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FILED PURSUANT TO
RULE 424(b)(3)
REGISTRATION NO. 333-70654
The information in this
preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 2, 2002
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated October 19, 2001)
$250,000,000
Southern California Gas Company
% First Mortgage Bonds, Series
GG, Due 2012
The
% First Mortgage Bonds, Series GG, due 2012 will mature on October 1, 2012. Interest on the Series GG bonds will accrue from October 1, 2002 and is payable on April 1 and October 1 of each year, beginning on April 1, 2003.
The Series GG bonds will be redeemable prior to maturity, at our option, at the redemption prices described in this prospectus supplement.
| Per Series GG Bond |
Total | ||||
| Price to investors(1) |
% |
$ |
| ||
| Underwriting discounts |
% |
$ |
| ||
| Proceeds to Southern California Gas Company |
% |
$ |
| ||
(1) |
Plus accrued interest from October 1, 2002 to the date of delivery. |
Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved 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.
It is expected that delivery of the Series GG bonds will be in book entry form through The Depository Trust Company (“DTC”) on October , 2002
| ABN AMRO Incorporated |
BNP PARIBAS |
| The Royal Bank of Scotland |
Scotia Capital | |||
| TD Securities |
WestLB AG |
The date of this prospectus supplement is October , 2002.
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PROSPECTUS SUPPLEMENT
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PROSPECTUS
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You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with different information. We are offering to sell Series GG bonds and seeking offers to buy Series GG bonds only
in jurisdictions where offers and sales are permitted. The information contained in this prospectus supplement and the accompanying prospectus may only be accurate as of their respective dates, regardless of the time of delivery of this prospectus
supplement or the accompanying prospectus or any sale of the Series GG bonds.
The distribution of this prospectus
supplement and the accompanying prospectus and the offering of the Series GG bonds in certain jurisdictions may be restricted by law. Persons into whose possession this prospectus supplement and the accompanying prospectus come should inform
themselves about and observe any such restrictions. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with an offer or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. See “Underwriting.”
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This prospectus supplement and the accompanying
prospectus and the documents they incorporate by reference contain statements that are not historical fact and constitute “forward-looking statements.” When we use words like “believes,” “expects,”
“anticipates,” “intends,” “plans,” “estimates,” “may,” “should” or similar expressions, or when we discuss our strategy or plans, we are making forward-looking statements. Forward-looking
statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results may differ materially from those expressed in these forward-looking statements. These statements are necessarily based upon various
assumptions involving judgments with respect to the future and other risks, including, among others:
• |
local, regional, national and international economic, competitive, technological, political, legislative and regulatory conditions and developments;
|
• |
actions by the California Public Utilities Commission, the California legislature and the Federal Energy Regulatory Commission; |
• |
the financial condition of other natural gas distribution companies and investor-owned utilities; |
• |
capital market conditions, inflation rates, exchange rates and interest rates; |
• |
decisions by rating agencies regarding our debt ratings; |
• |
energy and trading markets, including the timing and extent of changes in commodity prices; |
• |
weather conditions; |
• |
conservation efforts; |
• |
business, regulatory and legal decisions; |
• |
the actions by Federal, state and regulatory officials affecting deregulation of retail natural gas delivery both in California and in other energy markets;
|
• |
the timing and success of business development efforts; and |
• |
other uncertainties, all of which are difficult to predict and many of which are beyond our control. |
You are cautioned not to rely unduly on any forward-looking statements. These risks and uncertainties are discussed in more detail under
“Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2001, our Quarterly Reports on Form 10-Q for the
three-month periods ended March 31, 2002 and June 30, 2002, and other documents on file with the Securities and Exchange Commission. You may obtain copies of these documents as described under “Where You Can Find More Information” in the
accompanying prospectus.
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We are the nation’s largest natural gas
distribution utility. We own and operate a natural gas distribution, transmission and storage system supplying natural gas throughout a 23,000-square mile service territory comprising most of southern California and part of central California. We
provide natural gas service to residential, commercial, industrial, utility electric generation and wholesale customers through 5 million meters in a service area with a population of 19 million. We are an indirect subsidiary of Sempra Energy, a
California-based Fortune 500 energy services company.
For additional information concerning us, you should refer
to the information described under the caption “Where You Can Find More Information” in the accompanying prospectus.
Our offices are located at 555 West Fifth Street, Los Angeles, California 90013 and our telephone number is (213) 244-1200. The terms “we,” “our” and “us” are used in the document for purposes of
convenience and are intended to refer to Southern California Gas Company and/or its subsidiaries, either individually or collectively, as the context may require.
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The net proceeds from the sale of the Series GG bonds will become
part of our general treasury funds to replenish amounts previously expended to refund and retire indebtedness and will be used for working capital and other general corporate purposes. We estimate that the expenses for this offering, excluding
underwriting discounts, will be approximately $750,000.
The following table sets forth our consolidated capitalization as of
June 30, 2002 on an actual basis and on an as adjusted basis to reflect the sale of the Series GG bonds and receipt of the estimated proceeds therefrom.
| June 30, 2002 | ||||||
| Actual |
As Adjusted | |||||
| (In millions) | ||||||
| Debt: |
||||||
| Short-term debt |
$ |
— |
$ |
— | ||
| Long-term debt (including current portion): |
||||||
| First mortgage bonds (1) |
|
600 |
|
850 | ||
| Other long-term debt |
|
85 |
|
85 | ||
| |
|
|
| |||
| Total long-term debt |
|
685 |
|
935 | ||
| |
|
|
| |||
| Total debt: |
|
685 |
|
935 | ||
| |
|
|
| |||
| Shareholders’ equity: |
||||||
| Common stock (100,000,000 shares authorized; 91,300,000 shares outstanding) |
$ |
836 |
$ |
836 | ||
| Retained earnings |
|
481 |
|
481 | ||
| Preferred stock |
|
22 |
|
22 | ||
| |
|
|
| |||
| Total shareholders’ equity |
$ |
1,339 |
$ |
1,339 | ||
| |
|
|
| |||
| Total capitalization |
$ |
2,024 |
$ |
2,174 | ||
| |
|
|
| |||
(1) |
In August 2002, we repaid $100 million of first mortgage bonds at maturity. |
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The following table sets forth our ratio of
earnings to fixed charges for each of the years in the five-year period ended December 31, 2001 and for each of the six-month periods ended June 30, 2001 and 2002:
| Years Ended December 31, |
Six Months Ended June 30, | |||||||||||||
| 2001 |
2000 |
1999 |
1998 |
1997 |
2001 |
2002 | ||||||||
| Ratio of Earnings to Fixed Charges |
6.16 |
6.13 |
6.89 |
4.38 |
5.47 |
5.97 |
8.96 | |||||||
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The Series GG bonds offered by this prospectus
supplement are a series of our first mortgage bonds as described below and in the accompanying prospectus. The Series GG bonds will be issued under a supplemental indenture between us, as issuer, and U.S. Bank, N.A., as trustee. We have summarized
below selected provisions of the supplemental indenture applicable to the Series GG bonds. The summary of the provisions of our first mortgage bonds contained in the accompanying prospectus applies to the provisions of the Series GG bonds, except
that the summary of selected provisions of the Series GG bonds and the supplemental indenture set forth below supplements and, to the extent inconsistent, supersedes and replaces the description of the general terms and provisions of our first
mortgage bonds and the indenture contained in the accompanying prospectus. This summary is not complete and is qualified by reference to provisions of the Series GG bonds and the indenture. Terms used in this section but not defined have the
meanings given to those terms in the accompanying prospectus or, if not defined in the accompanying prospectus, in the supplemental indenture or indenture.
General
The Series GG bonds will constitute a series of first mortgage bonds
under the indenture, initially limited to $250 million aggregate principal amount.
The Series GG bonds
will mature on October 1, 2012. The Series GG bonds will bear interest at the rate of % per annum, accruing from October 1, 2002. Interest on the Series GG bonds will be payable to the holders thereof semi-annually in arrears
on April 1 and October 1 of each year, commencing April 1, 2003.
The Series GG bonds will be redeemable prior to
maturity, at our option, at the prices set forth below under the caption “Optional Redemption.” The Series GG bonds will not be subject to a sinking fund.
We may, from time to time, without notice to or the consent of the holders of the Series GG bonds, increase the principal amount of this series of first mortgage bonds
under the indenture and issue such increased principal amount (or any portion thereof). Any additional first mortgage bonds so issued shall have the same form and terms (other than the date of issuance, under certain circumstances, the date from
which interest thereon shall begin to accrue and the first interest payment date) as the Series GG bonds previously issued and shall form a single series with the Series GG bonds.
At June 30, 2002, we had outstanding $600 million of first mortgage bonds. The net book value of the property subject to a first lien of the indenture was $2.8 billion at
that date.
Optional Redemption
We may redeem all or any part of the Series GG bonds, at our option at any time or from time to time, at the prices set forth below. In the event that we elect to redeem only a portion of the Series GG
bonds, the particular bonds to be redeemed will be selected by the trustee by lot in such manner as the trustee deems fair.
The redemption price for the Series GG bonds to be redeemed on any redemption date will be equal to the greater of the following amounts:
• |
100% of the principal amount of the Series GG bonds being redeemed on the redemption date; or |
• |
the sum of the present values of the remaining scheduled payments of principal and interest on the Series GG bonds being redeemed on that redemption date (not
including any portion of any payments of accrued and unpaid interest to the redemption date) discounted to the redemption date on a semiannual basis at the Adjusted Treasury Rate (as defined below) plus basis
points, as determined by the Reference Treasury Dealer (as defined below), |
plus, in each case, accrued and unpaid
interest thereon to the redemption date. Notwithstanding the foregoing, installments of interest on Series GG bonds that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment
date to the registered holders as of the close of
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business on the relevant record date according to the Series GG bonds and the indenture. The redemption price will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
We will mail notice of any redemption at least 30 days but not more than 60 days before the redemption date to
each registered holder of the Series GG bonds to be redeemed. Once notice of redemption is mailed, the Series GG bonds called for redemption will become due and payable on the redemption date and at the applicable redemption price, plus accrued and
unpaid interest to the redemption date. Redemption will not be conditional upon receipt by the trustee of monies sufficient to pay the redemption price.
Unless we default in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Series GG bonds or portions thereof called for redemption. We will pay the
redemption price and any accrued interest once the Series GG bonds are surrendered for redemption. If only a portion of the Series GG bonds are redeemed, the trustee will deliver new Series GG bonds for the remaining portion without charge.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
“Comparable Treasury Issue” means the United States Treasury security selected by the Reference
Treasury Dealer as having a maturity comparable to the remaining term of the Series GG bonds to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Series GG bonds.
“Comparable Treasury
Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the trustee
is furnished fewer than three such Reference Treasury Dealer Quotations, the average of all such Quotations, or (C) if only one Reference Treasury Dealer Quotation is received, such Quotation.
“Reference Treasury Dealer” means (A) ABN AMRO Incorporated and BNP Paribas Securities Corp. (or their respective affiliates which are Primary
Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), we will substitute therefor
another Primary Treasury Dealer; and (B) any other Primary Treasury Dealer(s) selected by us.
“Reference
Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to us by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third business day preceding such redemption date.
Notice Regarding Remedies with Respect to Mortgaged Property
Any foreclosure on the mortgaged property by the trustee may be limited by applicable California law. Section 726 of the California Code of Civil Procedure provides that any action to recover on a debt or other right secured by a
mortgage or a deed of trust on real property or an estate for years therein must comply with the provisions of that section, which provisions relate to and specify the procedures for the sale of encumbered property or an estate for years therein,
the application of proceeds, the rendition in certain cases of a deficiency judgment, and other related matters. We advise you that in such an action or proceeding, the debtor may require the creditor to exhaust all of its security before a personal
judgment may be obtained against the debtor for a deficiency. We also advise you that failure to comply with the provisions of Section 726 may result in the extinguishment of the liens on the mortgaged property and the loss of your right to a
deficiency judgment. Section 580d of the California Code of Civil Procedure provides that no deficiency judgment shall be rendered on a note secured by a deed of trust or mortgage on real property after sale of the real property under the power of
sale contained in such deed of trust or mortgage.
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Defeasance
The defeasance provisions of the indenture will apply to the Series GG bonds. However, with respect to the satisfaction of the indenture following the release of the
mortgaged property (but not as a condition to the release of the mortgaged property), in addition to the conditions of defeasance specified in the indenture we will be required to deliver an opinion of counsel to the effect that a holder of Series
GG bonds will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance and will be subject to federal income tax on the same amounts, at the same times and in the same manner as if that defeasance had not
occurred. The opinion of counsel must be based upon a ruling of the Internal Revenue Service or a change in law after October 1, 2002.
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Under the terms and subject to the conditions contained in an
underwriting agreement, dated as of , 2002, the underwriters named below have severally agreed to
purchase, and we have agreed to sell to them, severally, the respective principal amount of the Series GG bonds set forth opposite their respective names below.
| Name |
Principal Amount of Series GG Bonds | ||
| ABN AMRO Incorporated |
$ |
| |
| BNP Paribas Securities Corp. |
|||
| The Royal Bank of Scotland plc |
|||
| Scotia Capital (USA) Inc. |
|||
| TD Securities (USA) Inc. |
|||
| WestLB AG, London Branch |
|||
| |
| ||
| Total |
$ |
250,000,000 | |
| |
| ||
WestLB AG is not a registered broker-dealer in the United States.
Securities offered in this prospectus supplement and underwritten by it may be sold by it or its affiliates only outside the United States in transactions not requiring it to register as a broker-dealer under United States laws. WestLB AG’s
identification as an underwriter in this prospectus supplement should not be deemed to be an offer by it to sell securities in the United States or a solicitation of an offer by persons in the United States to buy securities from it.
The underwriting agreement provides that the obligation of the several underwriters to pay for and accept delivery of the
Series GG bonds is subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all the Series GG bonds if any are taken.
We have been advised by the underwriters that the underwriters propose to offer the Series GG bonds to the public initially at the price
to investors set forth on the cover page of this prospectus supplement and to certain dealers at such price less a concession not in excess of % of the principal amount per Series GG bond. The
underwriters may allow, and such dealers may reallow, a concession not in excess of % of the principal amount of the Series GG bonds on sales to certain other dealers.
The Series GG bonds are a new issue of securities with no established trading market. There can be no assurance of a secondary market for
the Series GG bonds or the continued liquidity of such market if one develops. The underwriters have informed us that they intend to make a market in the Series GG bonds but are under no obligation to do so and such market making may be terminated
at any time without notice.
In order to facilitate the offering of the Series GG bonds, the underwriters, or any
of their affiliates, may engage in transactions that stabilize, maintain or otherwise affect the price of the Series GG bonds. Specifically, the underwriters may overallot in connection with the offering, creating a short position in the Series GG
bonds for its own account. In addition, to cover overallotments or to stabilize the price of the Series GG bonds, the underwriters may bid for, and purchase, the Series GG bonds in the open market. The underwriters may reclaim selling concessions
allowed to an underwriter or dealer for distributing the Series GG bonds in the offering, if the underwriters repurchase previously distributed Series GG bonds in transactions to cover syndicate short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market price of the Series GG bonds above independent market levels. The underwriters are not required to engage in these activities, and may end any of these activities at any time.
Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of
any effect that any of the transactions described above may have on the price of the Series GG bonds. In addition, neither we nor any of the underwriters makes any representation that the transactions will be engaged in or that the transactions,
once commenced, will not be discontinued without notice.
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The underwriters and certain of their affiliates and associates may engage in
transactions with, and/or perform services, including investment banking and general financing and banking services, for, us in the ordinary course of business.
We have agreed to indemnify the underwriters against certain liabilities, including civil liabilities under the Securities Act of 1933, as amended, or contribute to payments which the underwriters may
be required to make in respect thereof.
Expenses payable by us in connection with the offering of the Series GG
bonds, excluding underwriting discounts, are estimated at $750,000.
Latham & Watkins, Los Angeles, California, will pass upon certain
legal matters relating to the issuance and sale of the Series GG bonds on behalf of Southern California Gas Company. Gary W. Kyle, Chief Corporate Counsel of Sempra Energy, our parent company, will pass upon the validity of the Series GG bonds and
various other legal matters relating to the issuance and sale of the Series GG bonds. Sidley Austin Brown & Wood LLP, San Francisco, California will act as counsel for the underwriters. Paul C. Pringle, a partner of Sidley Austin Brown &
Wood LLP, owns 2,256 shares of common stock and 1,000 Equity Units of Sempra Energy.
The consolidated financial statements as of December 31, 2001 and 2000 and
for each of the three years in the period ended December 31, 2001 incorporated by reference into this prospectus supplement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein
by reference and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
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PROSPECTUS
$350,000,000
Southern California Gas Company
First Mortgage Bonds
We may offer and sell first mortgage bonds from time to time in one or more offerings. This prospectus provides you with a general description of the bonds we may offer.
Each time we sell bonds we will provide a supplement to this prospectus that contains specific information about the offering and the terms of the bonds. The
supplement may also add, update or change information contained in this prospectus. You should carefully read this prospectus and the accompanying prospectus supplement before you invest in any of our bonds.
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. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is October 19, 2001
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This prospectus is part of a “shelf” registration
statement that we filed with the United States Securities and Exchange Commission, or the “SEC.” By using a shelf registration statement, we may sell up to $350,000,000 aggregate principal amount of bonds, determined based upon the issue
price at stated principal or at a discount from stated principal, from time to time and in one or more offerings. This prospectus only provides you with a general description of the bonds that we may offer. Each time we sell bonds, we will provide a
supplement to this prospectus that contains specific information about the terms of the bonds. The supplement may also add, update or change information contained in this prospectus. Before purchasing bonds, you should carefully read both this
prospectus and the accompanying prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information.”
You should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement. We have not authorized any other person
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will not make an offer to sell the bonds in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus and the accompanying prospectus supplement is accurate as of the date on their respective covers. Our business, financial condition, results of operations and prospects may have changed
since that date.
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This prospectus, any accompanying prospectus supplement and
the documents they incorporate by reference may contain statements that are not historical fact and constitute forward-looking statements. When we use words like “believes,” “expects,” “anticipates,”
“intends,” “plans,” “estimates,” “may,” “should” or similar expressions, or when we discuss our strategy or plans, we are making forward-looking statements. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties and assumptions. Our future results may differ materially from those expressed in these forward-looking statements. These statements are necessarily based upon various assumptions
involving judgments with respect to the future and other risks, including, among others:
• |
national, international, regional and local economic, competitive, technological, political, legislative and regulatory conditions and developments;
|
• |
actions by the California Public Utilities Commission, the California State Legislature and the Federal Energy Regulatory Commission;
|
• |
the financial condition of other natural gas distribution companies and investor-owned utilities; |
• |
capital market conditions, inflation rates, exchange rates and interest rates; |
• |
decisions by rating agencies regarding our debt ratings; |
• |
energy markets, including the timing and extent of changes in commodity prices; |
• |
weather conditions; |
• |
business, regulatory and legal decisions; |
• |
the actions by federal, state and regulatory officials affecting deregulation of retail natural gas delivery both in California and in other energy markets;
|
• |
the timing and success of business development efforts; and |
• |
other uncertainties, all of which are difficult to predict and many of which are beyond our control. |
You are cautioned not to rely unduly on any forward-looking statements. These risks and uncertainties are discussed in more detail under
“Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2000, our Quarterly Reports on Form 10-Q for the
three-month periods ended March 31, 2001 and June 30, 2001, and other documents on file with the SEC. You may obtain copies of these documents as described under “Where You Can Find More Information” in this prospectus.
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Available Information
We file reports, proxy statements and other information with the SEC. You can inspect and copy information we file with the SEC at the
Public Reference Room maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site that contains
reports, proxy statements and other information about issuers, such as us, who file electronically with the SEC. The address of that site is http://www.sec.gov.
Certain of our securities are listed on the New York Stock Exchange (NYSE: SCGC5K03, SCGC6H02, SCGC6K25, SCGC7AC23, SCG7F23 and SCGC8J21), and you may inspect reports, proxy statements and other
information concerning us at the office of the New York Stock Exchange at 11 Wall Street, New York, New York 10005.
This prospectus is part of a registration statement that we filed with the SEC. The full registration statement may be obtained from the SEC or from us, as indicated below. Forms of the indentures and other documents establishing the
terms of the offered securities are filed as exhibits to the registration statement. Statements in this prospectus about these documents are summaries. You should refer to the actual documents for a more complete description of the relevant matters.
Incorporation by Reference
The rules of the SEC allow us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede that information. This prospectus
incorporates by reference the documents set forth below that have been previously filed with the SEC. These documents contain important information about us.
| SEC Filings (File No. 001-01402) |
Period | |
| Annual Report on Form 10-K |
Year Ended December 31, 2000 | |
| Quarterly Reports on Form 10-Q |
Three-month periods ended March 31, 2001 and June 30, 2001 |
We are also incorporating by reference all additional documents
that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, between the date of this prospectus and the termination of the offering of securities described in this prospectus.
We will provide without charge to each person to whom a copy of this prospectus has been delivered a copy of any
and all of these filings. You may request a copy of these filings by writing or telephoning us at:
Southern California
Gas Company
555 West Fifth Street
Los Angeles, California 90013-1011
Attention: Corporate Secretary
Telephone: (213) 244-1200
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We are the nation’s largest natural gas
distribution utility. We own and operate a natural gas distribution, transmission and storage system supplying natural gas throughout a 23,000-square mile service territory comprising most of southern California and part of central California. We
provide natural gas service to residential, commercial, industrial, utility electric generation and wholesale customers through 5.0 million meters in a service area with a population of 18.4 million. We are the principal subsidiary of Pacific
Enterprises, which is a subsidiary of Sempra Energy, a California-based Fortune 500 energy services company.
For
additional information concerning us, you should refer to the information described under the caption “Available Information” in this prospectus.
Our offices are located at 555 West Fifth Street, Los Angeles, California 90013 and our telephone number is (213) 244-1200. The terms “we,” “our” and “us” are used in the
document for purposes of convenience and are intended to refer to Southern California Gas Company and/or its subsidiaries, either individually or collectively, as the context may require.
The net proceeds from the sale of the bonds will become part of our
general treasury funds and will be applied to the expansion and betterment of our utility plant, to refund and retire indebtedness and to replenish funds previously expended for these purposes.
The following table sets forth the ratio of our
earnings to fixed charges for each of the five years in the five-year period ended December 31, 2000 and for each of the six-month periods ended June 30, 2000 and June 30, 2001:
| Year Ended December 31, |
Six Months Ended June 30, | |||||||||||||
| 1996 |
1997 |
1998 |
1999 |
2000 |
2000 |
2001 | ||||||||
| Ratio of Earnings to Fixed Charges |
4.73 |
5.46 |
4.36 |
6.86 |
6.11 |
5.79 |
5.97 | |||||||
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The following is a general description of the terms
and provisions of the bonds we may offer and sell by this prospectus. The summary is not meant to be a complete description. This prospectus and any accompanying prospectus supplement will contain the material terms and conditions for each series of
bonds. The accompanying prospectus supplement may add, update or change the terms and conditions of a particular series of bonds as described in this prospectus.
The indenture gives us authority to set the particular terms of each series of bonds as described in the indenture. Under the indenture, we may decide whether the bonds of a particular series will be
redeemable, convertible into shares of stock, bonds, notes or other obligations, issuable as coupon bonds, fully registered bonds without coupons or as global securities, and whether the bonds are entitled to the benefits of any purchase, sinking,
improvement, renewal or trust fund. For more information about the bonds offered by us, please refer to the indenture between us and U.S. Bank, N.A., as trustee, together with the applicable supplemental indentures, relating to the issuance of each
series of bonds by us (as supplemented, the “indenture”).
The indenture is filed as an exhibit to the
registration statement. The indenture is subject to and governed by the Trust Indenture Act of 1939, as amended, and may be supplemented or amended from time to time following its execution. The indenture contains the full legal text of the matters
described in this section. Because this section is a summary, it does not describe every aspect of the bonds or the indenture. This summary is subject to and qualified in its entirety by reference to all the provisions of the indenture, including
definitions of terms used in the indenture. We also include references in parentheses to particular sections of the indenture. Whenever we refer to particular sections or defined terms of the indenture in this prospectus or in a prospectus
supplement, these sections or defined terms are incorporated by reference into this prospectus or in a prospectus supplement. This summary also is subject to and qualified by reference to the description of the terms of a particular series of bonds
described in the applicable prospectus supplement.
General
We may issue bonds under the indenture in one or more series, subject to the limitations described below under the caption “Issuance of Additional Bonds.” Bonds
may be issued in denominations of $1,000, $5,000, $10,000, $25,000 or multiples of $25,000. Unless specified otherwise in the applicable prospectus supplement, the bonds will be issued in book-entry form as described under the caption “Global
Securities” in this prospectus. Bonds will be payable, exchangeable for bonds of other authorized denominations and transferable at the principal office of the trustee, in San Francisco, California. (Section 2.01)
Prior to the issuance of each series of bonds, the terms of the particular series of bonds will be determined by the Board of Directors or
a committee of directors and specified in a supplemental indenture. We refer you to the applicable prospectus supplement for a description of the following terms of each series of bonds:
• |
the title or designation of the bonds; |
• |
the aggregate principal amount of the bonds in such series; |
• |
the date or dates on which principal will be payable or how to determine the dates; |
• |
the rate or rates or method of determining interest, the date from which interest will accrue, the dates on which interest will be payable, which we refer to as
the “interest payment dates,” and any record dates for the interest payable on the interest payment dates; |
• |
whether we will have any obligation or option to redeem, purchase or repay bonds of such series prior to their maturity and the terms and conditions upon which
the bonds may be redeemed, purchased or repaid; |
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• |
whether the bonds will be entitled to the benefits of any purchase, sinking, improvement, renewal or trust fund; |
• |
whether the bonds will be convertible into shares of stock, bonds, notes or other obligations and/or have warrants providing for the purchase of shares of
stock, bonds, notes or other obligations; |
• |
whether the bonds will be issuable as coupon bonds, fully registered bonds without coupons or in book-entry form and represented by one or more global
securities; and |
• |
any other terms of the bonds that may supplement those described below. (Section 2.01) |
Issuance of Additional Bonds
Additional bonds
secured by the indenture may be issued in a maximum aggregate principal amount equal to the sum of:
• |
66 2/3% of the Net
Bondable Value of Property Additions that have not been applied to other indenture purposes; (Section 4.04) |
• |
100% of the amount of cash deposited with the trustee for the purpose of issuing additional bonds; (Section 4.05) and |
• |
100% of the aggregate principal amount of Refundable Bonds, which include bonds that have been retired by payment at maturity, redemption or purchase (other
than through sinking fund payments or other funds deposited with the trustee as Mortgaged Property) and not applied to other indenture purposes. (Section 4.06) |
However, the aggregate principal amount of bonds that we can issue under the indenture may not exceed 50% of our Net Investment in Mortgaged Property, after giving effect
to the issuance of such additional bonds. (Section 4.01) In addition, no additional bonds may be issued under the indenture (except under certain circumstances relating to those issued on the basis of Refundable Bonds) unless the Net Earnings of the
Corporation Available for Interest for any twelve consecutive months in the past fifteen months equals at least twice our interest charges on the sum of (i) all the bonds outstanding under the indenture, including such additional bonds, (ii) in the
event of a consolidation, merger or transfer of assets, the indebtedness of any successor corporation maturing more than one year from the date of its issuance, but only if such successor corporation does not secure the bonds with a lien on all of
its property, other than Excepted Property, and (iii) all of our indebtedness secured by any of the Mortgaged Property in priority to or pari passu with the lien securing the bonds. (Section 4.03) Other than as described above, the indenture
does not limit the amount of indebtedness that we may incur. However, our issuance of long-term indebtedness is regulated by the California Public Utilities Commission.
Additional bonds which may be issued may vary from any existing bonds as to maturity, interest rate, redemption, sinking fund and in certain other respects as described
above under the caption “General.”
Security for the Bonds
The bonds will be secured by the indenture which constitutes a first lien upon all of our real and personal property, other than Excepted Property, subject to Permissible
Encumbrances, purchase money liens and liens on property at the time of acquisition. All of the bonds issued under the indenture will be equally and ratably secured by the indenture, subject to the provisions relating to any sinking or similar fund
for the benefit of any bonds of a particular series.
Subject to such limitations and exceptions, all property
acquired by us after the date of the indenture will be further security as described in the indenture. (Section 5.09) In addition, the indenture creates a prior lien on the Mortgaged Property to secure the trustees’ right to compensation,
reimbursement and indemnity. (Section 14.10)
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Ranking
The bonds of each series will be our secured and unsubordinated obligations and will rank equal in right of payment with all other bonds issued under the indenture. The bonds will rank first in right
of payment with respect to proceeds from Mortgaged Property, and otherwise will rank equal in right of payment with all of our other unsubordinated and unsecured indebtedness. The bonds are our obligations exclusively, and are not the obligations of
any of our subsidiaries.
Payment of Bonds—Principal and Interest
We will pay principal of the bonds at stated maturity, upon redemption or otherwise, upon presentation of the bonds at the office of the trustee, as our paying agent. We
will make payments on bonds issued in book-entry form to the Depository Trust Company (“DTC”) or its nominee, as the registered owner of the bonds, by wire transfer of immediately available funds. If the securities are issued in definitive
certificate form under the limited circumstances described below under the caption “Global Securities,” we will have the option of paying interest by check mailed to the addresses of the persons entitled to payment or by wire transfer to
bank accounts in the United States designated in writing to the trustee at least 15 days before the applicable payment date by the persons entitled to payment.
Form; Transfers; Exchanges
Bonds may be issued in denominations of $1,000,
$5,000, $10,000, $25,000 or multiples of $25,000. Unless otherwise provided in the applicable prospectus supplement, the bonds will be issued in book-entry form represented by one or more global securities deposited with, or on behalf of, DTC, as
depositary, and registered in the name of Cede & Co., its nominee. You will not be entitled to receive a certificate for the bonds that you purchase except under the limited circumstances described below under the caption “Global
Securities.”
You will receive payments and may transfer bonds issued in book-entry form only through the
facilities of DTC and its direct and indirect participants as described below under the caption “Global Securities.” We will maintain an office or agency where notices and demands in respect of the bonds and the indenture may be delivered
to us and where certificated bonds may be surrendered for payment, registration of transfer or exchange, which will be at the principal office of the trustee, in San Francisco, California. (Sections 2.01 and 2.03)
Optional Redemption
Unless specified otherwise in an applicable prospectus supplement, we may redeem at our option at any time or from time to time all or any part of the bonds that we may offer and sell by this prospectus at the redemption price
specified in the respective series of bonds. In the event that we elect to redeem only a portion of a series of bonds, the particular bonds of such series to be redeemed will be selected by the trustee by lot in such manner as the trustee deems
fair. (Section 7.01)
We will mail notice of any redemption at least 30 days but not more than 60 days before the
redemption date to each holder of the bonds to be redeemed. (Section 7.02) On or prior to the redemption date, we will deposit with the trustee a sum of money sufficient to redeem the bonds. (Section 7.03) Upon surrender of the bonds, we will pay
the holders of the surrendered bonds the principal and accrued interest of the redeemed bonds or if only a portion of the principal of a particular bond is being redeemed, that portion of the principal and interest attributable to such redeemed
portion. (Sections 7.04 and 7.05) All of the bonds redeemed and paid shall be cancelled. (Section 7.06)
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Renewal Fund
We will pay to the trustee annually on April 1, as a renewal fund, an amount equal to our Appropriations of Earnings for Depreciation of Mortgaged Property during the
preceding calendar year, minus credits, taken at our option, for:
• |
payments in cash or bonds made by us to a sinking fund or a similar fund under which cash paid to the trustee is to be used only to retire bonds;
|
• |
the lesser of the cost or fair value of specified property additions purchased, constructed or otherwise acquired by us; and |
• |
the principal amount of bonds delivered to the trustee for such purpose, which will not be available for any other indenture purpose, including the issuance of
additional bonds. |
(Section 8.02)
Renewal fund payments that we pay in cash may, at our option:
• |
be withdrawn by us, subject to certain conditions, in an amount equal to the lesser of the cost or fair value of specified property additions purchased,
constructed or otherwise acquired by us, or in an amount equal to the amount of Refundable Bonds made the basis for withdrawal; or |
• |
be applied to the purchase or redemption of any outstanding bonds. |
At our election, the amount of any required renewal fund payment may be reduced by an amount equal to the amount of cash which, assuming that the renewal fund payments
required to be made pursuant to the indenture had actually been made in cash, could at the time be withdrawn under the indenture. (Section 8.06) Any payments that we make to the renewal fund are in addition to the expenditures we are required to
make for maintenance.
Consolidation, Merger and Transfer of Assets
Nothing in the indenture or in the bonds outstanding under the indenture prevents us from consolidating or merging with or into any corporation or selling all of our
property as an entirety subject to the continuing lien of the indenture, provided that:
• |
the terms of the consolidation, merger or sale preserve and do not impair the lien or the security under the indenture, and the rights and powers of the trustee
and the holders of the bonds outstanding under the indenture; |
• |
in the case of a merger or consolidation, the successor corporation expressly assumes the payment of the principal and interest of all the bonds and the
performance and observance of all of the covenants and conditions of the indenture; and |
• |
in the case of a sale of all of our property as an entirety, the corporation to which we sell all our property assumes the due and punctual payment of principal
and interest of all the bonds outstanding under the indenture, assumes the performance of all covenants and conditions of the indenture and executes and delivers an indenture to the trustee whereby the purchasing corporation agrees to assume such
payment and performance and charge therewith the property so taken over. (Section 15.01) |
Certain Covenants
Subject to the terms of the indenture and in addition to the covenants otherwise specified above, we will:
• |
keep, or cause to be kept, proper records and accounts of corporate dealings, including proper and complete records reflecting our capital and property
accounts, and we will furnish statements upon demand as reasonably required by the trustee; (Section 5.06) |
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• |
not voluntarily create any lien or charge that would be prior to the lien of the indenture upon the Mortgaged Property, other than purchase money liens and any
other liens existing on property at the time such property was acquired by us; (Section 5.09) |
• |
pay or cause to be discharged all taxes, assessments, lawful claims and mechanics liens, which, if unpaid, might be given priority over the lien of the
indenture; however, no such lien shall be a breach of the indenture if we are disputing it in good faith; (Section 5.09, 5.10) |
• |
file the indenture and any supplemental indenture as may be necessary to preserve and protect the security of the bondholders; (Section 5.11)
|
• |
maintain, preserve and keep the mortgaged properties in good repair, working order and conditions; (Section 5.15) and |
• |
maintain insurance, which may be self-insured, on the Mortgaged Property against losses or damages as are usually insured against by companies similarly
situated and operating like properties. (Section 5.16) |
Events of Default
The following events are defined for all purposes of the indenture (except where the term is otherwise defined for specific purposes) as
“events of default”:
• |
failure to pay the principal of any bond secured by the indenture when the same shall become due and payable, whether at maturity, as therein expressed, or by
declaration or otherwise; |
• |
failure to pay interest upon any bond secured by the indenture for a period of 30 days after such interest shall have become due and payable;
|
• |
failure to pay any installment of the sinking fund or renewal fund required by the indenture or of any sinking fund or analogous fund required by any
supplemental indenture, for a period of 30 days after the same shall have become due and payable; |
• |
the expiration of a period of 60 days following: |
• |
the adjudication of us as bankrupt by any court of competent jurisdiction; |
• |
the entry of an order approving a petition seeking the reorganization of us under the Federal Bankruptcy Laws or any other applicable law or statute of the
United States of America, or any state thereof; or |
• |
the appointment of a trustee or a receiver of all or substantially all of our property; |
unless during such period such adjudication, order or appointment of a receiver or trustee shall be vacated;
• |
the filing by us of a voluntary petition in bankruptcy or the making of an assignment for the benefit of creditors; the consenting by us to the appointment of a
receiver or trustee of all or any part of its property; the filing by us of a petition or answer seeking reorganization under the Federal Bankruptcy Laws, or any other applicable law or statute of the United States of America, or of any state
thereof; or the filing by us of a petition to take advantage of any insolvency act; |
• |
failure to perform any other covenant or agreement contained in the indenture or any supplemental indenture or in any bond secured by the indenture for a period
of 60 days following the mailing by the trustee to us of a written demand that such failure be cured, such failure not having been cured in the meantime. |
The trustee may, and, if required in writing to do so by the holders of a majority in principal amount of the bonds then outstanding, shall make such demand. (Section 9.02)
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Remedies
Acceleration
Upon the occurrence of an event of default,
the trustee may, and upon the written request of the holders of a majority in principal amount of all bonds outstanding under the indenture shall, declare the principal amount of all of the bonds outstanding under the indenture, together with
accrued and unpaid interest thereon, to be immediately due and payable. (Section 9.05)
Rescission of
Acceleration
At any time after the principal of the bonds shall have been declared due and payable and before
any sale of the trust estate shall have been made pursuant to the indenture,
• |
all interest in arrears upon such bonds with interest on overdue installments of interest, to the extent that payment of such interest on interest shall be
legally enforceable, at the same rate as was borne by the respective bonds on which installments of interest may be overdue, |
• |
together with reasonable charges and expenses of the trustee, its agents and attorneys, and |
• |
all other sums which may be due under the indenture, except the principal of such bonds as shall not have become due and payable by their terms,
|
shall either by paid by us to those entitled thereto (or to the trustee for their account) or be collected out of the Mortgaged
Property, and all other defaults existing under the indenture known to the trustee shall have been cured or provision deemed by the trustee to be adequate therefor shall have been made, or shall have been waived as provided in the indenture, then
and in every such case:
(a) |
the holders of the majority in principal amount of the bonds then outstanding, by written notice to us and the trustee may waive such default and rescind and
annul such declaration and its consequences, or |
(b) |
if in declaring the principal due, the trustee shall have acted without any request of the bondholders, or upon the request of the holders of less than 25% in
principal amount of the bonds outstanding at the time of such request, and if there shall not have been delivered to the trustee and to us written directions to the contrary by the holders of not less than a majority in principal amount of the bonds
then outstanding, then such default and its consequences ipso facto shall be deemed to be waived, or |
(c) |
if all such principal and interest which shall have matured otherwise than by such declarations shall have been made good and all other defaults cured or
provided for or waived within 30 days after such declaration, then, without regard to any directions by the bondholders, all such defaults and their consequences ipso facto shall be deemed to be waived; |
and the parties shall be restored to their respective rights and obligations under the indenture as if no default had occurred; but no such waiver of
any particular default shall extend to or affect or be deemed a waiver of any other default or impair any right consequent thereon. (Section 9.05)
Remedies with Respect to Mortgaged Property
To the extent
permitted by law, upon the occurrence of an event of default the trustee may take actual possession of and enter, hold, use, operate and manage all of the Mortgaged Property and conduct the business, either personally or through the trustee’s
agents. If the trustee takes such action, the trustee will receive the rents, income, issues and profits from the Mortgaged Property and net of the costs and expenses of taking, holding, operating and managing the Mortgaged Property, including
reasonable compensation to the trustee and its agents and counsel, taxes, assessments and expenses for any repairs, alterations and improvements. (Section 9.04)
If one or more events of default occurs and continues without remedy for the designated period, the trustee may sell the Mortgaged Property or in the alternative, take appropriate judicial proceedings
for the enforcement and protection of its rights and the rights of the bondholders. (Section 9.06)
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Control by Holders; Limitations
The holders of a majority in principal amount of the bonds outstanding under the indenture 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 trust or power given to the trustee. The holders of a majority in principal amount of the bonds of any series will have the right, on behalf of all
holders of the bonds of such series to consent to the waiving of any past default and its consequences, other than a payment default. (Sections 9.22 and 9.28)
In addition, the indenture provides that no holder of bonds will have any right to institute any suit, action or proceeding, at law or in equity, for the foreclosure of the indenture, the execution of
any trust with respect to the indenture, the appointment of a receiver, or for any other remedy under the indenture unless:
• |
the holder has previously given the trustee written notice of a continuing event of default; |
• |
the holders of at least a majority in principal amount of the outstanding bonds have made written request upon the trustee and afforded the trustee a reasonable
opportunity to exercise its powers under the indenture or institute the action, suit or proceeding in its own name; and |
• |
the trustee has been offered reasonable security and indemnity against costs and liabilities incurred to comply with the request; and
|
• |
the trustee has refused or failed to comply with the request within a reasonable time or to take other appropriate action for the enforcement of the indenture.
(Section 9.20) |
No holder will be entitled to institute any action to affect, disturb, or
prejudice the lien of the indenture, or to enforce any right under the indenture, except in the manner specified in the indenture, and actions must be instituted and maintained only according to the procedures established by the indenture and for
the equal benefit of all bondholders. Each registered holder, however, has an unimpaired and unaffected right to receive payment when due and to bring a suit to enforce that right, unless this action would impair the lien of the indenture. (Sections
9.20 and 9.21)
Notice of Default
The trustee is required to give the bondholders notice of any default under the indenture known to the trustee, unless the default has been cured within 90 days after the occurrence of the default,
provided, however, that except in the case of default in the payment of principal or interest of any bonds, or in the payment of any Maintenance and Sinking Fund installment, the trustee may withhold notice of default if and so long as the
board of directors, the executive committee of the board of directors or a trust committee of directors and/or responsible officers of the trustee in good faith determine that the withholding of notice is in the interest of the bondholders. (Section
9.03)
Modification of the Indenture
The indenture may be modified by the consent of the holders of at least 66 2/3% in principal amount of the bonds then outstanding, or in the event that less than all of the bonds of a particular series of bonds outstanding are affected by the modification, by the consent of the holders of 66 2/3% in principal amount of the bonds of such series affected. The right of any holder to receive payment of principal
and interest when due or the right of any holder to enforce such payment may not be changed without the consent of such holder. (Section 16.05)
Defeasance, Cancellation and Discharge
The lien on our property securing the
bonds will be cancelled and discharged when the principal of and interest on the bonds has been paid or when we deposit with the trustee sufficient funds to repay the principal of and interest on all then outstanding bonds, and we request that the
Mortgaged Property revert to us and that the
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lien be cancelled and discharged. Unless we request cancellation and discharge, the lien created by the indenture will not be cancelled and discharged, but shall remain in place for the issuance
of future bonds pursuant to the terms of the indenture. (Sections 11.01 and 11.02)
Release Provisions
Unless an event of default has occurred and is continuing, we may, free from the lien of the indenture and at any time, without any
release by the trustee, sell, exchange or dispose of obsolete machinery or equipment, provided we replace the machinery and equipment with other machinery and equipment of equivalent or greater value. (Section 10.02) In the absence of the occurrence
and continuance of an event of default, we may also at any time and from time to time, without any release by the trustee:
• |
cancel or modify our rights-of-way, leases or contracts, other than rights-of-way for transmission lines which require a release from the trustee;
|
• |
surrender or modify any franchise or governmental consent or permit, so long as we may still conduct our business in the same territory for the same time;
|
• |
abandon the operation of any of our properties if the operation of such property is not necessary or important for the operation of our other systems and plants
or where such abandonment is deemed to be advisable; |
• |
produce, mine, sell or dispose of gas, oil, coal or other minerals, if any, lying or being within or under any real property which is part of the Mortgaged
Property; and/or |
• |
dispose of, in the ordinary course of business, fuel, repair parts, repair material, operating supplies and commodities that comprise stock or merchandise kept
for sale, manufactured commodities, gas and other personal property manufactured or acquired for sale in the ordinary course of business. (Section 10.03) |
The indenture also contains provisions for the release of property by the trustee (i) upon a sale or exchange of such property provided that we receive compensation equal
to the fair value of the property and that the release is advantageous to the conduct of the business and will not impair the Mortgaged Property, and (ii) for property taken by eminent domain, and in each case provided that the proceeds of any sale,
exchange or taking by eminent domain are deposited with the trustee. (Sections 10.04, 10.05)
Evidence of Compliance
The indenture provides that we will furnish to the trustee officers’ certificates, engineer’s certificates and, in
certain cases, independent engineer’s certificates and independent accountant’s certificates in connection with the authentication of any bonds, the release or release and substitution of property and certain other matters, and opinions of
counsel as to the lien of the indenture and certain other matters.
Concerning the Trustee
U.S. Bank, N.A., duly organized and existing under the laws of the United States of America, has been appointed as the trustee. The
principal office of the trustee is located at 500 South Hope Street, Suite 500, Los Angeles, California 90071.
The trustee may resign at any time by giving us written notice and by publishing notice in a required newspaper. The resignation will be effective either on the date specified in the notice or on the date of appointment of a
successor trustee. The holders of a majority in principal amount of the outstanding bonds may remove the trustee by signing, acknowledging, and filing with the trustee a written instrument or concurrent written instruments. Under certain
circumstances, we may appoint a successor trustee. (Sections 14.16 and 14.17)
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No Liability for Stockholders, Directors and Officers
None of our present, past or future stockholders, directors or officers will be liable for any payments of principal or interest on the
bonds, or for any claim based on any payment of principal or interest, or on the indenture or any supplemental indenture. (Article XII)
Defined Terms
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for complete definitions of all such terms, as well as any other capitalized terms used in this prospectus for which no definition is provided:
“Appropriations of Earnings for Depreciation of Mortgaged Property” means the amounts actually appropriated by the Company from earnings as provisions for
depreciation, depletion and retirements of Mortgaged Property and, if such appropriations are calculated on a sinking fund or similar compound interest method, shall include the portion thereof representing interest accrual as well as the portion
thereof representing the annuity charge.
“Board of Directors” means the board of directors of
the Company.
“Excepted Property” means, notwithstanding anything contained in the granting
clauses of the indenture, from the property thereby mortgaged, conveyed in trust, and/or pledged, all of the following property, whether now owned by the Company or hereafter acquired by it:
(a) All bills, notes and accounts receivable, cash on hand or in bank, contracts and operating agreements, other than those subjected
to the lien of the indenture pursuant to the indenture, chooses in action, and the Company’s interest in existing leases in which the Company is lessor and in leases hereafter made of portions of the mortgaged property in which the Company is
lessor;
(b) Gas, manufactured commodities and other personal property
manufactured or acquired for sale in the ordinary course of business; commodities and appliances constituting the whole or any part of stock or merchandise kept for sale; and fuel, repair parts, repair material and operating supplies;
(c) All motor vehicles and tools therefor;
(d) Gas, coal, oil or other minerals (when produced or severed);
(e) Bonds, notes, conditional sales contracts, and other evidences of indebtedness, and shares of
stock, and other certificates of interest, other than those which may be actually delivered to the trustee pursuant to the indenture, or any subsequent provisions of the indenture;
(f) Any gas and/or oil acreage, gas and/or oil wells, gas and/or oil reserves, or gas and/or oil leaseholds hereafter acquired by the
Company, or any property or equipment now or hereafter owned by the Company and used for the development of gas and/or oil acreage or for the drilling for or production of gas and/or oil from such acreage; and
(g) certain real property as described in the indenture.
“Mortgaged Property” and “Trust Estate” mean as of any particular time the property which at said time
is covered or intended to be covered by the lien of the indenture; provided that moneys held by the trustee in trust for the payment, at maturity or on a date fixed for redemption, of specific bonds shall not be deemed to be a part of the
mortgaged property or trust estate.
“Net Bondable Value of Property Additions” means, at any
particular time, the aggregate of the cost to the Company or, as to such property additions which have not been retired, the fair value to the Company, if the fair value is less than cost, of all gross property additions purchased, constructed or
otherwise acquired by the Company, after deducting therefrom the amounts specified in the following paragraphs (1), (2) and (3) and the
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greater of the amounts specified in the following paragraphs (A) or (B) after each of the amounts specified in said paragraphs (A) and (B) has been reduced by the amount of all credits taken on
the basis of cash and bonds delivered to the trustee:
(1) The aggregate of:
(i) the amount of all cash theretofore deposited with the trustee which shall have been
withdrawn on the basis of property additions;
(ii) the amount by which
cash, provided to be deposited with the trustee pursuant to any provision of the indenture, has been reduced on the basis of property additions;
(iii) the amount of all credits taken pursuant to the indenture on the basis of property additions; and
(iv) the amount by which all credits taken pursuant to the indenture on the basis of property additions shall exceed whichever is the
greater of the amounts specified in paragraphs (A) or (B) of this definition;
(2) 150% of the amount of all cash withdrawn pursuant to the indenture;
(3) 150% of the aggregate principal amount of additional bonds theretofore authenticated and delivered pursuant to the indenture upon the basis of property additions; and
(A) the sum of all appropriations of earnings for depreciation of bondable property made on or
after January 1, 1955; or
(B) the aggregate of:
(i) the bonded cost of all bondable property theretofore (but on or after January 1, 1955) retired,
excepting property to an amount not exceeding $5,000,000 owned by the Company on October 1, 1940, and built for the manufacture of gas from oil, and excepting property mentioned in paragraph (ii) next following;
(ii) the excess, if any, of the bonded cost of all bondable property
(aa) theretofore (but on or after January 1, 1955) released from the lien of the indenture, over
the fair value thereof to the Company at the time of its release, as stated in an engineers’ certificate filed with the trustee or, if an independent engineer’s certificate is filed, then as stated in such independent engineer’s
certificate,
(bb) theretofore (but on or after January 1, 1955) taken by
exercise of a power of eminent domain, over the proceeds paid to the trustee, and
(cc) in respect of which insurance proceeds has theretofore (but on or after January 1, 1955) been paid to the trustee, over the cash so paid to the trustee in respect thereof.
“Net Earnings of the Corporation Available for Interest” means the net earnings of the Company ascertained as follows:
(a) The total operating revenues of the Company and the net non-operating
revenues of the properties of the Company shall be ascertained by the Company.
(b) From the total, determined as provided in subdivision (a), there shall be deducted (1) all operating expenses, including cost of gas purchased, all salaries, rentals, insurance, license and franchise fees,
expenditures for ordinary repairs and maintenance, provision for uncollectible accounts, taxes (other than income and excess or other profits taxes which are imposed on or measured by income after the deduction of interest charges), but excluding
all depreciation, depletion, or property retirement appropriations, all interest charges, and amortization of debt discount and expense or premium, and (2) net non-operating losses of the properties of the Company, if any.
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(c) The balance remaining after the
deduction of the total amount computed pursuant to subdivision (b) from the total amount computed pursuant to subdivision (a) shall constitute the “Net Earnings of the Corporation Available for Interest”, subject to subdivisions (d), (e),
(f), (g) and (h) below.
(d) If the net non-operating revenues to be
included in the foregoing calculation would exceed five percent (5%) of the net operating revenues so to be included, there shall be included in the foregoing calculation with respect to net non-operating revenues only an amount equal to five
percent (5%) of such net operating revenues.
(e) No income received or
accrued by the Company from securities and no profits or losses from the sale, abandonment, reclassification or revaluation of capital assets shall be included in making such computations.
(f) In case the Company shall have acquired any property additions or shall have been consolidated or merged with any other
corporation, or shall have acquired all or substantially all of the assets of another corporation, within or after the particular period for which the calculation of Net Earnings of the Corporation Available for Interest is made, then, in computing
the Net Earnings of the Corporation Available for Interest there shall be included, to the extent they may not have been otherwise included, the net earnings or net losses of such property additions or of such other corporation, as the case may be,
for the whole of such period. The net earnings of such property additions, or of such other corporation, for the period preceding such acquisition or such consolidation or merger, shall be ascertained and computed as provided in the foregoing
subdivisions of this definition as if such property additions or the assets of such other corporation, as the case may be, had been owned by the Company during the whole of such period, or as if such other corporation had been consolidated or merged
with the Company prior to the first day of such period.
(g) In case the
Company shall have obtained the release of property of an aggregate fair value in excess of One Million Dollars ($1,000,000), as shown by the engineer’s certificate, or shall have obtained the release of property of which the aggregate proceeds
of which shall have exceeded One Million Dollars ($1,000,000), within or after the particular period for which the calculation of net earnings of the Corporation available for interest is made, then, in computing the Net Earnings of the Corporation
Available for Interest, the net earnings or net losses of such property for the whole of such period shall be excluded to the extent possible on the basis of actual earnings and expenses of such property or on the basis of such estimates of the
earnings and expenses of such property as the signers of an officers’ certificate filed with the trustee shall deem proper.
(h) The Net Earnings of the Corporation Available for Interest, whether of the Company or of some other corporation or of property, shall be determined in accordance with
principles of sound accounting practice.
“Net Investment in Mortgaged Property” means as of any
particular time the total cost of the Mortgaged Property less the then related reserves for depreciation, depletion and amortization or other reserves for retirement of such property; all determined in compliance with the Uniform System of Accounts
for Gas Corporations prescribed by the Public Utilities Commission of the State of California, effective January 1, 1949, or in compliance with such system of accounts as said Commission or other similar regulatory body may from time to time
prescribe, or to the extent that any such system is not so prescribed or is not applicable, then in accordance with sound accounting practice.
“Permissible Encumbrances” means:
(a) the lien of taxes and assessments not at the time due;
(b) the lien of taxes for the then current year;
(c) the lien of specified taxes and assessments already due but the validity of which is being contested at the time by the Company in good faith, unless thereby in the opinion of counsel any of the Mortgaged
Property may be lost or forfeited;
(d) undetermined liens and charges
incidental to construction;
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(e) the right reserved to, or vested in,
any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or by any provision of law, to purchase or recapture or to designate a purchaser of, any of the Mortgaged Property;
(f) liens upon rights-of-way for transmission or distribution line purposes, provided that
the Company has, in the opinion of counsel, power under eminent domain or similar statutes to condemn or acquire easements or rights-of-way sufficient for its purposes over the land covered by the easements or rights-of-way in question or other
lands adjacent thereto;
(g) easements or similar encumbrances the existence of which in the opinion of the signers
of an engineer’s certificate filed at the particular time, does not impair the use of the property described in such certificate for the purposes for which it was acquired or is then used; and
(h) possible adverse rights or interests which, in the opinion of counsel, are unimportant and may
properly be disregarded.
“Refundable Bonds” means, at any particular time, all bonds which shall
theretofore have been authenticated and delivered under the provisions of the indenture and issued by the Company and bonds, not issued by the Company, which have been established as refundable pursuant to the indenture; provided that such
bonds, whether authenticated under the indenture or established as refundable, shall have been theretofore paid at maturity or redeemed or purchased (otherwise than out of funds included in the Trust Estate) and surrendered to the trustee, either
canceled or uncanceled, or surrendered to the trustee for conversion (if convertible), or otherwise surrendered to the trustee, subject to certain exceptions provided in the indenture, and which shall not theretofore have been made the basis for the
authentication and delivery of additional bonds or the withdrawal of cash under the provisions of the indenture or the reduction of the amount of cash to be deposited under the provisions of the indenture or paid or redeemed or purchased pursuant
to, or used to reduce the amount of cash to be deposited pursuant to, or otherwise retired through the operation of, or used in compliance with the requirements of, the provisions of the maintenance and sinking fund established by the indenture or
of any sinking fund, amortization fund, or analogous fund established by any indenture supplemental to the indenture, which does not permit the authentication of additional bonds upon the basis of bonds so paid, redeemed, purchased, retired, or
used.
Bonds and coupons for the payment or redemption of which moneys shall have been deposited (whether at or
prior to maturity or the redemption date of such bonds) with the trustee if such bonds were issued under the indenture, or with the trustee of the other indenture under which such bonds were issued, shall be deemed to have been paid within the
meaning of this definition; provided, however, that if such bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall be given as described above under the caption “Optional Redemption” or as provided
pursuant to the redemption provisions of such other indenture, as the case may be, or provisions satisfactory to the trustee shall have been made for such publication.
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Unless indicated otherwise in any prospectus supplement, the bonds
initially will be issued in book-entry form and represented by one or more global notes or global securities (collectively, “global securities”). If issued in book-entry form, the global securities will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York, as depositary (“DTC”), and registered in the name of Cede & Co., its nominee. Unless and until it is exchanged for individual certificates evidencing bonds under the limited
circumstances described below, a global security may not be transferred except as a whole by the depositary to its nominee or by the nominee to the depositary, or by the depositary or its nominee to a successor depositary or to a nominee of the
successor depositary.
DTC has advised us that it is:
• |
a limited-purpose trust company organized under the New York Banking Law; |
• |
a “banking organization” within the meaning of the New York Banking Law; |
• |
a member of the Federal Reserve System; |
• |
a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and |
• |
a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. |
DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among its participants of
securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants accounts, which eliminates the need for physical movement of securities certificates. “Direct
participants” in DTC include securities brokers and dealers, including underwriters, banks, trust companies, clearing corporations and other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange,
Inc., the American Stock Exchange LLC and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, which we sometimes refer to as “indirect participants,” that clear transactions through or
maintain a custodial relationship with a direct participant either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
Purchases of bonds within the DTC system must be made by or through direct participants, which will receive a credit for those bonds on DTC’s records. The ownership
interest of the actual purchaser of a debt security, which we sometimes refer to as a “beneficial owner,” is in turn recorded on the direct and indirect participants’ records. Beneficial owners of bonds will not receive written
confirmation from DTC of their purchases. However, beneficial owners are expected to receive written confirmations providing details of their transactions, as well as periodic statements of their holdings, from the direct or indirect participants
through whom they purchased bonds. Transfers of ownership interests in global securities are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in the global securities except under the limited circumstances described below.
To facilitate subsequent transfers, all global securities deposited with DTC will be registered in the name of DTC’s nominee, Cede & Co. The deposit of bonds with DTC and their registration in the name of Cede & Co. will
not change the beneficial ownership of the bonds. DTC has no knowledge of the actual beneficial owners of the bonds. DTC’s records reflect only the identity of the direct participants to whose accounts the securities are credited, which may or
may not be the beneficial owners. The participants are responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any legal requirements in effect from time to time.
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Redemption notices will be sent to DTC or its nominee. If less than all of the
bonds of a particular series are being redeemed, DTC will determine the amount of the interest of each direct participant in the bonds of such series to be redeemed in accordance with DTC’s procedures.
In any case where a vote may be required with respect to bonds of a particular series, neither DTC nor Cede & Co. will give consents
for or vote the global securities. Under its usual procedures, DTC will mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns the consenting or voting rights of Cede & Co. to those direct participants
to whose accounts the bonds of such series are credited on the record date identified in a listing attached to the omnibus proxy.
We will make payments on global securities to the depositary or its nominee, as the registered owner of such bonds, by wire transfer of immediately available funds. If bonds are issued in definitive certificated form under the
limited circumstances described below we will have the option of paying interest by check mailed to the addresses of the persons entitled to payment or by wire transfer to bank accounts in the United States designated in writing to the trustee at
least 15 days before the payment date by the persons entitled to payment.
Principal and interest payments on
global securities will be made to Cede & Co., as nominee of DTC. DTC’s practice is to credit direct participants accounts on the relevant payment date unless DTC has reason to believe that it will not receive payment on the payment date.
Payments by direct and indirect participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with bonds held for the account of customers in bearer form or registered in “street name.”
Those payments will be the responsibility of participants and not of DTC or us, subject to any legal requirements in effect from time to time. Payment of principal and interest to Cede & Co. is our responsibility, disbursement of payments to
direct participants is the responsibility of DTC and disbursement of payments to the beneficial owners is the responsibility of direct and indirect participants.
Except under the limited circumstances described below, purchasers of bonds will not be entitled to have bonds registered in their names and will not receive physical delivery of bonds. Accordingly,
each beneficial owner must rely on the procedures of DTC and its participants to exercise any rights under the bonds and the indenture.
The laws of some jurisdictions may require that some purchasers of bonds take physical delivery of bonds in definitive form. Those laws may impair the ability to transfer or pledge beneficial interests in bonds.
DTC is under no obligation to provide its services as depositary for the bonds and may discontinue providing its
services at any time. Neither we nor the trustee will have any responsibility for the performance by DTC or its direct participants or indirect participants under the rules and procedures governing DTC.
As noted above, beneficial owners of a particular series of bonds generally will not receive certificates representing their ownership
interests in those bonds. However, if:
• |
DTC notifies us that it is unwilling or unable to continue as a depositary for the global security or securities representing such series of bonds or if DTC
ceases to be a clearing agency registered under the Securities Exchange Act at a time when it is required to be registered and a successor depositary is not appointed within 90 days of the notification to us or of our becoming aware of DTC’s
ceasing to be so registered, as the case may be; |
• |
we determine, in our sole discretion, not to have the bonds of such series represented by one or more global securities of such series; or
|
• |
an event of default under the indenture has occurred and is continuing with respect to the bonds of such series, |
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we will prepare and deliver certificates for the bonds of such series in exchange for beneficial
interests in the global securities. Any beneficial interest in a global security that is exchangeable under the circumstances described in the preceding sentence will be exchangeable for securities in definitive certificated form registered in the
names that the depositary directs. It is expected that these directions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global securities.
We have obtained the information in this section and elsewhere in this prospectus concerning DTC and DTC’s book-entry
system from sources that are believed to be reliable, but we do not take responsibility for the accuracy of this information.
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We may sell the bonds described in this prospectus from time to
time in one or more transactions:
• |
to purchasers directly; |
• |
to underwriters for public offering and sale by them; |
• |
through agents; |
• |
through dealers; or |
• |
through a combination of any of the foregoing methods of sale. |
We may distribute the bonds from time to time in one or more transactions at:
• |
a fixed price or prices, which may be changed; |
• |
market prices prevailing at the time of sale; |
• |
prices related to such prevailing market prices; or |
• |
negotiated prices. |
Direct Sales
We may sell the bonds directly to institutional investors or others. A
prospectus supplement will describe the terms of any sale of bonds we are offering hereunder.
To Underwriters
The prospectus supplement will name any underwriter involved in a sale of bonds. Underwriters may offer and
sell securities at a fixed price or prices, which may be changed, or from time to time at market prices or at negotiated prices. Underwriters may be deemed to have received compensation from us from sales of bonds in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of bonds for whom they may act as agent.
Underwriters may sell the bonds to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions, which may be changed from time to time,
from the purchasers for whom they may act as agent.
Unless otherwise provided in a prospectus supplement, the
obligations of any underwriters to purchase bonds will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all the bonds of such series if they purchase any.
Through Agents and Dealers
We will name any agent involved in a sale of the bonds, as well as any commissions payable by us to such agent, in a prospectus supplement. Unless we indicate differently in the prospectus supplement,
any such agent will be acting on a reasonable efforts basis for the period of its appointment.
If we utilize a
dealer in the sale of the bonds being offered pursuant to this prospectus, we will sell the bonds to the dealer, as principal. The dealer may then resell the bonds to the public at varying prices to be determined by the dealer at the time of resale.
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Delayed Delivery Contracts
If we so specify in the applicable prospectus supplement, we will authorize underwriters, dealers and agents to solicit offers by certain
institutions to purchase bonds pursuant to contracts providing for payment and delivery on future dates. Such contracts will be subject to only those conditions set forth in the applicable prospectus supplement.
The underwriters, dealers and agents will not be responsible for the validity or performance of the contracts. We will set forth in the
prospectus supplement relating to the contracts the price to be paid for the bonds, the commissions payable for solicitation of the contracts and the date in the future for delivery of the securities.
General Information
Underwriters, dealers and agents participating in a sale of the bonds may be deemed to be underwriters as defined in the Securities Act of 1933, as amended, and any discounts and commissions received by them and any profit
realized by them on resale of the securities may be deemed to be underwriting discounts and commissions, under the Securities Act. We may have agreements with underwriters, dealers and agents to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, and to reimburse them for certain expenses.
Underwriters or
agents and their associates may be customers of, engage in transactions with or perform services for us or our affiliates in the ordinary course of business.
Unless we indicate differently in a prospectus supplement, we will not list the bonds on any securities exchange. The bonds will be a new issue of securities with no established trading market. Any
underwriters that purchase bonds for public offering and sale may make a market in such bonds, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. We make no assurance as to the
liquidity of or the trading markets for any bonds.
The consolidated financial statements as of December 31, 2000 and 1999 and for
each of the three years in the period ended December 31, 2000 incorporated by reference in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference,
and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
Latham & Watkins, Los Angeles, California, will pass upon
certain legal matters relating to the issuance and sale of the bonds on behalf of us. Gary W. Kyle, Chief Corporate Counsel of Sempra Energy, our ultimate parent company, will pass upon the validity of the bonds and various other legal matters
relating to the issuance and sale of the bonds. Sidley Austin Brown & Wood LLP, San Francisco, California will act as counsel for any underwriters or agents. Paul C. Pringle, a partner of Sidley Austin Brown & Wood LLP, owns 2,162 shares of
common stock of Sempra Energy.
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$250,000,000
% First Mortgage Bonds, Series GG, Due 2012
Southern California Gas Company
PROSPECTUS SUPPLEMENT
ABN AMRO Incorporated
BNP PARIBAS
The Royal Bank of Scotland
TD Securities
Scotia Capital
WestLB AG
October , 2002