Filed
Pursuant to Rule 424(b)(2)
Registration No. 333-141439
Laclede
Gas Company
$80,000,000
First
Mortgage Bonds, 6.35% Series due October 15, 2038
____________
Our
First Mortgage Bonds, 6.35% Series due October 15, 2038, which we refer to as
the “new bonds,” will bear interest at the rate of 6.35% per year and will be
payable in arrears on the 15th day of each month, beginning on October 15,
2008. The new bonds will mature on October 15,
2038. However, we may redeem the new bonds, in whole or in part from
time to time, as described herein, including on or after October 15, 2013 at
100% of the principal amount thereof plus any accrued interest
thereon. The new bonds will be issued only in registered form in
denominations of $1,000 and integral multiples thereof.
The
new bonds will be secured equally with all other bonds outstanding or hereafter
issued under our mortgage and deed of trust.
Investing
in the new bonds involves risks that are discussed in the “Risk Factors” section beginning on page S-6 of this
prospectus supplement.
The
underwriter proposes to offer the new bonds from time to time for sale in
negotiated transactions, or otherwise, at varying prices to be determined at the
time of each sale. The underwriter has agreed to purchase the new
bonds from us at 96.85% of their principal amount ($77,480,000 aggregate
proceeds to us before expenses), subject to the terms and conditions in the
underwriting agreement.
____________
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
____________
The
new bonds will be ready for delivery in book-entry only form through The
Depository Trust Company on or about September 23, 2008.
The
date of this prospectus supplement is September 18, 2008
You
should rely only on the information contained in or incorporated by reference in
this prospectus supplement, the accompanying prospectus and any related free
writing prospectus required to be filed with the Securities and Exchange
Commission (the "SEC"). We have not, and the underwriter has not,
authorized anyone to provide you with different or additional
information. If anyone provides you with different or additional
information, you should not rely on it. We are not, and the
underwriter is not, making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the
information contained in this prospectus supplement, the accompanying prospectus
or any such free writing prospectus is accurate only as of the date on the cover
page of this prospectus supplement, the accompanying prospectus or such free
writing prospectus, as the case may be, and that the information contained in
the documents incorporated by reference therein is accurate only as of the date
of those documents. We undertake no obligation to update these
statements in the future. You should understand that our business,
financial condition, results of operations and prospects may have changed since
those dates.
This
document is in two parts. The first part is this prospectus
supplement that describes the terms of the offering of the new bonds and also
adds to and updates information contained in the accompanying prospectus and the
documents incorporated by reference in the accompanying
prospectus. The second part is the accompanying prospectus that gives
more general information. If the description of the offering varies
between this prospectus supplement and the accompanying prospectus, you should
rely on the information in this prospectus supplement. You should
read both this prospectus supplement and the accompanying prospectus together
with additional information described in this prospectus supplement under the
heading “Where You Can Find More
Information.”
Unless
the context otherwise indicates, the words “Company,” “we,” “our” and “us” refer
to Laclede Gas Company. The term “underwriter” refers to
Edward D. Jones & Co., L.P.
____________
Prospectus
Supplement
| Page | |
| Forward-Looking Statements |
S-3
|
| Summary of the Offering |
S-4
|
| Where You Can Find More Information | S-5 |
| Risk Factors |
S-6
|
| Use of Proceeds |
S-10
|
| Capitalization |
S-10
|
| Ratios of Earnings to Fixed Charges |
S-10
|
| Description of New Bonds |
S-11
|
| Underwriting |
S-14
|
| Legal Matters |
S-15
|
| Experts |
S-15
|
Prospectus
Some
of the information included or incorporated by reference in this prospectus
supplement and the accompanying prospectus, excluding historical information,
include forward-looking statements. Words such as “may,”
“anticipate,” “believe, “estimate,” “expect,” “intend,” “plan,” “seek” and
similar words and expressions identify forward-looking statements that involve
uncertainties and risks. Future developments may not be in accordance
with our expectations or beliefs and the effect of future developments may not
be those anticipated. Among the factors that may cause results to
differ materially from those contemplated in any forward-looking statement
are:
| · | weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country; | |||
| · | volatility in gas prices, particularly sudden and sustained spikes in natural gas prices; | |||
| · |
the
impact of higher natural gas prices on our competitive position in
relation to suppliers of alternative heating sources, such as
electricity;
|
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| · |
changes
in gas supply and pipeline availability, particularly those changes that
impact supply for and access to our service area;
|
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| · |
legislative,
regulatory and judicial mandates and decisions, some of which may be
retroactive, including those affecting
|
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·
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allowed rates of return | |||
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·
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incentive regulation | |||
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·
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industry structure | |||
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·
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purchased gas adjustment provisions | |||
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·
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rate design structure and implementation | |||
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·
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franchise renewals | |||
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·
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environmental or safety matters | |||
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·
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taxes | |||
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·
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pension and other post-retirement benefit liabilities and funding obligations | |||
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·
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accounting standards; | |||
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·
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the
results of litigation;
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·
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retention
of, ability to attract, ability to collect from and conservation efforts
of customers;
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·
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capital
and energy commodity market conditions, including the ability to obtain
funds for necessary capital expenditures and general operations and the
terms and conditions imposed for obtaining sufficient gas
supply;
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·
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discovery
of material weakness in internal controls; and
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·
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employee
workforce issues.
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|||
You
are urged to consider the risks, uncertainties and other factors that could
affect our business included or incorporated by reference in this prospectus
supplement and the accompanying prospectus. All of these
forward-looking statements rely upon the safe harbor protections provided under
the Private Securities Litigation Reform Act of 1995. We do not, by
including this statement, assume any obligation to review or revise any
particular forward-looking statement in light of future events.
|
This
summary provides an overview of the key aspects of the offering of new
bonds. The summary is not complete and does not contain all of
the information you should consider before purchasing the new
bonds. You should carefully read all of the information
contained or incorporated by reference in this prospectus supplement or
the accompanying prospectus, including the risk factors in this prospectus
supplement and incorporated by reference and our financial statements and
related notes.
Laclede
Gas Company
We
are the largest natural gas distribution utility in Missouri serving
approximately 632,000 residential, commercial and industrial customers in
the City of St. Louis and ten surrounding counties in eastern
Missouri. In addition, we operate an underground natural gas
storage field, a propane storage cavern and propane vaporization
facilities. Our natural gas distribution utility business
is subject to the jurisdiction of the Missouri Public Service
Commission, which has authority to regulate substantially all phases of
public utility business in Missouri, including our issuance of long-term
debt. We are a subsidiary of The Laclede
Group, Inc. (NYSE: LG). The new bonds are not obligations of,
nor guaranteed by, The Laclede Group, Inc.
We
were incorporated in Missouri on March 2, 1857. Our principal
executive offices are located at 720 Olive Street, St. Louis, Missouri
63101. Our telephone number is 314-342-0500.
The
Offering
|
|
|
Securities Offered
|
$80,000,000
in aggregate principal amount of First Mortgage Bonds, 6.35% Series due
October 15, 2038
|
|
Interest Rate
|
6.35%
per year.
|
|
Interest Payments
|
We
will pay interest on the new bonds in arrears on the 15th day of each
month beginning on October 15, 2008, to the holders of the new bonds as of
the day that is 15 calendar days (whether or not a business day) prior to
the relevant interest payment date and, if applicable, upon
redemption.
|
|
Stated Maturity Date
|
The
new bonds will mature on October 15, 2038, unless redeemed prior to that
date.
|
|
Optional Redemption by Us
|
We
will have the right to redeem the new bonds, in whole at any time or in
part from time to time, as described in this prospectus supplement and the
accompanying prospectus, including on or after October 15, 2013, at 100%
of the principal amount to be redeemed plus any accrued and unpaid
interest thereon to, but not including, the date of
redemption.
|
|
Ranking
|
The
new bonds will be secured and rank equally with all of our other
outstanding first mortgage bonds. At June 30, 2008, we had an
aggregate of $310 million in principal amount of outstanding first
mortgage bonds.
|
| Use of Proceeds | We estimate that we will receive net proceeds from the sale of the new bonds of approximately $77.3 million after deducting estimated offering expenses of $150,000 payable by us. We intend to use the net proceeds from the sale of the new bonds to reduce our short-term debt borrowings incurred to pay gas supply costs, make capital expenditures and retire a series of our first mortgage bonds and for other general corporate purposes. |
| Risk Factors | Investing in the new bonds involves risks that are described under “Risk Factors” beginning on page S-6 of this prospectus supplement. |
| Trustee | UMB Bank & Trust, n.a. |
We
file annual, quarterly and special reports and other information with the
SEC. You may read and copy any document that we file at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for information on the
operation of the Public Reference Room. Our SEC filings also are
available to you at the SEC’s website at “http://www.sec.gov.” Our
filings with the SEC are also available on our own website at
“http://www.lacledegas.com.” The other information on our website is
not part of this prospectus supplement or the accompanying prospectus, and you
should not rely upon such information.
The
SEC allows us to “incorporate by reference” the information we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is an
important part of this prospectus supplement and the accompanying
prospectus. The annual and quarterly reports listed below have been
filed with the SEC on a combined basis by us and our parent, The Laclede Group,
but we are only incorporating the information that relates to us, not the
information that relates to The Laclede Group or its other
affiliates. We are incorporating by reference the documents listed
below and any future filings we make with the SEC under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 (other than information
furnished pursuant to Items 2.02 and 7.01 of Form 8-K and any related exhibits)
until we sell the new bonds offered by this prospectus
supplement. Those future filings, if any, will update, supersede and
replace the information contained in any documents incorporated by reference in
this prospectus supplement and the accompanying prospectus at the time of the
future filings.
|
·
|
Our
Annual Report on Form 10-K for the fiscal year ended September 30,
2007;
|
|
|
·
|
Our
Quarterly Reports on Form 10-Q for the fiscal quarters ended December 31,
2007, March 31, 2008 and June 30, 2008; and
|
|
|
·
|
Our
Current Reports on Form 8-K filed on December 5, 2007, February 11, 2008,
February 15, 2008, March 10, 2008, March 24, 2008 and August 18,
2008.
|
You
may obtain copies of these filings from our website referred to above or request
copies of these filings, at no cost, by writing or telephoning us at the
following address and phone number:
Corporate
Secretary
Laclede
Gas Company
720
Olive Street
St.
Louis, Missouri 63101
314-342-0531
You
should rely only on the information contained in, or incorporated by reference
in, this prospectus supplement and the accompanying prospectus. We
have not, and the underwriter has not, authorized anyone else to provide you
with different information. We are not, and the underwriter is not,
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information incorporated in
this prospectus supplement and the accompanying prospectus is accurate as of any
date other than the date on the front of such documents.
You
should carefully consider the risks described below before making an investment
decision. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occurs, our
business, financial condition or results of operations could be materially
adversely affected.
This
prospectus supplement and the accompanying prospectus and the documents
incorporated by reference also contain forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially
from those anticipated in the forward-looking statements as a result of a number
of factors, including the risks described below and elsewhere in this prospectus
supplement and the accompanying prospectus and the documents incorporated by
reference.
Risks
Relating to Our Business
Risks
related to the regulation of our business could impact our rates, our costs and
our profitability.
Our
business is regulated by state, federal and local regulatory
authorities. The Missouri Public Service Commission regulates
many aspects of our distribution operations, including construction and
maintenance of facilities, operations, safety, the rates that we may charge
customers, the terms of service to our customers, the rate of return that we are
allowed to realize and our ability to recover gas costs on a timely
basis. The Missouri Public Service Commission also regulates the
accounting treatment for certain aspects of our operations. Our
ability to obtain rate increases and rate supplements to maintain the current
rate of return depends upon regulatory discretion. There can be no
assurance that we will be able to obtain rate increases or rate supplements or
continue earning current authorized rates of return. The Federal Energy
Regulatory Commission regulates the interstate transportation of natural gas
from the wellhead to our city gate and establishes the terms and conditions
under which we may use interstate gas pipelines and storage capacity to
purchase, store and transport natural gas.
In
addition, our operations and properties are subject to a variety of federal,
state and local laws and regulations relating to environment
protection. These regulations concern the generation, storage,
transportation, disposal or discharge of contaminants into the environment and
the general protection of public health, natural resources, wildlife and the
environment. Costs of compliance and liabilities could negatively
affect our results of operations, financial condition and cash
flows. In addition, compliance with environmental laws and
regulations could require unexpected capital expenditures. While we
cannot predict the impact of the interpretation or enforcement of federal, state
and local regulations, our costs could increase if these laws and regulations
become more strict.
Our
liquidity and, in certain circumstances, our results of operations could be
adversely affected by the cost of purchasing natural gas during periods in which
natural gas prices are rising significantly.
Our
tariff rate schedules contain purchased gas adjustment clauses that permit us to
file for rate adjustments to recover the cost of purchased
gas. Changes in the cost of purchased gas flow through to customers
and may affect uncollectible amounts and cash flows and can therefore impact the
amount of our capital resources. Currently we are allowed to adjust
the gas cost component of our rates up to four times each year. We
must make a mandatory gas cost adjustment in November at the beginning of the
winter. During the next twelve months, we may make up to three
additional discretionary gas cost adjustments, so long as each of these
adjustments is separated by at least two months.
The
Missouri Public Service Commission typically approves our purchased gas
adjustment changes on an interim basis, subject to refund and the outcome of a
subsequent audit and prudence review. Due to such review process,
there is a risk of a disallowance of full recovery of these
costs. Any material disallowance of purchased gas costs would
adversely affect our revenues. Increases in the prices we charge for
gas may also adversely affect our revenues because they could lead customers to
reduce usage and cause some customers to have difficulty paying the resulting
higher bills. These higher prices may increase our bad debt expenses
and ultimately reduce earnings. We
have
used short-term borrowings in the past to finance storage inventories and
purchased gas costs, and we expect to do so in the future.
Hedging
procedures may not fully protect our sales and results of operations from
volatility, and the use of derivative contracts in the normal course of business
could result in financial losses.
To
lower financial exposure to commodity price fluctuations, we enter into
contracts to hedge the forward commodity price of our natural gas
supplies. As part of this strategy, we may use fixed-price, forward,
physical purchase contracts, or futures and option contracts traded on the
NYMEX. However, we do not hedge the entire exposure of energy assets
or positions to market price volatility, and the coverage will vary over
time. Any costs, gains or losses we experience through our hedging
procedures, including carrying costs, generally flow through our purchased gas
adjustment clause, thereby limiting our exposure to
volatility. However, these procedures remain subject to prudency
review by the Missouri Public Service Commission.
We
are dependent on bank lines of credit and continued access to capital markets to
successfully execute our operating strategies.
In
addition to our longer term debt that is issued to the public under our
mortgage, we have relied, and continue to rely, upon shorter term bank
borrowings or commercial paper supported by bank lines of credit to finance the
execution of a portion of our operating strategies. We are dependent
on these capital sources to purchase our natural gas supply and maintain our
properties. The availability and cost of these credit sources is
cyclical and these capital sources may not remain available to us, or we may not
be able to obtain funds at a reasonable cost in the future. Our
ability to borrow under our lines of credit, or to issue commercial paper
supported by our lines of credit, depends on our compliance with our obligations
under the lines of credit.
Transporting
and storing natural gas involves numerous risks that may result in accidents and
other operating risks and costs.
Inherent
in gas distribution activities is a variety of hazards and operations risks,
such as leaks, accidental explosions and mechanical problems, that could cause
substantial financial losses. In addition, these risks could result
in loss of human life, significant damage to property, environmental pollution,
impairment of our operations and substantial losses to us. The
location of pipelines and storage facilities near populated areas, including
residential areas, commercial business centers and industrial sites, could
increase the level of damages resulting from these risks. These
activities may subject us to litigation or administrative proceedings from time
to time. Such litigation or proceedings could result in substantial
monetary judgments, fines or penalties against us or be resolved on unfavorable
terms. In accordance with customary industry practices, we maintain
insurance against a significant portion, but not all, of these risks and
losses. To the extent that the occurrence of any of these events is
not fully covered by insurance, it could adversely affect our financial position
and results of operations.
Increases
in the wholesale costs of purchased natural gas supplies may adversely impact
our competitive position compared with alternative energy
sources.
We
are the only distributor of natural gas within our franchised service
area. Nevertheless, rising wholesale natural gas prices compared with
prices for electricity, fuel oil, coal, propane, or other energy sources may
affect our retention of natural gas customers and adversely impact our financial
position and results of operations.
Significantly
warmer-than-normal weather conditions, the effect of global warming and climate
change, and other factors that influence customer usage may affect our sale of
natural gas for heating energy and adversely impact our financial position and
results of operations.
Our earnings are
primarily generated by the sale of natural gas for heating energy. We
have a weather mitigation rate design, approved by the Missouri Public Service
Commission, that provides better assurance of the recovery of our fixed costs
and margins during winter months despite variations in sales volumes due to the
impacts of weather and other factors that affect customer
usage. However, significantly warmer-than-normal weather
conditions
in our service area and other factors may result in reduced profitability and
decreased cash flows attributable to lower gas sales
levels. Furthermore, the continued use of the weather mitigation rate
design is subject to regulatory discretion.
Regional
supply/demand fluctuations and changes in national pipeline infrastructure may
adversely affect our ability to profit from off-system sales and capacity
release.
Our
income from off-system sales and capacity release is subject to fluctuations in
market conditions and changing supply and demand conditions in areas where we
hold pipeline capacity rights. Specific factors impacting our income
from off-system sales and capacity release include the availability of
attractively-priced natural gas supply, availability of pipeline capacity, and
market demand. Income from off-system sales and capacity release is
shared with customers. Effective October 1, 2007, we are allowed to
retain between 15% and 25% of the first $6 million in annual income earned
(depending on the level of income earned) and 30% of income exceeding $6 million
annually. Our ability to retain such income in the future is subject
to regulatory discretion in a base rate proceeding.
Risk
of unexpected losses may adversely affect our financial position and results of
operations.
As
with most businesses, there are operations and business risks inherent in our
activities. If, in the normal course of business, we become a party to
litigation, such litigation could result in substantial monetary judgments,
fines or penalties or be resolved on unfavorable terms. In accordance with
customary practice, we maintain insurance against a significant portion of, but
not all, risks and losses. To the extent a loss is not fully covered by
insurance, that loss could adversely affect our financial position and results
of operations.
Catastrophic
events could adversely affect our facilities and operations.
Catastrophic
events such as fires, earthquakes, explosions, floods, tornados, terrorist acts
or other similar occurrences could adversely affect our facilities, operations,
financial condition and results of operations.
Workforce
risks could affect our financial results.
We
are subject to various workforce risks, including but not limited to, the risk
that we will be unable to attract and retain qualified personnel; that we will
be unable to effectively transfer the knowledge and expertise of an aging
workforce to new personnel as those workers retire; and that we will be unable
to reach collective bargaining arrangements with the unions that represent
certain of our workers, which could result in work stoppages.
We
may be adversely affected by economic conditions.
Periods
of slowed economic activity generally result in decreased energy consumption,
particularly by industrial and large commercial companies. As a
consequence, national or regional recessions or other downturns in economic
activity could adversely affect our revenues and cash flows or restrict our
future growth. Economic conditions in our service territory also
impact our collection of accounts receivable.
Risks
Relating to the New Bonds
A
downgrade or negative outlook in our credit rating is likely to adversely affect
the market price of the new bonds and may adversely affect your ability to sell
the new bonds.
We
expect that the new bonds initially will be rated “A” by Standard and Poor’s
Ratings Services (“S&P”), “A3” by Moody’s Investors Service, Inc.
(“Moody’s”) and “A+” by Fitch Rating, Inc. (“Fitch”). Credit ratings
are not a recommendation to purchase, sell or hold the new bonds and are not
necessarily a reflection of the market price of the new bonds or a comment as to
the suitability of the new bonds for a particular
investor. Nevertheless, the rating of the new bonds may change, and
there is no assurance that a rating will be maintained or that a rating will not
be lowered, placed on negative outlook or withdrawn at any
time. Downgrades (or initiations of negative outlooks) in or
withdrawals of a rating of the new bonds or our other securities are likely to
adversely affect the
market
price of the new bonds and your ability to, and the price at which you may, sell
the new bonds when desired or at all. Although the ratings of the new
bonds may not reflect the potential impact of all of the risks related to
an investment in the new bonds, they could be an indication of the rating
agencies’ views regarding the risks associated with an investment in the new
bonds. Therefore, negative ratings actions are likely to indicate
that the rating agencies believe that the risks associated with an investment in
the new bonds have increased.
A
downgrade or negative outlook in our credit rating could negatively affect our
ability to access capital and its costs.
The
following table shows the current ratings assigned by S&P, Moody’s and Fitch
to certain of our outstanding debt:
|
Current
Rating
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Type
of Security
|
S&P
|
Moody’s
|
Fitch
|
|
First
Mortgage Bonds
|
A
|
A3
|
A+
|
|
Commercial
Paper
|
A-1
|
P-2
|
|
S&P,
Moody’s and Fitch from time to time implement new requirements for various
ratings levels. To maintain our current credit ratings in light of
any new requirements, we may find it necessary to take steps to change our
business plans in ways that may affect our results of operations.
If
the rating agencies lowered our ratings, particularly below investment grade, it
could significantly limit our access to the commercial paper market and would
increase our costs of borrowing. In addition, we would likely be
required to pay a higher interest rate in future financings and our potential
pool of investors and funding sources would likely decrease. Also,
credit ratings are an independent assessment of our ability to pay our
obligations. Consequently, real or anticipated changes in our credit
ratings will generally affect the market value of the specific debt instruments,
including the new bonds, that are rated.
You
may not be able to resell the new bonds.
We
do not expect to list the new bonds on any securities exchange. The
underwriter has advised us that it intends to make a market in the new
bonds. The underwriter will have no obligation to make a market in
the new bonds, however, and may discontinue market-making activities, if
commenced, at any time without the consent of, or notice to, the
bondholders. There can be no assurance that an active trading market
for the new bonds will develop or, if one develops, will be maintained or be
liquid. If an active trading market does not develop or is not
maintained, you may not be able to sell your new bonds when desired, or perhaps
at all, or be able to sell your new bonds at a price equal to or above the price
you paid for them. The new bonds may not be appropriate as a
short-term investment, and you should consider the potentially illiquid and
long-term nature of your investment in the new bonds before making an investment
decision.
We
estimate that we will receive net proceeds from the sale of the new bonds of
approximately $77.3 million after deducting estimated offering expenses of
$150,000 payable by us. We intend to use the net proceeds from the sale of the
new bonds to reduce our short-term borrowings and for general corporate
purposes. As of June 30, 2008, our outstanding short-term debt was
$103.0 million, consisting of $58.6 million of commercial paper and $44.4
million of notes payable to our parent, The Laclede Group. The
outstanding short-term debt bore interest at a weighted average rate of 3.1% per
annum as of June 30, 2008. We used the proceeds of our short-term
debt, some of which is to be repaid with the net proceeds of this offering, to
pay gas supply costs and make capital expenditures for assets acquired in the
ordinary course of business, including construction and office equipment, and to
retire $40 million principal amount of our 7.5% first mortgage bonds, which
matured in November 2007.
The
following table sets forth our historical capitalization, as well as our
short-term debt, at June 30, 2008 and as adjusted to reflect the issuance of the
new bonds and use of the net proceeds from the issuance. The
following information is not complete, and you should read it together with the
more detailed information included or incorporated by reference in this
prospectus supplement and the accompanying prospectus.
|
At
June 30, 2008
|
||||||||
|
Actual
|
As Adjusted (1) | |||||||
|
(dollars
in millions)
|
||||||||
| Long-term debt |
$
|
309.2
|
|
$
|
389.2
|
|||
| Common stock equity |
|
372.9
|
372.9
|
|||||
| Redeemable preferred stock (less current sinking fund requirements) |
0.5
|
0.5
|
||||||
| Total capitalization |
$
|
682.6
|
|
$
|
762.6
|
|||
| Short-term debt |
$
|
103.0
|
|
$
|
25.7
|
|||
_________
(1) Adjusted
to reflect the issuance of the new bonds and the use of the net proceeds from
the issuance.
The
following table shows our ratio of earnings to fixed charges for the periods
indicated:
|
Fiscal
Years Ended September 30,
|
Twelve
Months
Ended
|
|||||||||
|
2003
|
2004
|
2005
|
2006
|
2007
|
June
30, 2008
|
|||||
|
3.15
|
2.89
|
2.62
|
2.17
|
2.33
|
2.78
|
|||||
In
computing these ratios, “earnings” consist of income before taxes and fixed
charges. “Fixed charges” consist of all interest expense and the
portion of rentals representing interest. We currently estimate the
portion of rentals representing interest to be one-third.
This
description of the particular terms of the new bonds supplements and should be
read in conjunction with the statements under “Description of First Mortgage Bonds” in the accompanying
prospectus. The description of certain provisions of the new bonds
and our mortgage does not purport to be complete and is subject to and is
qualified in its entirety by reference to the description in the accompanying
prospectus and our mortgage.
General
The
new bonds will be issued as a series of first mortgage bonds under our mortgage,
as supplemented by a supplemental indenture dated as of September 15, 2008 that
will establish the specific terms of the new bonds. The new bonds
will rank equally with all of our other outstanding first mortgage
bonds. The new bonds, with an aggregate principal amount of $80
million, will be issued on the basis of retired first mortgage bonds and will
mature on October 15, 2038. We may redeem the new bonds prior to
maturity as set forth under “—Redemption at Our Option”
below. Additional information describing the new bonds and our
mortgage under which they are to be issued is set forth below and included under
“Description of First Mortgage Bonds” in the
accompanying prospectus.
Interest
The
new bonds will bear interest at 6.35% per year from September 23,
2008. We will pay interest in arrears on the 15th day of each month,
beginning on October 15, 2008 (each an “interest payment date”), to the person
in whose name the new bond is registered at the close of business as of the day
(whether or not a business day) that is 15 days prior to the relevant interest
payment date. The amount of interest payable will be computed on the
basis of a 360-day year of twelve 30-day months.
In
the event that any interest payment date, the stated maturity date or any
redemption date is not a business day, then the required payment will be made on
the next business day (and without any interest or other payment in respect of
any such delay) with the same force and effect as if made on the original
date. “Business day” means any day other than a Sunday, Saturday or
other day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York.
Redemption
at Our Option
We
may redeem the new bonds prior to maturity, as described below. The
new bonds will not be entitled to the benefit of any sinking fund, which means
that we will not deposit money on a regular basis into any separate custodial
account to repay the new bonds.
We
will have the right to redeem the new bonds:
|
·
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in
whole or in part, at our option, at any time and from time to time on
or after October 15, 2013; or
|
|
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·
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in
whole if all or substantially all of our property subject to our mortgage
is taken by eminent domain or sold to a governmental body or its
designee.
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In
either case, the redemption price would be equal to 100% of the principal amount
to be redeemed plus any accrued and unpaid interest thereon to, but not
including, the date of redemption; provided, however, that interest on a new
bond with respect to an interest payment date that falls on or before a
redemption date shall be made to the holder of the new bond on the record date
related to the interest payment date.
In
each instance of redemption, we will give registered holders (which, as long as
the new bonds are in the book-entry only system, will be DTC or its nominee or a
successor depository) at least 30 days’, and not more than 90 days’, notice of
any redemption. If, at the time notice of redemption is given, the
redemption moneys are not held by the trustee, the redemption may be made
subject to their receipt on or before the date fixed for redemption and the
notice shall be of no effect unless such moneys are so received. A
completed default under our mortgage may occur
if
we fail to deposit money for the redemption with the trustee by the tenth day
after the redemption date. If we do not deposit redemption moneys on
or before the date fixed for redemption or if any of the new bonds called for
redemption is not paid upon surrender for redemption, the principal amount of
the new bonds called for redemption will continue to bear interest at the rate
indicated on the cover page of this prospectus supplement until
paid. If the redemption notice is given and funds are deposited as
required by the supplemental indenture to our mortgage relating to the new
bonds, then interest will cease to accrue on and after the redemption date on
the new bonds or portions of new bonds called for redemption.
Subject
to the foregoing and to applicable law (including, without limitation, United
States federal securities laws), we or our affiliates may, at any time and from
time to time, purchase outstanding new bonds by tender, in the open market or by
private agreement. We may apply cash on deposit under provisions of
our mortgage, with certain exceptions, to the redemption or purchase of any
series of our first mortgage bonds, including the new bonds.
Dividend
Restriction Covenant
Our
mortgage contains several restrictions on our ability to pay dividends on our
common stock. Under the most restrictive of these provisions, we may
not declare or pay any dividend if, after the dividend, the aggregate net amount
spent for all dividends after September 30, 1953 would exceed a maximum amount
determined by using a formula in our mortgage, which is described
below. This provision does not, however, restrict dividends paid in
the form of our common stock. In addition, the amount we have spent
on the acquisition or retirement of our common stock since that date is added
to, and the amount received from the issuance of new stock is deducted from, the
aggregate amount spent for dividends. Under our mortgage’s formula,
the maximum amount is the sum of $8 million plus our earnings applicable to
common stock (adjusted for stock repurchases and issuances) for the period from
September 30, 1953 to the last day of the quarter before the declaration or
payment date for the dividend. As of June 30, 2008, the amount under
our mortgage’s formula that was available to pay dividends was $288
million.
Maintenance
and Improvement Fund
The
new bonds will not be entitled to the benefits of a maintenance and improvement
fund described under “Description of First Mortgage Bonds—Maintenance and Improvement Fund” in
the accompanying prospectus. However, so long as the outstanding
series of first mortgage bonds issued prior to 2006 remain outstanding, we will
be required to comply with the maintenance and improvement fund
requirements.
Reservation
of Rights
In
the supplemental indenture to our mortgage that establishes the specific terms
of the new bonds, we have reserved the right to amend or supplement our mortgage
without any consent or other action of the holders of the new bonds or any
series of first mortgage bonds created after the issuance of the new bonds for
any of the following purposes:
|
·
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to
correct or amplify the description of property subject to the lien of our
mortgage, to better assure, convey and confirm to the trustee any property
required to be subject to our mortgage or to subject additional property
to the lien of our mortgage; and
|
|
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·
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to
change or eliminate any provision of our mortgage or to add any new
provision to our mortgage, provided that the change, elimination or
addition must not adversely affect the interests of the holders of the
first mortgage bonds of any series.
|
We
have also provided that our mortgage shall be deemed to be amended to comply
with the Trust Indenture Act of 1939, as in effect from time to
time.
Trustee
UMB
Bank & Trust, n.a. is the trustee under our mortgage. UMB Bank,
n.a., an affiliate of the trustee, serves as rights agent for the preferred
share purchase rights of our parent, The Laclede Group. Our parent
also has
a
line of credit from UMB Bank, n.a., and we have also recently had, and may from
time to time in the future have, lines of credit from UMB Bank,
n.a.
Book-Entry
Only
The
new bonds will be represented by one or more global securities that will be
deposited with, or on behalf of, and registered in the name of DTC or its
nominee. This means that we will not issue certificates to you for
the new bonds. Each global security will be issued to DTC, which will
keep a computerized record of its participants, known as direct participants,
whose clients have purchased the new bonds. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Each participant will
then keep a record of its clients. Unless a global security is
exchanged in whole or in part for a certificated security, a global security may
not be transferred. However, DTC, its nominees and their successors
may transfer a global security as a whole to one another. For more
details on book-entry securities, see “Book-Entry
Securities” in the accompanying prospectus.
General
Subject
to the terms and conditions of an underwriting agreement dated the date of this
prospectus supplement, we have agreed to sell to Edward D. Jones & Co.,
L.P., as underwriter, and the underwriter has agreed to purchase from us, the
entire principal amount of the new bonds.
In
the underwriting agreement, the underwriter has agreed, subject to the terms and
conditions set forth in the agreement, to purchase all of the new bonds offered
by this prospectus supplement if any are purchased.
The
underwriter proposes to offer the new bonds from time to time for sale in one or
more negotiated transactions, or otherwise, at varying prices to be determined
at the time of each sale. In connection with the sale of the new
bonds the underwriter may be deemed to have received compensation from us in the
form of underwriting discounts.
We
have agreed to indemnify the underwriter against certain liabilities, including
liabilities under the Securities Act of 1933, or to contribute to payments the
underwriter may be required to make in respect of those
liabilities.
The
expenses of the offering, including rating agency fees, trustee’s fees,
independent auditors’ fees and legal fees, but not including underwriting
discounts, are estimated to be $150,000 and are payable by us.
We
have agreed with the underwriter that, during the period of time from the date
of the underwriting agreement to the business day after the closing of the
offering, we will not, directly or indirectly, offer to sell or determine to
offer or sell any additional new bonds or securities that are substantially
similar to the new bonds or are convertible or exchangeable into or exercisable
for new bonds or similar securities without the underwriter’s prior written
consent.
New
Issue of Bonds
The
new bonds are a new issue of securities with no established trading
market. The new bonds will not be listed on any securities exchange
or on any automated dealer quotation system. We have been advised
that the underwriter may make a market in the new bonds after completion of the
offering, but will not be obligated to do so and may discontinue any
market-making activities at any time without notice. No assurance can
be given that an active trading market for the new bonds will develop, be
maintained or be liquid. If an active public trading market for the
new bonds does not develop or is not maintained, the market prices and liquidity
of the new bonds may be adversely affected.
Price
Stabilization and Short Positions
To
facilitate the offering of the new bonds, the underwriter may engage in
transactions that stabilize, maintain or otherwise affect the market prices of
the new bonds. Specifically, the underwriter may over-allot in
connection with the offering, creating short positions in the new bonds for its
own accounts. In addition, to cover the over-allotments, the
underwriter may bid for, and purchase, new bonds in the open
market. Any of these activities may stabilize or maintain the market
price of the new bonds above independent market levels. The
underwriter is not required to engage in these activities and may end any of
these activities at any time without the consent of, or notice to, the new
bondholders. In general, purchases of a security for the purposes of
stabilization or to reduce a short position could cause the prices of the
security to be higher than it might be in the absence of such
purchases.
Neither
we nor the underwriter makes any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the prices of the new bonds. In addition, neither we nor the
underwriter makes any representation that the underwriter will engage in these
transactions or that these transactions, once commenced, will not be
discontinued without notice.
Other
Relationships
The
underwriter and its affiliates have engaged in, and may in the future engage in,
various general financing and banking transactions with us and our affiliates
for customary compensation.
The
legality of the new bonds will be passed on for us by Mark C. Darrell, our
Senior Vice President - General Counsel. Certain legal matters will
be passed upon for the underwriter by Pillsbury Winthrop Shaw Pittman LLP, New
York, New York.
Our
financial statements and the related financial statement schedule incorporated
in this prospectus supplement by reference from the Company's Annual Report on
Form 10-K for the year ended September 30, 2007, and the effectiveness of
our internal control over financial reporting have been audited by Deloitte
& Touche LLP, an independent registered public accounting firm, as stated in
their reports (which reports (1) express an unqualified opinion on our financial
statements and financial statement schedule and includes an explanatory
paragraph referring to our adoption of the provisions of Statement of Financial Accounting Standards No. 158,
Employers' Accounting for Defined Benefit Pension and Other Postretirement
Benefit Plans - an amendment of FASB Statements No. 87, 88, 106 and
132(R), effective September 30, 2007 and (2) express an
unqualified opinion on the effectiveness of internal control over financial
reporting), which are incorporated herein by reference. Such financial
statements and financial statement schedule and management's assessment of the
effectiveness of our internal control over financial reporting have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
PROSPECTUS
$350,000,000
LACLEDE
GAS COMPANY
First
Mortgage Bonds
Unsecured
Debt Securities
Preferred
Stock
____________
Laclede
Gas Company intends to offer these securities from time to time, in one or more
series, with an aggregate offering price not to exceed
$350,000,000.
This
prospectus contains summaries of the general terms of these securities. We will
describe the specific terms and prices of the securities, and the manner in
which they are being offered, in more detail in one or more supplements to this
prospectus, which will be distributed at the time the securities are offered.
The supplements may also add, update or change information contained in this
prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
This prospectus may not be used to
consummate sales of any of these securities unless accompanied by a prospectus
supplement.
Each
prospectus supplement offering any securities will state whether those
securities are listed or will be listed on any national securities
exchange.
We
may sell the securities to or through underwriters, dealers or agents, directly
to purchasers, or through a combination of these methods. Each prospectus
supplement will provide information regarding the plan of distribution relating
to each series of securities. See “Plan of
Distribution.”
See
“Risk Factors” to read about certain factors you
should consider before purchasing any of the securities being
offered.
____________
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
____________
The
date of this prospectus is April 10, 2007.
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TABLE
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This
prospectus is provided by Laclede Gas Company. In this prospectus, Laclede Gas
Company is sometimes referred to by the terms “we,” “us,” and
“our.”
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, which we refer to as the SEC, using a “shelf”
registration process. Under this shelf registration process, we may issue and
sell any of the securities described in this prospectus in one or more offerings
with a maximum aggregate offering price of up to $350,000,000. We are required
to obtain the authorization of the Missouri Public Service Commission before we
can sell or issue these securities and use the proceeds of any sales other than
as currently authorized.
This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. Any
prospectus supplement may also add, update or change information contained in
this prospectus. If there is any inconsistency between the information in this
prospectus and the prospectus supplement, you should rely on the information in
the prospectus supplement. The registration statement we filed with the SEC
includes exhibits that provide more detail on descriptions of matters discussed
in this prospectus. You should read this prospectus and the related exhibits
filed with the SEC and any prospectus supplement together with additional
information that may be incorporated by reference as described under the heading
“Where You Can Find More
Information.”
Investing
in securities involves risks. You should carefully review all the
information we have included or incorporated by reference in this prospectus or
any prospectus supplement before deciding to invest. See “Where You
Can Find More Information” below. In particular, you should carefully consider
the risks and uncertainties discussed in our annual report on Form 10-K for the
year ended September 30, 2006, incorporated by reference herein, in
Item 1A “Risk Factors” and in Part I under “Forward Looking Statements” (all of
which may be updated in future filings we make with the SEC as described under
“Where You Can Find More
Information”). In addition, you should carefully consider the
risks and uncertainties discussed in the applicable prospectus supplement that
relates to the securities offered thereby. These risks are not the
only ones facing our company. There may be additional risks and uncertainties
that we presently do not know or that we currently believe are immaterial that
could also impair our business or financial condition. Any of these risks and
uncertainties, either alone or taken together, could materially and adversely
affect our business, financial condition or operating results.
We
are the largest natural gas distribution utility in Missouri, founded in 1857 as
The Laclede Gas Light Company. We serve over 630,000 residential, commercial and
industrial customers in metropolitan St. Louis and surrounding counties in
eastern Missouri. Our utility operations are subject to the jurisdiction of the
Missouri Public Service Commission. Generally, we sell gas for househeating,
certain other household uses, and we sell and transport gas for commercial and
industrial space heating and other industrial uses. We employed 1,874 persons at
September 30, 2006.
For
the year ended September 30, 2006, we had utility operating revenues of $1.141
billion, approximately 60% of which came from sales to residential customers and
25% from sales to commercial and industrial customers. The balance of our
utility operating revenues are primarily attributable to our on-system
transportation services and our off-system sales, and capacity release services.
Due to the seasonal nature of our business, earnings are typically concentrated
in the first six months of the fiscal year, which generally corresponds with the
heating season. We are a wholly-owned subsidiary of The Laclede Group, Inc.
(NYSE:LG), a holding company, and we contributed approximately 57% of The
Laclede Group’s consolidated revenues for the year ended September 30,
2006.
Our
principal executive offices are located at 720 Olive Street, St. Louis, Missouri
63101, and our telephone number is (314) 342-0500.
We
file annual, quarterly and current reports and other information with the
Securities and Exchange Commission. These SEC filings are available over the
Internet at the SEC’s website at “http://www.sec.gov” or on our own website at
“http://www.lacledegas.com.” The other information on our website is
not incorporated by reference in or otherwise part of this prospectus and you
should not rely upon such information. You may also read and copy any document
we file at the SEC’s public reference room at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the
public reference rooms and their copy charges.
In
connection with this offering, we have filed with the SEC a registration
statement on Form S-3 under the Securities Act of 1933 covering the securities.
As permitted by SEC rules, this prospectus omits certain information included in
the registration statement. For a more complete understanding of the securities
we may offer, you should refer to the registration statement, including its
exhibits.
The
SEC allows us to “incorporate by reference” into this prospectus the information
we file with it, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus and any prospectus supplement. The
annual and quarterly reports listed below have been filed with the SEC on a
combined basis by us and our parent, The Laclede Group, but we are only
incorporating the information that relates to us, not the information that
relates to The Laclede Group or its other affiliates. We are incorporating by
reference the documents listed below and any future filings we make with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(other
than
information furnished pursuant to Items 2.02 and 7.01 of Form 8-K and any
related exhibits). Those future filings, if any, will update, supersede and
replace the information contained in any documents incorporated by reference in
this prospectus at the time of the future filings.
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SEC
Filings
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Period/Date
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Annual
Report on Form 10-K
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Year
ended September 30, 2006
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Quarterly
Report on Form 10-Q
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Quarter
ended December 31, 2006
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You
may obtain copies of these filings from our website referred to above or request
copies of these filings, at no cost, by writing or telephoning us at the
following address:
Corporate
Secretary
Laclede
Gas Company
720
Olive Street, 15th
Floor
St.
Louis, Missouri 63101
(314)
342-0531
You
should rely only on the information contained, or incorporated by reference, in
this prospectus and any accompanying prospectus supplement. We have not
authorized anyone else to provide you with different information. Neither this
prospectus nor any accompanying prospectus supplement is an offer to sell
securities and it is not soliciting an offer to buy securities in any
jurisdiction in which the offer or sale is not permitted. You should not assume
that the information incorporated in this prospectus or any accompanying
prospectus supplement is accurate as of any date other than the date on the
front of such documents.
Unless
we state otherwise in any applicable prospectus supplement, we may use the net
proceeds from any sale of the offered securities:
| ● | to redeem, repurchase, repay or retire outstanding indebtedness; | |
| ● | to finance our working capital and capital expenditure needs; | |
| ● | to finance strategic investments in or future acquisitions of other entities or their assets; and | |
| ● | for other general corporate purposes. |
We
may set forth additional information on the use of net proceeds from a
particular offering of securities in the prospectus supplement relating to that
offering.
The
following table sets forth our ratios of earnings to fixed charges for the
respective periods indicated:
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Twelve
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|||||||||||
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Months
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Ended
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December
31,
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Fiscal
Years Ended September 30,
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2006
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2006
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2005
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2004
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2003
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2002
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Ratio
of earnings to fixed charges (1)
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1.99
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2.17
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2.62
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2.89
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3.15
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2.22
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(1)
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For
purposes of computing the ratios of earnings to fixed charges, earnings
represent income from continuing operations plus applicable income taxes
and fixed charges. Fixed charges include all interest expense and the
portion of rent expense deemed representative of the interest
factor.
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General
The
following description sets forth certain general terms and provisions of first
mortgage bonds that we may offer by this prospectus. We may issue first mortgage
bonds from time to time in one or more series. Each series of first mortgage
bonds will be issued under our Mortgage and Deed of Trust, dated as of February
1, 1945, to UMB Bank & Trust Company, n.a., successor trustee, as amended
and supplemented by supplemental indentures and as may be further amended and
supplemented from time to time, collectively referred to as our
“mortgage.” Our mortgage is incorporated by reference as an exhibit
to the registration statement of which this prospectus is a part, and you should
read our mortgage for provisions that may be important to you. Our mortgage has
been qualified under the Trust Indenture Act of 1939.
The
prospectus supplement relating to any series of first mortgage bonds being
offered will include specific terms of that offering, including:
| · | the date or dates on which the principal of the first mortgage bonds will be payable and how it will be paid; | |
| ● | the rate or rates at which the first mortgage bonds will bear interest; | |
| ● | the date or dates from which interest on the first mortgage bonds will accrue, the interest payment dates on which interest will be paid, and the record dates for interest payments; | |
| ● | the place for payment and for the registration and transfer of the first mortgage bonds; | |
| ● | any date or dates on which, and the price or prices at which, the first mortgage bonds may be redeemed at our option and any restrictions on such redemption; | |
| ● | any sinking fund or other provisions or options held by holders of first mortgage bonds that would obligate us to repurchase or otherwise redeem the first mortgage bonds; and | |
| ● | any other terms of the first mortgage bonds not inconsistent with terms of our mortgage. |
Unless
otherwise indicated in the prospectus supplement, the first mortgage bonds will
be issued in denominations of $1,000 and integral multiples thereof. At December
31, 2006, we had outstanding $350 million in first mortgage bonds issued under
our mortgage.
Payment
and Paying Agent
Principal,
interest and any premium on first mortgage bonds issued in the form of global
securities will be paid as described below in “Book-Entry Securities.”
Unless
otherwise specified in the applicable prospectus supplement, interest on the
first mortgage bonds payable on the applicable interest payment date will be
paid to the person in whose name the first mortgage bond is registered at the
close of business on the record date for the interest payment date. However, if
we default in the payment of interest on any first mortgage bond, the defaulted
interest will be paid to the person in whose name the first mortgage bond is
registered on the date of payment of such defaulted interest.
Unless
otherwise specified in the applicable prospectus supplement, principal, interest
and any premium on first mortgage bonds in certificated form will be payable at
the corporate trust office of the trustee in The City of New York as paying
agent for us, or we may direct payment of interest by checks mailed to the
registered owners of the first mortgage bonds. We may change the place of
payment on the first mortgage bonds, may appoint one or more additional paying
agents (including us) and may remove any paying agent, all at our
discretion.
Registration
and Transfer
Unless
otherwise indicated in the applicable prospectus supplement, first mortgage
bonds will initially be issued in the form of one or more global securities,
registered in form, without coupons, as described under “Book-Entry Securities.” The global
securities will be registered in the name of a nominee of The Depository Trust
Company, as depository, and deposited with, or on behalf of, the depository.
Except as described under “Book-Entry Securities,” owners of beneficial
interests in a global security will not be entitled to have first mortgage bonds
registered in their names, will not be entitled to receive physical delivery of
any first mortgage bonds and will not be considered the registered holders of
the bonds under our mortgage. First mortgage bonds may be exchanged for other
first mortgage bonds of the same series in any authorized denominations for a
like aggregate principal amount. Our mortgage allows us at our option to charge
up to two dollars per first mortgage bond for a transfer or exchange as well as
a sum sufficient to cover any applicable taxes or other governmental charges in
either case. However, we are not required to make transfers or exchanges of
first mortgage bonds:
| · | for a period of ten days prior to an interest payment date; | |
| ● | for a period of fifteen days prior to the selection of first mortgage bonds for redemption; or | |
| ● | of any first mortgage bonds called or selected for redemption in full. |
Security
Our
mortgage creates a continuing lien to secure the payment of the principal of,
and interest and any premium on, all first mortgage bonds issued under our
mortgage, which are in all respects equally and ratably secured without
preference, priority or distinction. The lien of our mortgage covers
substantially all of our properties (real, personal and mixed) and franchises,
whether now owned or hereafter acquired, other than cash, shares of stock,
obligations (including bonds, notes and other securities), property acquired for
the purpose of sale or resale in the usual course of business or for consumption
in the operation of our properties, construction equipment acquired for
temporary use, vehicles and automobiles, and all judgments, accounts and choses
in action.
Our
mortgage allows certain permitted liens and encumbrances:
| ● | restrictions, exceptions and reservations of easements, rights of way or otherwise contained in any and all deeds and/or other conveyances under or through which we claim title thereto; | |
| · | with respect to property acquired since the execution of our mortgage, all defects and limitations of title and all other encumbrances existing at the time of such acquisition, including any purchase money mortgage or lien created at the time of acquisition; | |
| ● |
defects
of title with respect to certain real estate of minor importance acquired
by us since 1945;
|
| ● |
liens
and deeds of trust on our leasehold estate at our general offices;
and
|
|
| ● | excepted encumbrances as defined in our mortgage. |
Satisfaction
and Discharge
We
will be discharged from our obligations on the first mortgage bonds, or any
portion of the principal amount of the first mortgage bonds, if we irrevocably
deposit with the trustee sufficient cash to pay the principal, or portion of
principal, interest and any other sums when due on the first mortgage bonds at
their maturity, stated maturity date or redemption.
Our
mortgage will be deemed satisfied and discharged when no first mortgage bonds
issued under our mortgage remain outstanding and when we have paid all other
sums payable by us under our mortgage.
Consolidation,
Merger and Sale of Assets
Our
mortgage does not prevent our consolidation with or merger into another
corporation or our sale or lease of all or substantially all of the mortgaged
property to a corporation provided:
| · |
we
effect the transaction so as to preserve and not impair the lien of our
mortgage;
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any
lease is subject to immediate termination by (a) us or the trustee at any
time during a completed default under our mortgage or (b) a purchaser of
the property at a sale under our mortgage; and
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the
payment of the principal and interest of all first mortgage bonds issued
under our mortgage and the performance and observance of all of our
covenants and conditions in our mortgage are expressly assumed by the
successor corporation.
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The
successor corporation may exercise our same powers and rights under our
mortgage. Our mortgage will not become a lien upon any of the property or
franchises of the successor corporation, except:
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property
which the successor corporation may acquire or construct which becomes an
integral part of the property covered by our mortgage;
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property
used by the successor corporation as the basis under our mortgage for the
issuance of first mortgage bonds; or
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| ● | franchises, repairs and additional property as may be acquired, made or constructed by the successor corporation (a) to maintain, renew and preserve the mortgaged property or (b) in pursuance of some covenant or agreement under our mortgage. |
Our
mortgage does not restrict transactions in which we are the surviving
entity.
Eminent
Domain Provision
If
any governmental body or agency exercises any right that it may have through
eminent domain or otherwise to purchase or designate a purchaser of all or
substantially all of the mortgaged property, or if we sell all or substantially
all of the mortgaged property to any governmental body or agency, then we shall
have the right to redeem all first mortgage bonds outstanding under our
mortgage. The first mortgage bonds would be redeemed at their principal amounts
plus accrued interest to the date of redemption together with any premiums as
may be required. We covenant that in any of such events we will deposit with the
trustee an amount in cash as needed so that all moneys then held by the trustee
shall be sufficient to redeem all first mortgage bonds outstanding under our
mortgage. The trustee will then take such steps as may be necessary to
effect the redemption. The trustee will use the deposited moneys for the
redemption. If we fail to take any steps necessary to effect the prompt
redemption of the first mortgage bonds, the trustee shall have the power, in our
name or otherwise, to take such steps. The trustee, however, is under no
obligation to take any such steps unless the amount of cash on deposit with the
trustee shall be sufficient to effect the redemption.
Dividend
Restriction Covenant
Our
mortgage contains several restrictions on our ability to pay dividends on our
common stock. Under the most restrictive of these provisions, we may not declare
or pay any dividend if, after the dividend, the aggregate net amount spent for
all dividends after September 30, 1953 would exceed a maximum amount determined
by using a formula in our mortgage, which is described below. This provision
does not, however, restrict dividends paid in the form of our common stock. In
addition, the amount we have spent on the acquisition or retirement of our
common stock since that date is added to, and the amount received from the
issuance of new stock is deducted from, the aggregate amount spent for
dividends. Under our mortgage’s formula, the maximum amount is the sum of $8
million plus our earnings applicable to common stock (adjusted for stock
repurchases and issuances) for the period from September 30, 1953, to the last
day of the quarter before the declarations or payment date for the dividend. As
of December 31, 2006, the amount under our mortgage’s formula that was available
to pay dividends was $266 million.
Issuance
of Additional First Mortgage Bonds
The
aggregate amount of first mortgage bonds that may be issued under our mortgage
is unlimited. Our board of directors shall determine, for each series of first
mortgage bonds, denominations, maturity, interest rate, redemption or sinking
fund provisions, and other terms. Sinking fund, redemption or maintenance and
improvement fund provisions for first mortgage bonds of one series may be
inapplicable to first mortgage bonds of another series.
Our
mortgage permits the three different types of issuances of additional first
mortgage bonds: (1) on the basis of unfunded property additions
not subject to a prior lien, in a principal amount not exceeding 60% of the cost
or fair value thereof, whichever is less; (2) on the basis of retired first
mortgage bonds previously outstanding and not made the basis of certain credits
under other provisions of our mortgage; and (3) on the basis of cash deposited
with the trustee, which we may later withdraw after substituting either property
additions or retired first mortgage bonds.
At
December 31, 2006, approximately $255 million principal amount of first mortgage
bonds was issuable under clause (1) above and approximately $60 million
principal amount of first mortgage bonds was issuable under clause (2)
above.
Notwithstanding
the foregoing, additional first mortgage bonds generally may not be issued
unless our net earnings for 12 consecutive months within the 15 months preceding
such issuance is equal to or greater than twice the annual interest charges on
all first mortgage bonds and prior lien bonds then outstanding and then being
issued. We do not need to comply with the earnings test under clause (2) above
if the interest attributable to the retired bonds was included in a net earnings
certificate delivered to the trustee and the interest rate on the new first
mortgage bonds is less than the interest rate of the retired bonds.
Release
and Substitution of Property
Unless
we are in default under our mortgage, property may be released against cash or,
to a limited extent, purchase money mortgages, property additions, and the
waiver of the right to issue first mortgage bonds. Any cash deposited may be
withdrawn upon the basis of property additions and the waiver of the right to
issue first mortgage bonds on the basis of property additions. Our mortgage
contains special provisions with respect to pledged prior lien
bonds.
Events
of Default and Remedies
A
“completed default” under our mortgage means any of the following:
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failure
to pay the principal of any first mortgage bond when due, whether at its
stated maturity or by declaration, redemption or
otherwise;
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failure
to pay interest on any first mortgage bond within 60 days of when it is
due;
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failure
to pay any interest on or principal of any outstanding prior lien bonds
with any applicable grace period;
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certain
events involving our bankruptcy, insolvency or reorganization for a period
of 90 days or more or our written admission of our inability to pay our
debts generally as they mature; or
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failure
to perform any covenant, agreement or condition in our mortgage within 90
days of notice thereof to us from the
trustee.
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Our
mortgage provides that if a completed default happens, the trustee may, and upon
written request of the holders of a majority in principal amount of the first
mortgage bonds then outstanding will, declare the principal and accrued interest
then owing immediately due and payable. However, after that declaration but
before any sale under that declaration, the holders of a majority in principal
amount of all outstanding first mortgage bonds may, under certain circumstances,
rescind and annul the declaration if all agreements with respect to the
completed default have been fully performed and all interest in arrears and
expenses and charges have been paid. Upon the occurrence of a completed default,
the trustee may take possession of, manage, and operate the property. In
addition, the trustee may sell all of the property, or those parcels as the
holders of a majority in principal amount of the first mortgage bonds
outstanding may determine.
Subject
to the provisions of our mortgage relating to the duties of the trustee, if an
event of a completed default occurs and continues, the trustee is under no
obligation to exercise any of its rights or powers under our mortgage unless the
holders of a majority in principal amount of the first mortgage bonds then
outstanding have requested the trustee to take action and have adequately
indemnified the trustee. In addition, the holders of a majority in principal
amount of the first mortgage bonds then outstanding have the right to direct the
time, method, and place of conducting any proceedings for any remedy available
to the trustee and to exercise any trust or power conferred on the
trustee.
Our
mortgage provides that the trustee, within 90 days after the occurrence of a
completed default, will give notice to the holders of the default, unless the
default is cured before the giving of the notice. In the case of a default in
the payment of the principal of or interest on any of the first mortgage bonds,
however, the trustee is protected in withholding notice if it determines in good
faith that the withholding of the notice is in the interest of the holders of
first mortgage bonds.
Holders
of first mortgage bonds have no right to institute any suit, action or
proceeding in equity or at law for the foreclosure of our mortgage, for the
execution of any trust, for the appointment of a receiver or any other remedy
unless:
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prior
notice is given to the trustee of a completed default;
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holders
of at least 25% of the first mortgage bonds then outstanding request the
trustee, and offer it reasonable opportunity, to
proceed;
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offer
the trustee adequate security and indemnity; and
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the
trustee within 60 days of the notice fails or refuses to institute such
action.
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Our
mortgage also provides that a court in its discretion may require, in any suit
to enforce any provision of our mortgage or against the trustee, the filing by
the party filing the suit of an undertaking to pay the costs of the suit. The
court may also assess reasonable costs including attorneys’ fees against any
party to the suit. These provisions do not apply, however, to a suit filed by
the trustee or any bondholder for the payment of principal or interest on any
first mortgage bond on or after the stated due date of the first mortgage
bond.
Compliance
Certificates
We
are required to furnish annually to the trustee a certificate as to compliance
with all conditions and covenants under our mortgage. We must provide similar
certificates to the trustee upon each release of property from the lien of our
mortgage and upon each issuance of additional first mortgage bonds. Further, our
mortgage
7
requires
us to deliver a similar certificate to the trustee each time we declare a
dividend, make any other payment or distribution on our capital stock, or
purchase, redeem, acquire or retire any shares of our capital
stock.
Trustee
UMB
Bank & Trust, n.a., is the trustee under our mortgage. UMB Bank, n.a., an
affiliate of the trustee, serves as transfer agent for our preferred stock,
transfer agent for our parent company’s common stock, rights agent for our
parent company’s preferred share purchase rights, and plan agent for our parent
company’s dividend reinvestment and stock purchase plan. Our parent also has a
line of credit from UMB Bank, n.a., and we have also recently had, and may from
time to time in the future have, lines of credit from UMB Bank,
n.a.
Modification
of Mortgage
Our
mortgage contains provisions permitting modification of our mortgage by consent
of the holders of two-thirds in principal amount of all first mortgage bonds
whose rights are affected by such modification. However, no modification
may:
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extend
the maturity of the principal of any first mortgage
bonds,
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reduce
the rate of interest on any first mortgage bond,
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modify
any other term of payment of principal and interest,
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deprive
to any holder of a first mortgage bond the mortgage
lien,
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create
a lien on the mortgaged property ranking equal or prior to the mortgage
lien; or
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reduce
the percentage required for
modification,
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without
the consent of any holder of first mortgage bonds affected by the modification.
Holders of at least three-fourths in principal of the first mortgage bonds
outstanding (including first mortgage bonds offered by this prospectus),
however, may consent to the postponement of any interest payment for a period
not exceeding three years from its due date.
Reservation
of Rights
In
the supplemental indentures for our first mortgage bonds issued on or after June
9, 2006, we have reserved the right to amend or supplement our mortgage without
any consent or other action of the holders of any series of first mortgage bonds
created on or after June 9, 2006, for any of the following
purposes:
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to
correct or amplify the description of property subject to the lien of our
mortgage, to better assure, convey and confirm to the trustee any property
required to be subject to our mortgage or to subject additional property
to the lien of our mortgage; and
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to
change or eliminate any provision of our mortgage or to add any new
provision to our mortgage provided that the change, elimination or
addition must not adversely affect the interests of the holders of the
first mortgage bonds of any
series.
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We
have also provided that our mortgage shall be deemed to be amended to comply
with the Trust Indenture Act of 1939, as in effect from time to
time.
First
mortgage bonds issued on and after June 9, 2006 will not be entitled to the
benefits of a maintenance and improvement fund. However, so long as the
outstanding series of first mortgage bonds created prior to June 9, 2006
remain outstanding, we will be required to comply with the maintenance and
improvement fund requirements. Those requirements include paying annually to the
trustee cash equal to 2¾% of the average amount of our gross property account
less certain credits. These credits consist
of:
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credit
for ordinary maintenance and repairs to the mortgaged property in the
calendar year in question;
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credit
for expenditures since August 31, 1942 for property additions that have
not been made the basis for the issuance of first mortgage bonds, for a
prior credit or as to which the right to have first mortgage bonds
authenticated has been waived (this credit is limited to the cost of
mortgaged property retired subsequent to August 31,
1942);
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credit
for property additions that could be the basis for the issuance of first
mortgage bonds, but which first mortgage bonds have not yet been
issued;
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credit
for outstanding first mortgage bonds surrendered to the trustee for
cancellation; and
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credit
up to $2,000,000 for the payment of certain debentures that were issued in
1945 and have now been paid.
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If
the credits taken exceed the amount of the annual payment that would otherwise
be required, the excess credits may be carried forward from year to year. We may
choose to use these excess credits or to deposit cash into the fund. Any cash so
deposited may be withdrawn on the basis of those credits or used to redeem first
mortgage bonds. Any cash not so withdrawn or used within three years from the
receipt thereof by the trustee shall be used by the trustee to redeem first
mortgage bonds. The credit balance that is shown on the most recent certificate,
which was filed in 2006 for the calendar year 2005 and may, therefore, be
carried forward, is $88,959,227.
General
The
following description sets forth certain general terms and provisions of
unsecured debt securities that we may offer by this prospectus. We may issue
debt securities from time to time in one or more series. Each series of debt
securities will be issued under our indenture between us and the trustee. The
form of our indenture is incorporated by reference as an exhibit to the
registration statement of which this prospectus is a part, and you should read
our indenture for provisions that may be important to you. Our indenture will be
qualified under the Trust Indenture Act of 1939.
The
debt securities will be our direct senior, unsecured and unsubordinated general
obligations. The debt securities will rank equally with any of our other senior,
unsecured and unsubordinated debt. As of December 31, 2006, we had $257 million
of short-term unsecured debt outstanding, all in the form of commercial paper,
and $350 million of first mortgage bonds issued and outstanding under our
mortgage. Our indenture does not restrict our ability to issue
additional first mortgage bonds under our mortgage.
The
prospectus supplement relating to any series of debt securities being offered
will include specific terms relating to that offering, including:
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the
title of the debt securities;
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the
total principal amount of the debt securities;
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the
date or dates on which the principal of the debt securities will be
payable and how it will be paid;
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the
rate or rates at which the debt securities will bear interest, or how such
rate or rates will be determined;
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the
date or dates from which interest on the debt securities will accrue, the
interest payment dates on which interest will be paid, and the record
dates for interest payments;
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any
right to extend the interest payment periods for the debt securities and
the duration of the extension;
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the
percentage, if less than 100%, of the principal amount of the debt
securities that will be payable if the maturity of the debt securities is
accelerated;
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any
date or dates on which, and the price or prices at which, the debt
securities may be redeemed at our option and any restrictions on
such redemptions;
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any
sinking fund or other provisions or options held by holders of debt
securities that would obligate us to repurchase or otherwise redeem the
debt securities;
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any
changes or additions to the events of default under our indenture or
changes or additions to our covenants under our
indenture;
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if
the debt securities will be issued in denominations other than
$1,000;
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if
payments on the debt securities may be made in a currency or currencies
other than United States dollars;
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any
convertible feature or options regarding the debt
securities;
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any
rights or duties of another person to assume our obligations with respect
to the debt securities;
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any
collateral, security, assurance or guarantee for the debt securities;
and
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any
other terms of the debt securities not inconsistent with terms of our
indenture.
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Our indenture does
not limit the principal amount of debt securities that may be issued. Our
indenture allows debt securities to be issued up to the principal amount that
may be authorized by us.
Debt
securities may be sold at a discount below their principal amount. United States
federal income tax considerations applicable to debt securities sold at an
original issue discount may be described in the prospectus supplement. In
addition, certain United States federal income tax or other considerations
applicable to any debt securities that are denominated or payable in a currency
or currency unit other than United States dollars may be described in the
prospectus supplement.
Except
as may otherwise be described in the prospectus supplement, the covenants
contained in our indenture will not afford holders of debt securities protection
in the event of a highly leveraged or similar transaction involving us or in the
event of a change of control.
Payment
and Paying Agents
Except
as may be provided in the prospectus supplement, interest, if any, on each debt
security payable on each interest payment date will be paid to the person in
whose name such debt security is registered as of the close of business on the
regular record date for the interest payment date. However, interest payable at
maturity will be paid to the person to whom the principal is paid. If there has
been a default in the payment of interest on any debt security, the defaulted
interest may be paid to the holder of such debt security as of the close of
business on a date to be fixed by the trustee, which will be between 10 and
15 days prior to the date proposed by us for payment of such defaulted interest
or in any other manner permitted by any securities exchange on which such debt
security may be listed, if the trustee finds it practicable.
Unless
otherwise specified in the prospectus supplement, principal of, and premium, if
any, and interest, if any, on the debt securities at maturity will be payable
upon presentation of the debt securities at the trustee’s corporate trust
office. We may change the place of payment on the debt securities, may appoint
one or more additional paying agents (including us) and may remove any paying
agent, all at our discretion.
Registration
and Transfer
Unless
otherwise specified in the prospectus supplement, the transfer of debt
securities may be registered, and debt securities may be exchanged for other
debt securities of the same series or tranche, of authorized denominations and
with the same terms and principal amount, at the trustee’s corporate trust
office. We may change the place for registration of transfer and exchange of the
debt securities and may designate additional places for such registration and
exchange. Unless otherwise provided in the prospectus supplement, no service
charge will be made for any transfer or exchange of the debt securities.
However, we may require payment to cover any tax or other
governmental
charge that may be imposed. We will not be required to execute or to provide for
the registration of transfer of, or the exchange of, (a) any debt security
during a period of 15 days prior to giving any notice of redemption or (b) any
debt security selected for redemption except the unredeemed portion of any debt
security being redeemed in part.
Defeasance
and Discharge
Unless
the applicable prospectus supplement states otherwise, the indenture, with
respect to any and all series of debt securities, will be discharged and
canceled (except for certain specified surviving obligations) if, among other
things, we pay, in full, the principal of (and premium, if any) and interest on
all series of the debt securities and all other sums required under the
indenture and we deliver a certificate to the trustee stating that we have
complied with all conditions precedent relating to the satisfaction and
discharge of the indenture.
In
addition, we may at any time terminate certain of our obligations under the
indenture with respect to the debt securities of any series or terminate our
obligations under certain covenants set forth in the indenture (after which any
omission to comply with such obligations shall not constitute a default with
respect to the debt securities) if we irrevocably deposit in trust with the
trustee for the debt securities, for the benefit of the holders, cash or United
States government obligations, or a combination thereof, in such amounts as will
be sufficient to pay the principal of and premium and interest, if any, on the
dates such payments are due in accordance with the terms of the indenture and
the debt securities; provided that such funds shall have been on deposit with
such trustee for a period of at least 90 days, or such trustee shall have
received an opinion of counsel to the effect that payments to holders with such
monies as proceeds are not recoverable as a preference under any applicable
United States federal or state law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief of debtors. We
must also comply with certain other conditions, including (under certain
circumstances) the delivery of an opinion of counsel to the effect that the
holder of the debt securities will not realize income, gain or loss for federal
income tax purposes as a result of such defeasance. The opinion of counsel may
be required to be accompanied by a ruling of the Internal Revenue Service issued
to us or based on a change in law or regulation occurring after the date of the
indenture.
Consolidation,
Merger, and Sale of Assets
Under
the terms of our indenture, we may not consolidate with or merge into any other
entity or convey, transfer or lease our properties and assets substantially as
an entirety to any entity, unless:
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the
surviving or successor entity is organized and validly existing under the
laws of any domestic jurisdiction and it expressly assumes our obligations
on all debt securities and under our indenture;
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immediately
after giving effect to the transaction, no event of default and no event
which, after notice or lapse of time or both, would become an event of
default shall have occurred and be continuing; and
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we
shall have delivered to the trustee an officer’s certificate and an
opinion of counsel as to compliance with the
foregoing.
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The
terms of our indenture do not restrict us in a merger in which we are the
surviving entity.
Events
of Default
“Event
of default” when used in our indenture with respect to any series of debt
securities, means any of the following:
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failure
to pay interest, if any, on any debt security of the applicable series for
60 days after it is due;
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failure
to pay the principal of or premium, if any, on any debt security of the
applicable series within three business days after its
maturity;
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we
and the trustee receive a written notice from 33% of the holders of the
debt securities of that series; however, the trustee or the trustee and
the holders of such principal amount of debt securities of this series can
agree to an extension of the 90-day period and that an agreement to extend
will be automatically deemed to occur if we are diligently pursuing action
to correct the default;
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certain
events involving our bankruptcy, insolvency or reorganization;
or
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any
other event of default included in any supplemental indenture or officer’s
certificate for a specific series of debt
securities.
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The
trustee may withhold notice to the holders of debt securities of any default,
except default in the payment of principal, premium or interest, if it considers
such withholding of notice to be in the interests of the holders. An event of
default for a particular series of debt securities does not necessarily
constitute an event of default for any other series of debt securities issued
under our indenture.
Remedies
If
an event of default with respect to fewer than all the series of debt securities
occurs and continues, either the trustee or the holders of at least 33% in
principal amount of the debt securities of such series may declare the entire
principal amount of all the debt securities of such series, together with
accrued interest, to be due and payable immediately. However, if the event of
default is applicable to all outstanding debt securities under our indenture,
only the trustee or holders of at least 33% in principal amount of all
outstanding debt securities of all series, voting as one class, and not the
holders of any one series, may make such a declaration of
acceleration.
At
any time after a declaration of acceleration with respect to the debt securities
of any series has been made and before a judgment or decree for payment of the
money due has been obtained, the event of default giving rise to such
declaration of acceleration will be considered waived, and such declaration and
its consequences will be considered rescinded and annulled, if:
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we
have paid or deposited with the trustee a sum sufficient to
pay:
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all
overdue interest, if any, on all debt securities of the
series;
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the
principal of, and premium, if any, on, any debt securities of the series
which have otherwise become due and interest, if any, that is currently
due;
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interest,
if any, on overdue interest; and
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all
amounts due to the trustee under our indenture;
or
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any
other event of default with respect to the debt securities of that series
has been cured or waived as provided in our
indenture.
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There
is no automatic acceleration, even in the event of our bankruptcy, insolvency or
reorganization.
Other
than its duties in case of an event of default, the trustee is not obligated to
exercise any of its rights or powers under our indenture at the request, order
or direction of any of the holders, unless the holders offer the trustee a
reasonable indemnity. If they provide a reasonable indemnity, the holders of a
majority in principal amount of any series of debt securities will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee, or exercising any power conferred upon the
trustee. However, if the event of default relates to more than one series, only
the holders of a majority in aggregate principal amount of all affected series
will have the right to give this direction. The trustee is not obligated to
comply with directions that conflict with law or other provisions of our
indenture.
No
holder of debt securities of any series will have any right to institute any
proceeding under our indenture, or to exercise any remedy under our indenture,
unless:
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the
holder has previously given to the trustee written notice of a continuing
event of default;
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the
holders of a majority in aggregate principal amount of the outstanding
debt securities of all series in respect of which an event of default
shall have occurred and be continuing have made a written request to the
trustee and have offered reasonable indemnity to the trustee to institute
proceedings; and
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the
trustee has failed to institute any proceeding for 60 days after notice
and has not received any direction inconsistent with the written request
of holders during that period. (See Section
807.)
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However,
such limitations do not apply to a suit by a holder of a debt security for
payment of the principal of, or premium, if any, or interest, if any, on, a debt
security on or after the applicable due date.
Annual
Notice to Trustee
We
will provide to the trustee an annual statement by an appropriate officer as to
our compliance with all conditions and covenants under our
indenture.
Modification
and Waiver
We
and the trustee may enter into one or more supplemental indentures without the
consent of any holder of debt securities for any of the following
purposes:
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to
evidence the assumption by any permitted successor of our covenants in our
indenture and in the debt securities;
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to
add additional covenants or to surrender any of our rights or powers under
our indenture;
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to
add additional events of default;
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to
change, eliminate, or add any provision to our indenture; provided,
however, if the change, elimination, or addition will adversely affect the
interests of the holders of debt securities of any series in any material
respect, such change, elimination, or addition will become effective
only:
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when
no debt securities of the affected series remain outstanding under our
indenture;
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to
provide collateral security for all but not part of the debt
securities;
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to
establish the form or terms of debt securities of any other series as
permitted by our indenture;
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to
provide for the authentication and delivery of bearer securities and
coupons attached thereto;
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to
evidence and provide for the acceptance of appointment of a successor
trustee;
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to
provide for the procedures required for use of a noncertificated system of
registration for the debt securities of all or any
series;
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to
change any place where principal, premium, if any, and interest shall be
payable, debt securities may be surrendered for registration of transfer
or exchange and notices to us may be served; or
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to
cure any ambiguity or inconsistency or to make any other provisions with
respect to matters and questions arising under our indenture, provided
that such action shall not adversely affect the interests of the holders
of debt securities of any series in any material
respect.
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The
holders of at least a majority in aggregate principal amount of the debt
securities of all series then outstanding may waive our compliance with certain
restrictive provisions of our indenture. The holders of not less than a majority
in principal amount of the outstanding debt securities of any series may waive
any past default under our indenture with respect to that series, except a
default in the payment of principal, premium, if any, or interest and certain
covenants and provisions of our indenture that cannot be modified or be amended
without the consent of the holder of each outstanding debt security of the
series affected.
If
the Trust Indenture Act of 1939 is amended after the date of our indenture in
such a way as to require changes to our indenture, our indenture will be deemed
to be amended so as to conform to such amendment of the Trust Indenture Act of
1939. We and the trustee may, without the consent of any holders, enter into one
or more supplemental indentures to evidence such an amendment.
The
consent of the holders of a majority in aggregate principal amount of the debt
securities of all series then outstanding is required for all other
modifications to our indenture. However, if less than all of the series of debt
securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate
principal amount of all series that are directly affected will be required. No
such amendment or modification may:
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change
the stated maturity of the principal of, or any installment of principal
of or interest on, any debt security, or reduce the principal amount of
any debt security or its rate of interest or change the method of
calculating such interest rate or reduce any premium payable upon
redemption, or change the currency in which payments are made, or impair
the right to institute suit for the enforcement of any payment on or after
the stated maturity of any debt security, without the consent of the
holder;
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reduce
the percentage in principal amount of the outstanding debt securities of
any series whose consent is required for any supplemental indenture or any
waiver of compliance with a provision of our indenture or any default
thereunder and its consequences, or reduce the requirements for quorum or
voting, without the consent of all the holders of the series;
or
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A
supplemental indenture that changes our indenture solely for the benefit of one
or more particular series of debt securities, or modifies the rights of the
holders of debt securities of one or more series, will not affect the rights
under our indenture of the holders of the debt securities of any other
series.
Our
indenture provides that debt securities owned by us or anyone else required to
make payment on the debt securities shall be disregarded and considered not to
be outstanding in determining whether the required holders have given a request
or consent.
We
may fix in advance a record date to determine the required number of holders
entitled to give any request, demand, authorization, direction, notice, consent,
waiver or other act of the holders, but we shall have no obligation to do so. If
a record date is fixed for that purpose, the request, demand, authorization,
direction, notice, consent, waiver or other act of the holders may be given
before or after that record date, but only the holders of record at the close of
business on that record date will be considered holders for the purposes of
determining whether holders of the required percentage of the outstanding debt
securities have authorized or agreed or consented to the request, demand,
authorization, direction, notice, consent, waiver or other act of the holders.
For that purpose, the outstanding debt securities shall be computed as of the
record date. Any request, demand, authorization, direction, notice, consent,
election, waiver or other act of a holder shall bind every future holder of the
same debt securities and the holder of every debt security issued upon the
registration of transfer of or in exchange of those debt securities. A
transferee will be bound by acts of the trustee or us taken in reliance upon an
act of holders whether or not notation of that action is made upon that debt
security.
Notices
Notices
to holders of debt securities will be given by mail to the addresses of the
holders as they may appear in the security register for the debt
securities.
Title
We,
the trustee, and any agent of us or the trustee, may treat the person in whose
name debt securities are registered as the absolute owner of those debt
securities, whether or not those debt securities may be overdue, for the purpose
of making payments and for all other purposes irrespective of notice to the
contrary.
Governing
Law
Each
indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
Regarding
the Trustee
We
will appoint the trustee under our indenture. A trustee may resign at any time
by giving written notice to us or may be removed at any time by act of the
holders of a majority in principal amount of all series of debt securities then
outstanding delivered to the trustee and us. No resignation or removal of a
trustee and no appointment of a successor trustee will be effective until the
acceptance of appointment by a successor trustee. So long as no event of default
or event which, after notice or lapse of time, or both, would become an event of
default has occurred and is continuing and except with respect to a trustee
appointed by act of the holders, if we have delivered to the trustee a
resolution of our board of directors appointing a successor trustee and that
successor has accepted such appointment in accordance with the terms of our
indenture, the trustee will be deemed to have resigned and the successor will be
deemed to have been appointed as trustee in accordance with our
indenture.
The
following description sets forth certain general terms and provisions of
preferred stock that we may offer by this prospectus. We may issue our preferred
stock from time to time in one or more series. When we refer to a series of
preferred stock, we mean all of the shares of preferred stock issued as part of
the same series under a certificate of designation filed as part of our articles
of incorporation. Our articles of incorporation are incorporated by reference as
an exhibit to the registration statement of which this prospectus is a part, and
you should read our articles for provisions that may be important to
you.
Our
Authorized Preferred Stock
Our
authorized capital stock includes 1,480,000 shares of preferred stock, par value
$25.00 per share. As of March 9, 2007 we have 31,932 shares of cumulative
preferred stock (designated as two separate series), $25.00 liquidation
preference per share, issued and outstanding as of the date of this prospectus.
The prospectus supplement with respect to any offered preferred stock will
describe any preferred stock that may be outstanding as of the date of the
applicable prospectus supplement. The prospectus supplement will also describe
restrictions on our ability to make certain amendments to our articles of
incorporation, sell additional shares, and declare or pay any dividends on any
stock ranking junior to the preferred stock. We may at any time purchase out of
surplus, or when and as permitted by law, out of stated capital, preferred
shares of any series but for no more than the applicable redemption price. Any
shares purchased and retired, redeemed and retired, purchased or redeemed out of
stated capital as permitted by law, shall have the status of authorized but
unissued shares of preferred stock and may be issued again. Holders of shares of
our preferred stock have no preemptive rights relative to any shares of any
class of our stock.
Preferred
Stock Issued in Separate Series
Our
board of directors is authorized to divide the preferred stock into series and,
with respect to each series, to determine the designations, the powers,
preferences and rights and the qualifications, limitations and restrictions of
the series, including:
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dividend
rate;
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conversion
or exchange
rights;
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redemption
price and terms of redemption;
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voluntary
and involuntary liquidating value;
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sinking
fund provisions;
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the
serial designation of the series; and
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the
number of shares constituting the
series.
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In
all other respects, all of the shares of the preferred stock regardless of
series shall in all respects be equal and shall have the preferences, rights,
privileges and restrictions provided under our articles of incorporation. Before
we issue any series of preferred stock, our board of directors will adopt
resolutions creating and designating the series and will file a certificate of
designation stating the terms of the series with the Secretary of State of the
State of Missouri. None of our stockholders will need to approve that
amendment.
The
rights of holders of preferred stock may be adversely affected by the rights of
holders of preferred stock that may be issued in the future. Our board of
directors may cause shares of preferred stock to be issued in public or private
transactions for any proper corporate purpose.
Preferred
stock will be fully paid and nonassessable when issued, which means that its
holders will have paid their purchase price in full and that we may not ask them
to surrender additional funds. Holders of preferred stock will not have
preemptive or subscription rights to acquire more stock.
UMB
Bank, n.a., currently serves as the transfer agent, registrar, dividend
disbursing agent and redemption agent for our preferred stock.
Ranking
Shares
of each series of preferred stock will rank equally with each other series of
preferred stock and senior to our common stock with respect to dividends and
distributions of assets. In addition, we will generally be able to pay dividends
and distributions of assets to holders of our preferred stock only if we have
satisfied our obligations on our indebtedness then due and payable. No dividends
may be declared or paid on our common stock unless the dividends for the current
and all past quarterly periods shall have been declared on our outstanding
preferred stock.
Dividends
Holders
of each series of preferred stock will be entitled to receive cash dividends
when, as and if declared by our board of directors, from funds legally available
for the payment of dividends. The rates of payment of dividends for each series
of preferred stock will be stated in the applicable prospectus supplement.
Dividends will be payable to holders of record of preferred stock as they appear
on our books on the record dates fixed by our board of directors. Dividends on
any series of preferred stock will be cumulative. The payment dates will be
March 31, June 30, September 30, and December 31.
Redemption
Shares
of preferred stock of any series may be redeemed at the option of our board of
directors in whole or in part at any time. Our board of directors will determine
the redemption price applicable to a series of preferred stock, which will be
specified in a prospectus supplement. In no event will the redemption price
exceed the par value of the stock, plus 15% of the par value, plus any unpaid
dividends. If only a part of the preferred shares or a part of a series of
preferred shares is to be redeemed, our board of directors will determine what
shares are to be redeemed and the process for the selection of those to be
redeemed. Notice of redemption will be given by mail and publication at least 30
but no more than 60 days prior to the redemption date.
Any
restriction on the repurchase or redemption by us of our preferred stock while
there is an arrearage in the payment of dividends will be described in the
applicable prospectus supplement. Any partial redemptions of preferred stock
will be made in a way that our board of directors decides is
equitable.
Unless
we default in the payment of the redemption price, dividends will cease to
accrue after the redemption date on shares of preferred stock called for
redemption, and all rights of holders of these shares will terminate except for
the right to receive the redemption price.
Conversion
or Exchange Rights
The
prospectus supplement relating to any series of preferred stock that is
convertible, exercisable or exchangeable will state the terms on which shares of
that series are convertible into or exercisable or exchangeable for shares of
common stock, another series of our preferred stock or other securities or debt
or equity securities of third parties.
Liquidation
Preference
Upon
any voluntary or involuntary liquidation, dissolution or winding up of our
business, holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount described in the applicable
prospectus supplement, but in no event will the liquidation value exceed the par
value of the stock plus 15% of the par value. Also payable upon liquidation will
be any unpaid dividends. These distributions will be made before any
distribution is made on any securities ranking junior to the preferred stock
with respect to liquidation, including our common stock. If the liquidation
amounts payable relating to the preferred stock of any series and any other
securities ranking on a parity regarding liquidation rights are not paid in
full, the holders of the preferred stock of that series and the other securities
will share in any distribution of our available assets on a ratable basis in
proportion to the full liquidation preferences of each security. Holders of our
preferred stock will not be entitled to any other amounts from us after they
have received their full liquidation preference.
Voting
Rights
The
holders of preferred stock of each series generally will have no voting rights.
However, if six quarterly payment dates have passed and the full amount of
dividends payable on those payment dates shall not have been declared and paid
or funds set aside for payment, then until those payment defaults have been
remedied so that no dividends on any preferred stock are in default, the shares
of outstanding preferred stock shall be entitled to one vote for each share on
all matters other than the election of directors. In those circumstances, the
holders of the outstanding preferred stock, voting separately as a class, shall
be entitled to elect, by cumulative voting, the minimum number of directors
required for a majority of our board of directors; and the holders of the common
stock, voting separately as a class, shall be entitled to elect by cumulative
voting the remainder of the directors. After the defaults have been remedied,
the preferred stock shall revert to non-voting and the election of directors
shall return to its process before the defaults.
Modifications
and Covenants
So
long as any shares of preferred stock are outstanding, we may not amend our
articles of incorporation:
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to
create or increase preferential shares or reclassify any authorized but
unissued shares of stock that would make
them:
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rank
on a parity with the preferred shares currently authorized under our
articles of incorporation unless the amendment is approved by the
affirmative vote of a majority of the outstanding shares of preferred
stock voting as a separate class, as well as the affirmative vote of a
majority of all outstanding shares entitled to vote thereon;
or
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have
a preference or a priority over shares of preferred stock currently
authorized under our articles of incorporation unless the amendment
received the affirmative vote of at least 75% of the
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outstanding
shares of preferred stock, voting as a separate class, plus the
affirmative vote of a majority of all outstanding shares entitled to vote;
or
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to
alter or change the preferred stock’s preferences, priorities, special
rights or special powers given to a class of preferred stock so as to
affect such class adversely unless the amendment received the affirmative
vote of at least two-thirds of the outstanding shares of the class of
preferred stock in addition to the affirmative vote of a majority of all
other outstanding shares entitled to vote and in addition to any other
vote that may be required by law; provided, however, that if the amendment
would change adversely the dividends or dividend rate on the preferred
stock, the redemption price, the amounts payable on voluntary or
involuntary liquidation or any rights with respect to conversion into
common stock, then the affirmative vote required shall be 75% of the
outstanding shares of each and every series that would be adversely
affected by such change or
alteration.
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While
there are shares of preferred stock outstanding, we will not, without the
consent of the holders of at least two-thirds of the aggregate number of shares
of preferred stock then outstanding:
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sell
or otherwise dispose of any shares ranking on a parity with the preferred
stock as to assets or dividends unless our gross income for a period of
any 12 consecutive calendar months within the 15 calendar months
immediately preceding the first day of the month in which such additional
stock is to be issued, is at least 1½ times the annual requirements
for
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dividends
on all preferred stock and of any other class ranking on a parity
therewith or having any preference over it as to assets or dividends that
will be outstanding immediately after the issuance of the additional
stock, plus interest on all of our bonds, notes, debentures and other
interest-bearing obligations that will be outstanding immediately after
the issuance of the additional
stock.
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declare
or pay any dividend (other than a stock dividend) on stock ranking junior
to the preferred stock when the stated capital represented by the stock of
all classes ranking junior to the preferred stock plus paid-in and capital
surplus and earned surplus, is less than 25% of our total capitalization,
unless:
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the
dividend is an amount not greater than 75% of our net earnings,
after provision for dividends on the preferred stock outstanding, earned
during our fiscal year in which the dividend is declared and before the
end of the quarter in which the dividend is declared;
or
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the
dividend and all other dividends (other than stock dividends) on stock of
any class junior to the preferred stock, declared or paid since the
earliest date of issue of any then outstanding shares of said preferred
stock or of stock ranking on a parity with the preferred stock, as to
assets or dividends, aggregate no more than 75% of our net earnings after
provision for dividends on the preferred stock outstanding earned between
the earliest date of issue and the end of the quarter in which the
dividend is declared.
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issue
any shares of preferred stock or stock ranking on a parity with the
preferred stock as to assets or dividends, if the stated capital to be
represented by shares of the preferred stock and such other stock to be
outstanding immediately after each issue, would exceed the stated capital
to be represented by shares of stock to be then outstanding ranking junior
to said preferred stock as to assets and dividends, increased by the
amount of any paid-in surplus and capital surplus, and any earned surplus,
or reduced by the amount of any
deficit.
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Mergers
and Similar Transactions Permitted; Liens Permitted
The
terms of the preferred stock will not include any restrictions on our ability to
merge or consolidate with, or sell our assets to, another corporation or other
entity or to engage in any other transactions. The terms of the preferred stock
also will not include any restrictions on our ability to put liens on our
assets.
Governing
Law
The
preferred stock will be governed by Missouri law.
Unless
otherwise specified in the applicable prospectus supplement, the securities
offered by this prospectus will be issued to investors in the form of one or
more book-entry certificates registered in the name of a depositary or a nominee
of a depositary. Unless otherwise specified in the applicable prospectus
supplement, the depositary will be DTC. We have been informed by DTC that its
nominee will be Cede & Co. Accordingly, Cede is expected to be the initial
registered holder of all securities that are issued in book-entry
form.
No
person that acquires a beneficial interest in securities issued in book-entry
form will be entitled to receive a certificate representing those securities,
except as set forth in this prospectus or in the applicable prospectus
supplement. Unless and until definitive securities are issued under the limited
circumstances described below, all references to actions by holders or
beneficial owners of securities issued in book-entry form will refer to actions
taken by DTC upon instructions from its participants, and all references to
payments and notices to holders or beneficial owners will refer to payments and
notices to DTC or Cede, as the registered holder of such
securities.
DTC
has informed us that it is:
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a
limited-purpose trust company organized under New York banking
laws;
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a
“banking organization” within the meaning of the New York banking
laws;
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a
member of the Federal Reserve System;
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a
“clearing corporation” within the meaning of the New York Uniform
Commercial Code; and
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a
“clearing agency” registered under the Securities Exchange
Act.
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DTC
has also informed us that it was created to:
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hold
securities for “participants;” and
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facilitate
the computerized settlement of securities transactions among participants
through computerized electronic book-entry changes in participants’
accounts, thereby eliminating the need for the physical movement of
securities certificates.
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Participants
have accounts with DTC and include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to indirect participants such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Persons
that are not participants or indirect participants but desire to buy, sell or
otherwise transfer ownership of or interests in securities may do so only
through participants and indirect participants. Under the book-entry system,
beneficial owners may experience some delay in receiving payments as payments
will be forwarded by our agent to Cede, a nominee for DTC. These payments will
be forwarded to DTC’s participants, which thereafter will forward them to
indirect participants or beneficial owners. Beneficial owners will not be
recognized by the applicable registrar, transfer agent, trustee or depositary as
registered holders of the securities entitled to the benefits of our mortgage,
our indenture or any other instrument governing the securities, as the case may
be. Beneficial owners that are not participants will be permitted to exercise
their rights as an owner only indirectly through participants and, if
applicable, indirect participants.
Under
the current rules and regulations affecting DTC, DTC will be required to make
book-entry transfers of securities among participants and to receive and
transmit payments to participants. Participants and indirect participants with
whom beneficial owners of securities have accounts are also required by these
rules to make book-entry transfers and receive and transmit such payments on
behalf of their respective account holders.
Because
DTC can act only on behalf of participants who, in turn, act only on behalf of
other participants or indirect participants, and on behalf of certain banks,
trust companies and other persons approved by it, the ability of
a
beneficial owner of securities issued in book-entry form to pledge those
securities to persons or entities that do not participate in the DTC system may
be limited due to the unavailability of physical certificates for the
securities.
DTC
has advised us that it will take any action permitted to be taken by a
registered holder of any securities under our mortgage, our indenture
or any instrument governing the securities, as the case may be, only
at the direction of one or more participants to whose accounts with DTC the
securities are credited.
According
to DTC, it has provided information with respect to DTC to its participants and
other members of the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract modification of
any kind.
Unless
otherwise specified in the applicable prospectus supplement, a book-entry
security will be exchangeable for definitive securities registered in the names
of persons other than DTC or its nominee only if:
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DTC
notifies us that it is unwilling or unable to continue as depositary for
the book-entry security or DTC ceases to be a clearing agency registered
under the Securities Exchange Act at a time when DTC is required to be so
registered;
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A
completed default has occurred and is continuing under our mortgage or an
event of default has occurred and is continuing under our indenture;
or
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we
execute and deliver to the trustee or transfer agent and registrar, as the
case may be, an order complying with the requirements
of our mortgage, our indenture or other
instrument governing the book-entry security, as the case may
be, that it will be so
exchangeable.
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Any
book-entry security that is exchangeable in accordance with the preceding
sentence will be exchangeable for securities registered in such names as DTC
directs.
If
one of the events described in the immediately preceding paragraph occurs, DTC
is generally required to notify all participants of the availability through DTC
of definitive securities. Upon surrender by DTC of the book-entry security
representing the securities and delivery of instructions for re-registration,
the trustee or transfer agent and registrar, as the case may be, will reissue
the securities as definitive securities. After reissuance of the securities,
those persons will recognize the beneficial owners of such definitive securities
as registered holders of securities.
Except
as described above:
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a
book-entry security may not be transferred except as a whole book-entry
security by or among DTC, a nominee of DTC and/or a successor depositary
appointed by us; and
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DTC
may not sell, assign or otherwise transfer any beneficial interest in a
book-entry security unless the beneficial interest is in an amount equal
to an authorized denomination for the securities evidenced by the
book-entry security.
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None
of us, the trustees, any registrar and transfer agent, or any agent of any of
them, will have any responsibility or liability for any aspect of DTC’s or any
participant’s records relating to, or for payments made on account of,
beneficial interests in a book-entry security.
We
may sell the offered securities through the solicitation of proposals of
underwriters or dealers to purchase the offered securities, through underwriters
or dealers on a negotiated basis, through agents or directly to a limited number
of purchasers or to a single purchaser.
The
prospectus supplement with respect to each offering of securities will set forth
the terms of such offering, including:
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the
name or names of any underwriters, dealers or
agents;
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the
purchase price of the offered securities and the proceeds to us from their
sale;
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any
underwriting discounts and commissions and other items constituting
underwriters’ compensation;
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any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers; and
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any
securities exchange on which the offered securities may be
listed.
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Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Underwriters
If
underwriters are used in the sale, they will acquire the offered securities for
their own account and may resell them on one or more occasions 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 offered
securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of securities will be named in the prospectus
supplement relating to such offering and, if an underwriting syndicate is used,
the names of the managing underwriter or underwriters will be set forth on the
cover of that prospectus supplement. Unless otherwise set forth in the
prospectus supplement relating thereto, the obligations of the underwriters to
purchase the offered securities will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all the offered securities if
any are purchased.
Dealers
If
dealers are utilized in the sale of offered securities, we will sell such
offered securities to the dealers as principals. The dealers may then resell
such offered securities to the public at varying prices to be determined by such
dealers at the time of resale. The names of the dealers and the terms of the
transaction will be set forth in the applicable prospectus
supplement.
Agents
The
offered securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the offered
securities will be named, and any commissions payable by us to such agent will
be set forth, in the applicable prospectus supplement. Unless otherwise
indicated in the prospectus supplement, any such agent will be acting on a
best-efforts basis for the period of its appointment.
Direct
Sales
The
offered securities may be sold directly by us to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the applicable prospectus supplement.
Indemnification
Agents,
dealers and underwriters and the persons who control them may be entitled under
agreements with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which these agents, dealers or underwriters may be required to make
in respect thereof. Agents, dealers and underwriters may be customers of, engage
in transactions with, or perform services for us in the ordinary course of
business.
Remarketing
The
offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, or
otherwise, by one or more firms (“remarketing firms”), acting as principals for
their own accounts or as agents for us. Any remarketing firm will be identified
and the terms of its agreement, if any, with its compensation will be described
in the applicable prospectus supplement. Remarketing firms may be deemed to be
underwriters, as such term is defined in the Securities Act, in connection with
the offered securities they remarket. Remarketing firms may be entitled, under
agreements that may be entered into with us, to indemnification or contribution
by us against certain civil liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions or perform
services for us in the ordinary course of business.
No
Assurance of Liquidity
The
offered securities may or may not be listed on a national securities exchange.
You should read the prospectus supplement for a discussion of this matter. We
cannot assure you there will be a market for any of the offered
securities.
Unless
otherwise indicated in the applicable prospectus supplement, certain legal
matters will be passed upon for us by Mary C. Kullman, our Chief Governance
Officer and Corporate Secretary, or Mark C. Darrell, our General Counsel,
and for any underwriters by Pillsbury Winthrop Shaw Pittman LLP.
Ms. Kullman and Mr. Darrell are our salaried employees and earn
stock-based compensation based on The Laclede Group’s common stock.
Additionally, they may hold stock-based interests through an employee benefit
plan and may participate in The Laclede Group’s dividend reinvestment and stock
purchase plan. They do not own any Laclede Gas Company securities.
The
consolidated financial statements, the related financial statement schedule and
management’s report on the effectiveness of internal control over financial
reporting incorporated in this prospectus by reference from our Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm, given on the authority
of said firm as experts in auditing and accounting.
Laclede
Gas Company
$80,000,000
First
Mortgage Bonds, 6.35% Series due October 15, 2038
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PROSPECTUS
SUPPLEMENT
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September
18, 2008