Rule 424(b)(2)
Registration Statement No. 333-86387
Prospectus Supplement
(To Prospectus dated October 7, 1999)
$150,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds
6.70% Series due February 1, 2011
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South Carolina Electric & Gas Company will pay interest on the New Bonds on
February 1 and August 1 of each year. SCE&G will make the first interest payment
on August 1, 2001. The New Bonds may be redeemed at any time at the option of
SCE&G, in whole or in part, at a redemption price equal to the sum of (i) the
principal amount of the New Bonds being redeemed, plus accrued interest to the
redemption date, and (ii) the Make-Whole Amount, if any. See "Description of the
New Bonds Optional Redemption."
SCE&G has its principal office at 1426 Main Street, Columbia, South
Carolina 29201, telephone (803) 217-9000.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
Per New Bond Total
Price to Public 99.753% $149,629,500
Underwriting Discount 0.650% $ 975,000
Proceeds, before expenses, to SCE&G 99.103% $148,654,500
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We expect the New Bonds will be ready for delivery in book-entry form
only through The Depository Trust Company on or about January 24, 2001.
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Joint Book-Running Managers
Banc of America Securities LLC Wachovia Securities, Inc.
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The date of this prospectus supplement is January 19, 2001.
You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
TABLE OF CONTENTS
Page
Prospectus Supplement
Use of Proceeds......................................................S-3
Selected Financial Data..............................................S-4
Description of the New Bonds.........................................S-5
Basis for Issuance of the New Bonds..................................S-6
Underwriting.........................................................S-6
Experts..............................................................S-8
Validity of the New Bonds............................................S-8
Prospectus
About This Prospectus...................................................2
Where You Can Find More Information.....................................2
South Carolina Electric & Gas Company...................................3
Ratio of Earnings to Fixed Charges......................................3
Use of Proceeds.........................................................3
Description of the New Bonds............................................3
Book-Entry System......................................................13
Plan of Distribution...................................................16
Experts................................................................17
Validity of the New Bonds..............................................17
S-2
USE OF PROCEEDS
SCE&G will use the net proceeds from the sale of the New Bonds for the
repayment of short-term debt and for general corporate purposes.
S-3
SELECTED FINANCIAL DATA
Three Months Ended
September 30, September 30,
2000 1999
(Dollars in Thousands)
(Unaudited)
Consolidated Statements of Income Data:
Operating Revenues $ 448,105 $ 431,063
Operating Income 154,861 147,875
Income Before Interest Charges 157,878 149,943
Interest Charges 27,366 26,560
AFC (includes allowance for both
equity and borrowed funds) 1,606 860
Preferred Dividend Requirement of Company -
Obligated Mandatorily Redeemable
Preferred Securities 944 944
Net Income 82,038 76,635
Ratio of Earnings to Fixed Charges (1) 4.24 3.90
Net Utility Plant $3,552,757 $3,475,637
As of September 30, 2000
Actual Percentage Adjusted(2) Percentage(2)
(Dollars in Thousands)
(Unaudited)
Capitalization:
Long-Term Debt (3) 1,267,722 41% 1,417,722 44%
Cumulative Preferred Stock 106,261 3 106,261 3
(not subject to purchase or sinking funds)
Cumulative Preferred Stock
(subject to purchase or sinking funds)(4) 10,454 10,454
Company - Obligated Mandatorily
Redeemable Preferred Securities of the
Company's Subsidiary Trust, SCE&G
Trust I 50,000 2 50,000 2
Common Stock Equity 1,650,524 54 1,650,524 51
--------- ---- --------- ----
Total 3,084,961 100% 3,234,961 100%
========= === ========= ===
(1) For purposes of these ratios, earnings represent net income plus income
taxes and fixed charges. Fixed charges represent interest and the estimated
interest portion of annual rentals. These ratios are for the twelve months
ended September 30, 2000 and 1999, respectively.
(2) Gives effect to the sale of all the New Bonds offered hereby. (3) Excludes
current portion of long-term debt of $27,578. (4) Excludes current portion of
preferred stock of $560.
S-4
DESCRIPTION OF THE NEW BONDS
SCE&G will issue the First Mortgage Bonds, 6.70% Series due February 1,
2001 (the "New Bonds") under the Indenture dated as of April 1, 1993, as
supplemented (the "Mortgage"), made by SCE&G to The Bank of New York, successor
to NationsBank of Georgia, National Association, as trustee (the "Trustee"). The
following information concerning the New Bonds supplements and should be read in
conjunction with the statements under "Description of the New Bonds" in the
accompanying prospectus.
Form and Denomination
The New Bonds will be issued as one or more global bonds in the name of
Cede & Co., as nominee for The Depository Trust Company, New York, New York and
will be available only in book-entry form. See "Book-Entry System" in the
accompanying prospectus.
Interest and Maturity
SCE&G will pay interest on the New Bonds from January 26, 2001, at the
rate of 6.70% per annum (based upon a 360-day year of twelve 30-day months),
semiannually on February 1 and August 1 of each year commencing on August 1,
2001, to holders of record on the preceding January 15 and July 15,
respectively. The New Bonds will mature February 1, 2011. The principal
and interest are payable at the office or agency of SCE&G in Atlanta,
Georgia (currently, the Trustee). The New Bonds will be limited to $150,000,000
in aggregate principal amount.
Optional Redemption
The New Bonds may be redeemed at any time at the option of SCE&G, in
whole or in part, at a redemption price equal to the sum of (i) the principal
amount of the New Bonds being redeemed, plus accrued interest thereon to the
redemption date, and (ii) the Make-Whole Amount, if any, with respect to such
New Bonds (the "Redemption Price").
"Make-Whole Amount" means the excess, if any, of (i) the aggregate
present value as of the date of any optional redemption of each dollar of
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect of
such dollar of principal if such redemption had not been made, determined by
discounting, on a semi-annual basis, such principal and interest at the
Reinvestment Rate (determined on the third Business Day preceding the date
notice of such redemption is given) from the respective dates on which such
principal and interest would have been payable if such redemption had not been
made, over (ii) the aggregate principal amount of the New Bonds being redeemed.
S-5
"Reinvestment Rate" means .25% (twenty-five one-hundredths of one
percent) plus the arithmetic mean of the yields under the respective headings
"This Week" and "Last Week" published in the Statistical Release under the
caption "Treasury Constant Maturities" for the maturity (rounded to
the nearest month) corresponding to the remaining life to maturity, as of
the payment date of the principal being redeemed. If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to
the date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination, then such
other reasonably comparable index which shall be designated by SCE&G.
BASIS FOR ISSUANCE OF THE NEW BONDS
SCE&G will issue the New Bonds upon the basis of $150,000,000 of Class
A Bonds held by the Trustee and designated by SCE&G as the basis for such
issuance. After the issuance of the New Bonds, SCE&G will be able to issue
$515,035,000 of additional Bonds on the basis of a like principal amount of
Class A Bonds held by the Trustee and available for such purpose. See
"Description of the New Bonds" in the accompanying prospectus.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting
Agreement between SCE&G and the Underwriters named below, SCE&G has agreed to
sell to the Underwriters, and each of the Underwriters has agreed to purchase
from SCE&G, the respective principal amount of New Bonds set forth opposite its
name. In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase the entire aggregate
principal amount of the New Bonds if any New Bonds are purchased.
Principal Amount
Underwriters of New Bonds
Banc of America Securities LLC. . . . . . . . . . $ 75,000,000
Wachovia Securities, Inc. . . . . . . . . . . .. . . . 75,000,000
Total . . . . . . . . . . . . . . . . . $150,000,000
S-6
SCE&G has been advised by the Underwriters that they propose initially
to offer the New Bonds to the public at the public offering price set forth on
the cover page of this prospectus supplement, and to certain dealers at such
price less a concession not in excess of 0.40% of the principal amount of the
New Bonds. The Underwriters may allow and such dealers may reallow a concession
not in excess of 0.325% of the principal amount. After the initial public
offering, the public offering price and the concessions may be changed.
The New Bonds are a new issue of securities with no established trading
market. SCE&G does not intend to apply for listing of the New Bonds on a
national securities exchange. The Underwriters have told SCE&G that they
presently intend to make a market in the New Bonds, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the New Bonds. Any market making by the Underwriters may be
discontinued at any time at the sole discretion of the Underwriters. No
assurance can be given as to whether a trading market for the New Bonds will
develop or as to the liquidity of any trading market.
Until the distribution of the New Bonds is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the New Bonds. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the New Bonds. Possible transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the New Bonds.
If the Underwriters create a short position in the New Bonds in
connection with this offering, that is, if they sell a greater aggregate
principal amount of New Bonds than is set forth on the cover page of this
prospectus supplement, the Underwriters may reduce that short position by
purchasing New Bonds in the open market. The Underwriters may also impose a
penalty bid on certain selling group members. This means that if an Underwriter
purchases New Bonds in the open market to reduce its short position or to
stabilize the price of the New Bonds, it may reclaim the amount of the selling
concession from the selling group members who sold those New Bonds as part of
the offering.
In general, purchases of a security for the purposes of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a New Bond to the extent that it
were to discourage resales of the New Bonds.
Neither SCE&G nor the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above might have on the price of the New Bonds. In addition, neither
SCE&G nor the Underwriters make any representation that the Underwriters will
engage in such transactions. Such transactions, once commenced, may be
discontinued without notice.
SCE&G has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that the Underwriters may be required to make in
respect thereof.
S-7
The Underwriters and their affiliates have from time to time performed,
and may continue to perform in the future, investment banking services for
SCE&G, for which customary compensation has been received.
SCE&G estimates that its total expenses relating to the offering, not
including the underwriting discount, will be approximately $100,000.
EXPERTS
The statements made under "Description of the New Bonds" in the
accompanying prospectus, as to matters of law and legal conclusions, have been
reviewed by H. Thomas Arthur, Esq., and such statements are made upon the
authority of such counsel as an expert. Mr. Arthur is a Senior Vice President,
the General Counsel and an Assistant Secretary of SCE&G.
VALIDITY OF THE NEW BONDS
The validity of the New Bonds will be passed upon for SCE&G by McNair
Law Firm, P.A., of Columbia, South Carolina and by H. Thomas Arthur, Esq. of
Columbia, South Carolina, and for the Underwriters by Thelen Reid & Priest LLP,
of New York, New York. Thelen Reid & Priest LLP will rely as to all matters of
South Carolina law upon the opinion of H. Thomas Arthur, Esq. Thelen Reid &
Priest LLP from time to time renders legal services to SCE&G.
At December 31, 2000, H. Thomas Arthur, Esq., owned beneficially 12,453
(and options to purchase 8,796) shares of SCANA Corporation's Common Stock,
including shares acquired by the trustee under its Stock Purchase-Savings Plan
by use of contributions made by Mr. Arthur and earnings thereon and including
shares purchased by such trustee by use of SCANA contributions and earnings
thereon.
S-8
$150,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds
6.70% Series due February 1, 2011
Prospectus Supplement
January 19, 2001
Joint Book-Running Managers
Banc of America Securities LLC Wachovia Securities, Inc.