired. The Company is also required to pay to the Trustee accrued interest on Bonds so purchased or redeemed to the dates of purchase or redemption. All Bonds so acquired are to be cancelled and no Bonds are to be issued under the Mortgage in place of them. (For applicable provisions of the Mortgage, see Article X, Section 3, and supplemental indenture relating to such series of New Bonds, paragraph 2.) SECURITY The New Bonds will be secured, equally and ratably with all other Bonds outstanding at any time under the Mortgage, (A) by a valid and direct first lien on all of the principal properties and franchises now owned or hereafter acquired by the Company subject (i) in the case of Pennsylvania real property, to a prior lien for Pennsylvania local real property taxes for the current year, which are not overdue, and (ii) to minor and unimportant encumbrances which do not materially interfere with the use of the properties by the Company; and (B) by a pledge of 100,000 shares of Class A stock and 100,000 shares of Class B stock of Safe Harbor Water Power Corporation and the common stock of other directly owned subsidiaries of the Company (but not stock of second level subsidiaries, i.e. subsidiaries of subsidiaries). With respect to substantially all of the personal property and fixtures owned by the Company, the lien of the Mortgage has been perfected as a security interest under the Maryland and Pennsylvania Uniform Commercial Codes. The Mortgage contains an after-acquired property clause. The lien upon after-acquired property (other than property in Pennsylvania and improvements to property now owned) may not become fully effective until such property is conveyed or delivered to the Trustee. It is the Company's practice when acquiring fee simple property in Maryland (not subject to a purchase money mortgage) to have the conveyance made to itself and the Trustee, 7 and as to all other property, except securities and certain personal property, to record deeds or supplemental indentures from time to time conveying record title to such property to the Trustee. Securities acquired by the Company (except temporary investments intended to be reconverted into cash) are deposited with the Trustee with instruments of transfer in blank upon acquisition. So long as the Company is entitled or permitted to retain possession of the mortgaged property, the lien of the Mortgage ordinarily is not effective upon merchandise or other property acquired or produced for sale in the ordinary course of business, upon cash (other than cash deposited with the Trustee pursuant to certain provisions of the Mortgage) or securities not transferred or delivered to the Trustee, or upon income. (For applicable provisions of the Mortgage, see granting clauses; Article III, Section 2; Article IV, Sections 1 and 3; and Article X, Section 1.) ISSUE OF ADDITIONAL BONDS Subject to limitations imposed by any applicable law or any supplemental indenture with respect to any existing series, additional Bonds may be issued under the Mortgage as Bonds of any existing series or a new series, in a principal amount equal to: (a) the amount of cash deposited with the Trustee for such purpose (which may thereafter be withdrawn upon the same basis upon which additional Bonds may be issued); (b) 80% of the amount of actual expenditures for Additional Property as defined in the Mortgage (not in excess of the reasonable value of such property), including to a specified extent securities of subsidiaries, made within three years prior to the request for issuance of such Bonds (and also in the case of Additional Property subject to Prior Charges as so defined, additional Bonds may be issued in an amount obtained by deducting the amount of Prior Charges from 80% of the sum of such expenditures and such Prior Charges); (c) the principal or par amounts of Prior Charges acquired, paid or refunded; and (d) the principal amount of Bonds previously authenticated under the Mortgage and paid or retired (except by operation of the Sinking Fund). At March 31, 1996, approximately $762,354,000 principal amount of Bonds was issuable under clause (b) above, and approximately $640,192,000 principal amount of Bonds was issuable under clause (d) above. (For applicable provisions of the Mortgage, see Article I, Sections 3, 5, 6, 7, and 8; and the definitions in Article XIV.) EVENTS OF DEFAULT The Mortgage provides that the following constitute "events of default:" (a) default for 60 days in payment of any interest on any Bonds; (b) default in payment of the principal of any Bonds; (c) default in observance or performance of any other covenant or condition by the Company, and continuance of such default for a period of 60 days after written notice thereof to the Company; or (d) an order for appointment of a receiver of the Company, or of all or any part of the mortgaged property which, in the opinion of the Trustee, is prejudicial to the security of the Bonds or to the interests of the holders of the Bonds, or for the winding up or liquidation of the business and affairs of the Company, or adjudicating the Company a bankrupt, or corporate action taken on the part of the Company for any of the foregoing. The Trustee must give the holders of the Bonds notice of all defaults known to it within 90 days after the occurrence thereof (disregarding any period of grace), unless such defaults shall have been cured, but no such notice shall be given until at least 60 days after the occurrence of a default described in (a) or (c) above; provided that, except in the case of default in the payment of the principal of or interest on the Bonds, or in the payment of any sinking fund installment, the Trustee may withhold such notice so long as it determines that the withholding of such notice is in the interests of the holders of the Bonds. (For applicable provisions of the Mortgage, see Article V, Section 2; Article IX; Article XII; and Article XIII, Section 5.) 8 ENFORCEMENT Upon the written request of the holders of not less than a majority in principal amount of the Bonds at the time outstanding, in case of any "event of default," as defined in the Mortgage (see above), it is the duty of the Trustee, upon being offered satisfactory security and indemnity against costs, expenses and liability, to take all needful steps for the protection and enforcement of its rights and the rights of the holders of Bonds and to exercise the powers of entry or sale conferred by the Mortgage, or to take appropriate judicial proceedings by action, suit or otherwise, as the Trustee shall deem most expedient in the interest of the holders of such Bonds. In case of a sale of the mortgaged property, whether under the power of sale or pursuant to judicial proceedings, the principal of all Bonds shall, if not previously due, immediately become due and payable. The holders of sixty-five percent in principal amount of the Bonds outstanding have the right to direct and to control any proceedings for any sale of the mortgaged property, or for the foreclosure of the Mortgage, or for the appointment of a receiver, or any other proceedings under the Mortgage; provided, however, that the Trustee shall have the right to refuse to comply with any direction or order of holders of the Bonds under this provision if in its judgement compliance therewith would be unjustly prejudicial to non- assenting holders. (For applicable provisions of the Mortgage, see Article V, Sections 4, 5, 6 and 15.) THE TRUSTEE The Trustee is the registrar and paying agent under the Mortgage and will serve as calculation agent for Bonds with floating rates. Annually, the Company is required to furnish the Trustee with a certificate regarding its compliance with certain covenants of the Mortgage and an opinion of counsel regarding the recording and filing of the Mortgage and of each supplemental indenture. (For applicable provisions of the Mortgage, see Article IX; and Article XII, Sections 1 and 9.) ADDITIONAL PROVISIONS APPLICABLE TO REMARKETED NEW BONDS The Company may issue one or more series of New Bonds in the form of Remarketed New Bonds. In the applicable Prospectus Supplement, the Company will designate one or more remarketing agents for the series, each a "Remarketing Agent." Initial Terms The interest rate for a series of Remarketed New Bonds will float. The Prospectus Supplement for any series of Remarketed New Bonds will specify whether the interest rate will be reset daily, weekly, monthly, quarterly, semi-annually or annually. It will set forth the index by which the interest rate will be determined such as LIBOR or Federal Funds Rate; the spread over such index; and the interest payment dates. Annual Remarketing Date, Redemption and Tender Provisions The applicable Prospectus Supplement will specify an annual remarketing date for each series of Remarketed New Bonds. Pursuant to terms described in the Prospectus Supplement, the Remarketing Agent, prior to the annual remarketing date, will determine the applicable interest rate period, index, and spread, and the Remarketing Agent will provide recordholders with this information. The recordholders may do nothing, in which case they will continue to hold the Remarketed New Bonds, or may tender all or a portion of their Remarketed New Bonds. If the Remarketed New Bonds are tendered, the recordholders will receive principal plus accrued interest. The Remarketing Agent will attempt on a best efforts basis to remarket the tendered Remarketed New Bonds at a price of 100% of the principal amount and may, at its option purchase any tendered Remarketed New Bonds at such price; and, the Company will repurchase and retire on the annual remarketing date any remaining unsold tendered Remarketed New Bonds at a price of 100% of the principal amount, plus accrued interest. 9 Remarketed New Bonds are subject to the sinking fund provisions described in this Prospectus. Remarketed New Bonds also are subject to redemption at the Company's option on any annual remarketing date at 100% of principal together with accrued interest. PLAN OF DISTRIBUTION The Company may sell any series of the New Bonds in any of the following ways: (i) through underwriters or dealers; (ii) directly to a limited number of purchasers or to a single purchaser; or (iii) through agents. The Prospectus Supplement with respect to the series of New Bonds being offered thereby will set forth the terms of the offering of such New Bonds, including the name or names of any underwriters, the purchase price of such New Bonds and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which such New Bonds may be listed. Only underwriters named in a Prospectus Supplement are deemed to be underwriters in connection with the New Bonds offered thereby. If underwriters are used in the sale of a series of New Bonds, such Bonds will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The New Bonds may be either offered to the public through underwriting syndicates (any such syndicate may be represented by managing underwriters which may be designated by the Company), or directly by one or more underwriters acting alone. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase the New Bonds of the series offered thereby will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all such New Bonds if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. New Bonds may be sold directly by the Company or through agents designated by the Company from time to time. The Prospectus Supplement with respect to any series of New Bonds sold in this manner will set forth the name of any agent involved in the offer or sale of such series of New Bonds as well as any commissions payable by the Company to such agent. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If dealers are utilized in the sale of any series of New Bonds, the Company will sell such New Bonds to the dealers, as principal. Any dealer may then resell such New Bonds to the public at varying prices to be determined by such dealer at the time of resale. The name of any dealer and the terms of the transaction will be set forth in the Prospectus Supplement with respect to such New Bonds being offered thereby. It has not been determined whether any series of the New Bonds will be listed on a securities exchange. Underwriters will not be obligated to make a market in any series of New Bonds. The Company can not predict the activity of trading in, or liquidity of, any series of the New Bonds. Agents, underwriters and dealers 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, or to contribution with respect to payments which the agents, underwriters or dealers may be required to make in respect thereof. Agents, underwriters and dealers may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. 10 LEGAL OPINIONS Certain legal matters in connection with the New Bonds will be passed upon for the Company by David A. Brune, Esq., General Counsel of the Company, or Susan Wolf, Esq., Associate General Counsel of the Company, and for the underwriters by Cahill Gordon & Reindel (a partnership including a professional corporation), New York, N.Y. Cahill Gordon & Reindel will not pass upon the incorporation of the Company, titles to properties of the Company or the lien of the Mortgage. Cahill Gordon & Reindel will rely upon the opinion of Mr. Brune or Miss Wolf as to matters of Maryland law and applicability of the Public Utility Holding Company Act of 1935. EXPERTS The consolidated balance sheets and statements of capitalization as of December 31, 1995 and 1994 and the consolidated statements of income, cash flows, common shareholders' equity and taxes for each of the three years in the period ended December 31, 1995, and the consolidated financial statement schedules listed in Item 14(a)(1) and (2) of the 1995 Form 10-K incorporated by reference in this Prospectus from the 1995 Form 10-K have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 11 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN- FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS INCLUDING ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE- SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER, OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OF- FER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. --------------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- Certain Terms of Remarketed New Bonds...................................... S-2 Underwriting............................................................... S-6 PROSPECTUS Available Information...................................................... 2 Incorporation of Certain Documents by Reference............................ 2 The Company................................................................ 3 Use of Proceeds............................................................ 3 Ratio of Earnings to Fixed Charges......................................... 4 Description of New Bonds................................................... 4 Plan of Distribution....................................................... 10 Legal Opinions............................................................. 11 Experts.................................................................... 11
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- $125,000,000 LOGO REMARKETED FLOATING RATE SERIES DUE SEPTEMBER 1, 2006 FIRST REFUNDING MORTGAGE BONDS --------------- PROSPECTUS SUPPLEMENT --------------- MERRILL LYNCH & CO. JUNE 17, 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----