1
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND DECLARED EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THAT A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-50477
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED JULY 15, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 25, 1998)
$150,000,000
ATMOS ENERGY CORPORATION [ATMOS ENERGY CORP LOGO]
% DEBENTURES DUE 2028
------------------------
Interest on the Debentures is payable semi-annually on and
of each year, commencing , 1999. The Debentures may be
redeemed at any time at the option of Atmos Energy Corporation (the "Company"),
in whole or in part, at a Redemption Price equal to the sum of (i) the principal
amount of the Debentures being redeemed plus any accrued interest thereon to but
not including the Redemption Date and (ii) the Make-Whole Premium (as
hereinafter defined), if any. See "Description of Debentures".
The Debentures initially will be represented by a single global security
registered in the name of The Depository Trust Company ("DTC"), or its nominee.
Except under the limited circumstances described herein, beneficial interests in
the Debentures will be shown on, and transfers thereof will be effected only
through, records maintained by DTC or its participants. Except as described
herein, Debentures in definitive form will not be issued. See "Description of
Debt Securities -- Book-Entry Debt Securities" in the accompanying Prospectus.
An application has been made to list the Debentures on The New York Stock
Exchange.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------------------
Per Debenture.......................... % % %
- ------------------------------------------------------------------------------------------------------------------
Total.................................. $ $ $
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting expenses payable by the Company estimated at $240,000.
------------------------
The Debentures are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer, and to reject orders in whole or in part. It is expected that
delivery of the Debentures will be made through the book-entry facilities of DTC
on or about , 1998.
------------------------
MERRILL LYNCH & CO. NATIONSBANC MONTGOMERY SECURITIES LLC
EDWARD D. JONES & CO., L.P.
------------------------
The date of this Prospectus Supplement is , 1998.
2
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES. SUCH
TRANSACTIONS MAY INCLUDE OVERALLOTMENT, STABILIZING AND THE PURCHASE OF THE
DEBENTURES TO COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
------------------------
THE COMPANY
Atmos Energy Corporation (the "Company") distributes and sells natural gas
and propane to approximately 1.02 million residential, commercial, industrial,
agricultural and other customers. The Company distributes and sells natural gas
through its five operating divisions to approximately 985,000 customers in 802
cities, towns and communities in service areas located in Colorado, Georgia,
Illinois, Iowa, Kansas, Kentucky, Louisiana, Missouri, South Carolina,
Tennessee, Texas and Virginia. The Company also transports natural gas for
others through parts of its distribution system. It also distributes propane to
approximately 31,000 customers in Kentucky, North Carolina, Tennessee and
Virginia. For the six months ended March 31, 1998, such utility business
generated approximately 95% of the Company's operating revenues and
approximately 94% of its net income.
The Company, through various wholly-owned subsidiaries, conducts operations
that complement its natural gas and propane distribution business. One
subsidiary, United Cities Gas Storage Company, owns natural gas storage fields
in Kansas and Kentucky, which are used to supplement natural gas used by
customers in those states. Another subsidiary, UCG Energy Corporation ("UCG
Energy"), leases appliances, real estate, equipment and vehicles to the United
Cities Gas Company division and others, and owns a small interest in a
partnership engaged in exploration and production activities. UCG Energy also
owns a 45% interest in Woodward Marketing, L.L.C. ("WMLLC"), which conducts a
gas marketing business. WMLLC provides gas marketing services to industrial
customers, municipalities and local distribution companies, including the United
Cities Gas Company division.
UCG Energy also owns Atmos Propane, Inc. (the "Propane Division"), which is
engaged in the retail distribution of propane (LP) gas, the wholesale supply and
transportation of LP gas, the transportation of certain petroleum products for
other companies and the direct merchandising and repair of propane gas
appliances. The Propane Division has LP storage facilities in 16 towns in which
it operates, with a total storage capacity of approximately 2,209,000 gallons.
The Company's principal executive offices are located at 1800 Three Lincoln
Centre, 5430 LBJ Freeway, Dallas, Texas 75240, and its telephone number is (972)
934-9227.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated:
SIX MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
-------------------------------- -----------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges......... 2.35 2.30 2.31 2.82 1.95 5.13 5.09
For purposes of computing the foregoing ratios, (i) "earnings" represent
the Company's net income from continuing operations plus applicable income taxes
and fixed charges and (ii) "fixed charges" represent interest expense,
amortization of debt discount, premium and expense, capitalized interest and a
portion of lease payments considered to represent an interest factor.
S-2
3
USE OF PROCEEDS
The Company expects to use the net proceeds from the sale of the Debentures
to repay outstanding short-term indebtedness under its revolving credit facility
and uncommitted lines of credit. The revolving credit facility matures on August
7, 1998 and provides for a fluctuating interest rate per annum based upon LIBOR.
The interest rate on such indebtedness was 5.855% on July 7, 1998. As of such
date, the Company had drawn down $100 million under the revolving credit
facility. The interest rate on the uncommitted lines of credit fluctuates daily
based on rates quoted by participating lenders and as of July 7, 1998 had a
weighted average of 5.749%. As of such date, the Company had drawn down $60.6
million under these uncommitted lines of credit. The short-term indebtedness
incurred by the Company under the revolving credit facility and the uncommitted
lines of credit (i) was incurred primarily in connection with the Company's
customer service initiative, including the establishment of a new customer
service center located in Amarillo, Texas and (ii) represents transaction costs
incurred in connection with the merger of United Cities Gas Company with and
into the Company.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of March 31, 1998 and as adjusted to give effect to the sale by the
Company of the Debentures offered hereby (as if such sale occurred on such date)
and the application of the net proceeds thereof as described in "Use of
Proceeds". This capitalization table should be read in conjunction with the
Company's consolidated financial statements and notes thereto incorporated by
reference in this Prospectus Supplement.
MARCH 31, 1998
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
Short-term debt:
Current portion of long-term debt......................... $ 57,508 $ 57,508
Other short-term debt..................................... 146,843 --
-------- --------
Total short-term debt............................. 204,351 57,508
Long-term debt:
Debentures offered hereby................................. -- 150,000
Other long-term debt, less current portion................ 252,152 252,152
-------- --------
Total long-term debt.............................. 252,152 402,152
-------- --------
Total debt........................................ $456,503 $459,660
======== ========
Shareholders' equity:
Common Stock, no par value; 75,000,000 shares authorized;
30,056,436 shares issued and outstanding at March 31,
1998................................................... 150 150
Additional paid-in capital................................ 262,295 262,295
Retained earnings......................................... 117,630 117,630
-------- --------
Total shareholders' equity........................ 380,075 380,075
-------- --------
Total capitalization.............................. $632,227 $782,227
======== ========
S-3
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SELECTED CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data of the Company for each
of the five years in the period ended September 30, 1997 has been derived from
the audited consolidated financial statements of the Company included in the
documents incorporated by reference in the accompanying Prospectus. The selected
historical consolidated financial data for the six months ended March 31, 1997
and 1998 is unaudited; however, in the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of
the consolidated financial position and results of operations for these periods
have been included. The following data should be read in conjunction with the
consolidated financial statements and related notes thereto included in its
Annual Report on Form 10-K for the fiscal year ended September 30, 1997 and its
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1997 and
March 31, 1998. Amounts for 1997 reflect the pooled operations of the Company
and United Cities Gas Company. Prior year amounts have been restated for the
pooling.
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
-------------------------------------------------------- -----------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Operating revenues............ $794,893 $826,302 $749,555 $886,691 $906,835 $643,261 $583,881
Net income.................... 29,694 26,772 28,808 41,151 23,838 48,781 57,520
Net income per share.......... 1.21 1.05 1.06 1.42 .81 1.66 1.94
Cash dividends per share...... .82 .91 .96 .98 1.01 .50 .53
Total assets at end of year... 786,739 829,385 900,948 1,010,610 1,088,311 1,053,304 1,148,174
Long-term debt at end of
year........................ 257,696 282,647 294,463 276,162 302,981 325,495 252,152
S-4
5
DESCRIPTION OF DEBENTURES
The Debentures are to be issued under the Indenture dated as of ,
1998 (the "Indenture") between the Company and U.S. Bank Trust National
Association, Trustee, which Indenture is more fully described in the Prospectus.
The following description of the particular terms of the Debentures offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus under the caption "Description of Debt Securities". Whenever
particular defined terms of the Indenture are referred to, such defined terms
are incorporated herein by reference.
The Debentures will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof. The
Debentures will be represented by a single permanent global Debenture registered
in the name of DTC, or its nominee, and payment of principal of, and interest
on, the Debentures will be made in immediately available funds to DTC or its
nominee, as the case may be, as the registered holder thereof. See "Description
of Debt Securities -- Book-Entry Debt Securities" in the Prospectus.
The Debentures will mature on and will be limited to an
aggregate principal amount of $150,000,000. Each Debenture will bear interest at
the rate per annum stated on the cover page hereof from , 1998 or from
the most recent interest payment date to which interest has been paid, payable
on each , commencing , 1998, to the person in whose name the
Debenture (or any predecessor Debenture) is registered at the close of business
on the next preceding and , respectively. The Debentures will be
unsecured and unsubordinated obligations of the Company.
The defeasance and covenant defeasance provisions of the Indenture
described under "Description of Debt Securities -- Defeasance and Covenant
Defeasance" in the Prospectus will apply to the Debentures.
REDEMPTION
The Debentures will be redeemable at the option of the Company, in whole or
in part, in principal amounts of $1,000 or any integral multiple thereof at any
time at a Redemption Price equal to the sum of (i) an amount equal to 100% of
the principal amount thereof and (ii) the Make-Whole Premium, together with
accrued and unpaid interest to the Redemption Date.
In the event that less than all of the Debentures are to be redeemed at any
time, selection of such Debentures for redemption will be made by the Trustee on
a pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Debentures of a principal amount of
$1,000 or less shall be redeemed in part. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
before the Redemption Date, to each Holder of Debentures to be redeemed, at its
address as shown in the Security Register. If any Debenture is to be redeemed in
part only, the notice of redemption that relates to such Debenture shall state
the portion of the principal amount thereof to be redeemed. A new Debenture in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon surrender for cancellation of the original
Debenture. On and after the Redemption Date, interest will cease to accrue on
Debentures or portions thereof called for redemption unless the Company defaults
in the payment of the Redemption Price.
As used herein:
"Make-Whole Premium" means, in connection with any optional redemption of
any Debenture, the excess, if any, of (i) the aggregate present value as of the
Redemption Date of each dollar of principal of such Debentures being redeemed
and the amount of interest (exclusive of interest accrued to the Redemption
Date) that would have been payable in respect of such dollar if such redemption
had not been made, determined by discounting, on a semi-annual basis, such
principal and interest at a rate equal to the sum of the Treasury Yield
(determined on the Business Day immediately preceding the Redemption Date) plus
% from the respective dates on which such principal and interest would have
been payable if such redemption had not been made, over (ii) the aggregate
principal amount of such Debentures being redeemed.
S-5
6
"Treasury Yield" means, in connection with the calculation of any
Make-Whole Premium on any Debenture, the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two Business Days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source of similar data)) equal to the then remaining
maturity of such Debenture; provided that if no United States Treasury security
is available with such a constant maturity and for which a closing yield is
given, the Treasury Yield shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the closing yields of United States
Treasury securities for which such yields are given, except that if the
remaining maturity of such Debenture is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. So long as the Debentures are represented by a
permanent global Debenture, all payments of principal and interest will be made
by the Company in immediately available funds.
An application has been made to list the Debentures on The New York Stock
Exchange.
S-6
7
UNDERWRITING
Subject to the terms and conditions set forth in a Purchase Agreement,
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below (the "Underwriters"), and each of the Underwriters has
severally agreed to purchase, the respective principal amount of the Debentures
set forth opposite its name below:
PRINCIPAL
AMOUNT OF
UNDERWRITERS DEBENTURES
- ------------------------------------------------------------ ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $
NationsBanc Montgomery Securities LLC.......................
Edward D. Jones & Co., L.P..................................
------------
Total.......................................... $150,000,000
============
In the Purchase Agreement, the Underwriters have agreed, subject to terms
and conditions set forth therein, to purchase all of the Debentures offered
hereby, if any Debentures are purchased. The Underwriters have advised the
Company that they propose initially to offer the Debentures to the public at the
initial public offering price set forth on the cover page of this Prospectus
Supplement and to certain securities dealers at such price less a concession not
in excess of % of the principal amount of each Debenture. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of % of
the principal amount of each Debenture to certain brokers and dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
In connection with the offering of the Debentures, the Underwriters may
engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Securities Exchange Act
of 1934, as amended. Overallotment involves sales in excess of the offering
size, which creates a short position for the Underwriters. Stabilizing
transactions involve bids to purchase the Debentures in the open market for the
purpose of pegging, fixing or maintaining the price of the Debentures. Syndicate
covering transactions involve purchases of the Debentures in the open market
after the distribution has been completed in order to cover short positions.
These activities may cause the price of the Debentures to be higher than it
would otherwise be in the absence of such transactions. Such activities, if
commenced, may be discontinued at any time.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Debentures but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Debentures.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, and to contribute to payments the Underwriters may be required to make
in respect thereof.
Merrill Lynch, Pierce, Fenner & Smith Incorporated and affiliates of
NationsBanc Montgomery Securities LLC have provided from time to time, and
expect to provide in the future, investment or commercial banking services to
the Company and its affiliates for which they have received or will receive
customary fees and commissions. Because more than 10% of the net proceeds of
this offering will be paid to NationsBank, N.A. , an affiliate of NationsBanc
Montgomery Securities LLC, the offering will be conducted in accordance with
National Association of Securities Dealers Conduct Rule 2710(c)(8).
S-7
8
[This page is intentionally left blank.]
9
PROSPECTUS
ATMOS ENERGY CORPORATION
$150,000,000
DEBT SECURITIES
---------------------
Atmos Energy Corporation, a Texas and Virginia corporation (the "Company"),
may offer from time to time, together or separately, its debt securities ("Debt
Securities") on terms to be determined at the time of offering. Debt Securities
with an aggregate issue price of up to $150,000,000 may be issued, in one or
more series, under this Prospectus. The Debt Securities will be unsecured and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company.
The prospectus supplement ("Prospectus Supplement") accompanying this
Prospectus sets forth, with respect to the particular series or issue of Debt
Securities for which this Prospectus and the Prospectus Supplement are being
delivered ("Offered Securities"): the terms of the Debt Securities offered,
including, where applicable, their title, aggregate principal amount, maturity,
rate of any interest (or the manner of calculation and time of payment thereof),
any redemption or repayment terms, any index, formula or other method pursuant
to which principal, premium or interest may be determined and the form of such
Debt Securities (which may be in registered or global form), any initial public
offering price, the purchase price and net proceeds to the Company and the other
specific terms of such offering.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
Offered Securities may be sold directly to purchasers or to or through
underwriters, dealers or agents. If any underwriters, dealers or agents are
involved in the offering of any Offered Securities, their names and any
applicable fee, commission or discount arrangements will be set forth in the
Prospectus Supplement. See "Plan of Distribution".
---------------------
The date of this Prospectus is June 25, 1998.
10
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"), which may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Office (Seven World Trade Center, Suite
1300, New York, New York 10048) and Chicago Office (500 W. Madison St., Suite
1400, Chicago, Illinois 60621-2511). Copies of such materials also can be
obtained upon request from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. In addition, such materials may also be inspected and copied
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005, on which exchange one or more of the Company's securities are
listed. Finally, copies of reports, proxy statements and other information filed
with the Commission electronically by the Company may be inspected by accessing
the Commission's Internet site at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document. A copy of the Registration Statement and the exhibits and schedules
thereto may be examined without charge at the Commission's principal offices at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
copies of such materials can be obtained from the Public Reference Section of
the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have heretofore been filed by the Company
with the Commission pursuant to the Exchange Act, are incorporated herein by
reference and are deemed to be a part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended September 30,
1997;
(b) Quarterly Reports on Form 10-Q for the quarters ended December 31,
1997 and March 31, 1998; and
(c) Current Report on Form 8-K dated November 13, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby also shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the foregoing documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Such requests should be directed
to: Atmos Energy Corporation, 1800 Three Lincoln Centre, 5430 LBJ Freeway,
Dallas, Texas 75240, Attention: Investor Relations.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is
2
11
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified shall not be deemed to constitute a part of
this Prospectus except as so modified, and any statement so superseded shall not
be deemed to constitute part of this Prospectus.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus, including the documents that are
incorporated by reference as set forth in "Incorporation of Certain Documents by
Reference," that are not historical facts are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on management's beliefs as well as assumptions made by and
information currently available to management. Because such statements are based
on expectations as to future economic performance and are not statements of
fact, actual results may differ materially from those projected. Important
factors that could cause future results to differ include, but are not limited
to, national, regional and local economic competitive conditions, regulatory and
business trends and decisions, technological developments, Year 2000 issues,
inflation rates, weather conditions, and other factors discussed in this and
other filings by the Company with the Commission, all of which are difficult to
predict and many of which are beyond the control of the Company. Accordingly,
while the Company believes these forward-looking statements to be reasonable,
there can be no assurance that they will approximate actual experience or that
the expectations derived from them will be realized. When used in the Company's
documents or oral presentations, the words "anticipate," "estimate," "expect,"
"objective," "projection," "forecast," "goal" or similar words are intended to
identify forward-looking statements.
THE COMPANY
The Company distributes and sells natural gas and propane to approximately
1.02 million residential, commercial, industrial, agricultural, and other
customers. The Company distributes and sells natural gas through its five
operating divisions to approximately 985,000 customers in 802 cities, towns, and
communities in service areas located in Colorado, Georgia, Illinois, Iowa,
Kansas, Kentucky, Louisiana, Missouri, South Carolina, Tennessee, Texas and
Virginia. The Company also transports gas for others through parts of its
distribution system. It also distributes propane to approximately 31,000
customers in Kentucky, North Carolina, Tennessee and Virginia.
The Company, through various wholly-owned subsidiaries, conducts operations
that complement its natural gas and propane distribution business. One
subsidiary, United Cities Gas Storage Company, owns natural gas storage fields
in Kansas and Kentucky, which are used to supplement natural gas used by
customers in those states. Another subsidiary, UCG Energy Corporation ("UCG
Energy"), leases appliances, real estate, equipment, and vehicles to the United
Cities Gas Company division and others, and owns a small interest in a
partnership engaged in exploration and production activities. UCG Energy also
owns a 45% interest in Woodward Marketing, L.L.C. ("WMLLC"), which conducts a
gas marketing business. WMLLC provides gas marketing services to industrial
customers, municipalities and local distribution companies, including the United
Cities Gas Company division.
UCG Energy also owns Atmos Propane, Inc. (the "Propane Division"), which is
engaged in the retail distribution of propane (LP) gas, the wholesale supply and
transportation of LP gas, the transportation of certain petroleum products for
other companies and the direct merchandising and repair of propane gas
appliances. The Propane Division has LP storage facilities in 16 towns in which
it operates, with a total storage capacity of approximately 2,209,000 gallons.
The Company's principal executive offices are located at 1800 Three Lincoln
Centre, 5430 LBJ Freeway, Dallas, Texas 75240, and its telephone number is (972)
934-9227.
3
12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated:
SIX MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
-------------------------------- -----------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges......... 2.35 2.30 2.31 2.82 1.95 5.13 5.09
For purposes of computing the foregoing ratios, (i) "earnings" represent
the Company's net income from continuing operations plus applicable income taxes
and fixed charges, and (ii) "fixed charges" represent interest expense,
amortization of debt discount, premium and expense, capitalized interest, and a
portion of lease payments considered to represent an interest factor.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds received by the Company from the sale of the Debt Securities will be
used for the repayment of short-term debt (i) incurred in connection with the
establishment of a new customer service center located in Amarillo, Texas and
(ii) representing transaction costs incurred in connection with the merger of
United Cities Gas Company with and into the Company. If the Company elects at
the time of an issuance of the Debt Securities to make a different or more
specific use of proceeds other than that set forth herein, such use will be
described in the Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture ("Indenture") between
the Company and U.S. Bank Trust National Association, Trustee ("Trustee"). The
form of the Indenture has been filed as an exhibit to the Registration
Statement. The Indenture is subject to and governed by the Trust Indenture Act
of 1939, as amended ("TIA"). The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Indenture, including the definitions of
certain terms therein. Whenever particular sections or defined terms of the
Indenture are referred to, such sections or defined terms are incorporated by
reference herein as part of the statement made, and the statement is qualified
in its entirety by such reference.
GENERAL
The Indenture provides that any Offered Securities may be issued in one or
more series, in each case as authorized from time to time by the Company; the
Indenture does not limit the aggregate principal amount of debt securities that
may be issued thereunder. Reference is made to the Prospectus Supplement
relating to the Offered Securities for the following:
(1) The title of such Debt Securities.
(2) The aggregate principal amount of such Debt Securities, the
percentage of their principal amount at which such Debt Securities will be
issued and the date or dates on which the principal of such Debt Securities
will be payable or the method by which such date or dates will be
determined or extended.
(3) The rate or rates (which may be fixed or variable) at which such
Debt Securities will bear interest, if any, and, if variable, the method by
which such rate or rates will be determined.
(4) The date or dates from which any interest will accrue or the
method by which such date or dates will be determined, the date or dates on
which any interest will be payable (including the Regular
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Record Dates for such Interest Payment Dates) and the basis on which any
interest will be calculated if other than on the basis of a 360-day year of
twelve 30-day months.
(5) The place or places, if any, other than or in addition to New York
City, where the principal of (and premium, if any, on) and interest, if
any, on such Debt Securities will be payable, where any Debt Securities may
be surrendered for registration of transfer, where such Debt Securities may
be surrendered for exchange and where notices or demands to or upon the
Company in respect of such Debt Securities may be served.
(6) The period or periods within which, the price or prices at which
and the other terms and conditions upon which, such Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the Company
is to have that option.
(7) The obligation, if any, of the Company to redeem, purchase or
repay such Debt Securities, in whole or in part, pursuant to any sinking
fund or analogous provision or at the option of a holder thereof, and the
period or periods within which, the price or prices at which and the other
terms and conditions upon which, such Debt Securities will be so redeemed,
purchased or repaid.
(8) Whether the amount of payments of principal of (and premium, if
any, on) and interest, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which index, formula
or method may, without limitation, be based on one or more commodities,
equity indices or other indices) and the manner in which such amounts will
be determined.
(9) Any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to such Debt Securities
(which Events of Default or covenants may not be consistent with the Events
of Default or covenants set forth in the general provisions of the
Indenture).
(10) If other than the entire principal amount thereof, the portion of
the principal amount of such Debt Securities that will be payable upon
declaration of acceleration of the maturity thereof or the method by which
such portion will be determined.
(11) Any provisions in modification of, in addition to or in lieu of
any of the provisions concerning defeasance and covenant defeasance
contained in the Indenture that will be applicable to such Debt Securities.
(12) Any provisions granting special rights to the holders of such
Debt Securities upon the occurrence of such events as may be specified.
(13) If other than the Trustee, the designation of any Paying Agent or
Security Registrar for such Debt Securities, and the designation of any
transfer or other agents or depositories for such Debt Securities.
(14) Whether such Debt Securities will be issuable initially in
temporary global form, whether any such Debt Security is to be issuable in
permanent global form (a "Global Security") and, if so, whether beneficial
owners of interests in any Global Security may exchange such interests for
Debt Securities of like tenor of any authorized form and denomination and
the circumstances under which any such exchanges may occur, if other than
in the manner provided in the Indenture, and, if such Debt Securities are
to be issuable as a Global Security, the identity of the depository for
such Debt Securities.
(15) The person to whom any interest on any Debt Security will be
payable, if other than the person in whose name such Debt Security (or one
or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, or the manner in which any
interest payable on a temporary Debt Security issued in global form will be
paid (if other than as described in "Book-Entry Debt Securities" below).
(16) The denomination or denominations in which such Debt Securities
will be issuable, if other than $1,000 or any integral multiple thereof.
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(17) Whether and under what circumstances the Company will pay
Additional Amounts, as contemplated by Section 1008 of the Indenture, on
such Debt Securities to any holder who is not a United States person
(including any modification of the definition of such term as contained in
the Indenture) in respect of any tax, assessment or governmental charge
and, if so, whether the Company will have the option to redeem such Debt
Securities rather than pay such Additional Amounts (and the terms of any
such option).
(18) Any other, terms, conditions, rights and preferences (or
limitations on such rights and preferences) of such Debt Securities not
inconsistent with the provisions of the Indenture (Section 301).
If the terms of any series of Debt Securities provide that the Company may
be required to pay Additional Amounts in respect thereof, for purposes of this
Prospectus, any reference to the payment of the principal of (and premium, if
any, on) or interest, if any, on such Debt Securities will be deemed to include
mention of the payment of the Additional Amounts provided for by the terms of
such Debt Securities.
The Debt Securities referred to on the cover page of this Prospectus, and
any additional debt securities issued under the Indenture, are herein
collectively referred to, while a single Trustee is acting with respect to all
debt securities issued thereunder, as the "Indenture Securities". The Indenture
provides that there may be more than one Trustee thereunder, each with respect
to one or more series of Indenture Securities. At a time when two or more
Trustees are acting under the Indenture, each with respect to only certain
series, the term "Indenture Securities" as used herein will mean the series with
respect to which each respective Trustee is acting. In the event that there is
more than one Trustee under the Indenture, the powers and trust obligations of
each Trustee as described herein will extend only to the series of Indenture
Securities for which it is the Trustee. If two or more Trustees are acting under
the Indenture, then the Indenture Securities for which each Trustee is acting
would in effect be treated as if issued under separate indentures.
The Debt Securities may provide for less than the entire principal amount
thereof to be due and payable upon a declaration of acceleration of the maturity
thereof. A discussion of the federal income tax and other considerations
applicable to Original Issue Discount Securities will be set forth in the
Prospectus Supplement relating thereto.
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Company.
The general provisions of the Indenture do not limit the ability of the
Company to incur indebtedness and do not afford holders of Debt Securities
protection in the event of highly leveraged or similar transactions involving
the Company. However, the general provisions of the Indenture do provide that
neither the Company nor any Restricted Subsidiary will subject certain of its
properties or assets to any mortgage or other encumbrance unless the Indenture
Securities outstanding thereunder are secured equally and ratably with or prior
to such other indebtedness thereby secured. See "Limitations on Liens" and
"Limitation on Sale and Leaseback Transactions" under the heading "Certain
Covenants". Reference is made to the Prospectus Supplement for information with
respect to any deletions from, modifications of or additions to the Events of
Default or covenants of the Company that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
Under the Indenture, the Company has the ability to issue Indenture
Securities with terms different from those of Indenture Securities previously
issued thereunder and, without the consent of the holders, to reopen a previous
issue of a series of Indenture Securities and issue additional Indenture
Securities of such series (unless such reopening was restricted when such series
was created) in an aggregate principal amount determined by the Company (Section
301).
There is no requirement that future issues of debt securities of the
Company be issued under the Indenture, and the Company will be free to employ
other indentures or documentation, possibly containing provisions different from
those included in the Indenture or applicable to one or more issues of Indenture
Securities, in connection with such future issues.
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CERTAIN COVENANTS
Limitations on Liens
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, create, incur, issue or assume any Indebtedness
secured by any Lien on any Principal Property, or on shares of stock or
Indebtedness of any Restricted Subsidiary ("Restricted Securities"), without
making effective provision for the Outstanding Indenture Securities (other than
any Outstanding Indenture Securities not entitled to this covenant) to be
secured by the Lien equally and ratably with (or prior to) any and all
Indebtedness and obligations secured or to be secured thereby for so long as
such Indebtedness is so secured, except that the foregoing restriction will not
apply to:
(1) Any Lien existing on the date of the first issuance of Indenture
Securities under the Indenture, including, but not limited to, the Liens on
property or after-acquired property of the Company or its Subsidiaries
under the Greeley Indenture or the United Cities Indenture.
(2) Any Lien on any Principal Property or Restricted Securities of any
Person existing at the time such Person is merged or consolidated with or
into the Company or a Restricted Subsidiary, or such Person becomes a
Restricted Subsidiary.
(3) Any Lien on any Principal Property existing at the time of
acquisition of such Principal Property by the Company or a Restricted
Subsidiary, whether or not assumed by the Company or such Restricted
Subsidiary, provided that no such Lien may extend to any other Principal
Property of the Company or any Restricted Subsidiary.
(4) Any Lien on any Principal Property (including any improvements on
an existing Principal Property) of the Company or any Restricted
Subsidiary, and any Lien on the shares of stock of a Restricted Subsidiary
that was formed or is held for the purpose of acquiring and holding such
Principal Property, in each case to secure all or any part of the cost of
acquisition, development, operation, construction, alteration, repair or
improvement of all or any part of such Principal Property (or to secure
Indebtedness incurred by the Company or a Restricted Subsidiary for the
purpose of financing all or any part of such cost); provided that such Lien
is created prior to, at the time of, or within 12 months after the latest
of, the acquisition, completion of construction or improvement or
commencement of commercial operation of such Principal Property and
provided, further, that no such Lien may extend to any other Principal
Property of the Company or any Restricted Subsidiary, other than any
theretofore unimproved real property on which the Principal Property is so
constructed or developed or the improvement is located.
(5) Any Lien on any Principal Property or Restricted Securities to
secure Indebtedness owing to the Company or to another Restricted
Subsidiary.
(6) Any Lien in favor of governmental bodies to secure advances or
other payments pursuant to any contract or statute or to secure
Indebtedness incurred to finance the purchase price or cost of constructing
or improving the property subject to such Lien.
(7) Any Lien created in connection with a project financed with, and
created to secure, Non-Recourse Indebtedness.
(8) Any Lien required to be placed on any property of the Company or
its Subsidiaries pursuant to the provisions of the Greeley Indenture, the
United Cities Indenture, the Note Purchase Agreements or the Loan
Agreement.
(9) Any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), in whole or in part,
of any Lien referred to in the foregoing clauses (1) through (8), provided
that the Indebtedness secured thereby may not exceed the principal amount
of Indebtedness so secured at the time of such renewal or refunding, and
that such renewal or refunding Lien must be limited to all or any part of
the same property and improvements thereon, shares of stock or Indebtedness
that secured the Lien renewed or refunded.
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(10) Any Lien not permitted above securing Indebtedness that, together
with the aggregate outstanding principal amount of other secured
Indebtedness that would otherwise be subject to the foregoing restrictions
(excluding Indebtedness secured by Liens permitted under the foregoing
exceptions) and the Attributable Debt in respect of all Sale and Leaseback
Transactions (not including Attributable Debt in respect of any such Sale
and Leaseback Transactions described in clause (iii) or (iv) of the next
succeeding paragraph) would not then exceed 10% of Consolidated Net
Tangible Assets (Section 1006).
Limitation on Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Leaseback Transaction unless
(i) the Company or a Restricted Subsidiary would be entitled, without securing
the Outstanding Indenture Securities, to incur Indebtedness secured by a Lien on
the Principal Property that is the subject of such Sale and Leaseback
Transaction; (ii) the Attributable Debt associated therewith would be in an
amount permitted under clause (10) of the preceding paragraph; (iii) the
proceeds received in respect of the Principal Property so sold and leased back
at the time of entering into such Sale and Leaseback Transaction are used for
the business and operations of the Company or any Subsidiary; or (iv) within 12
months after the sale or transfer, an amount equal to the proceeds received in
respect of the Principal Property so sold and leased back at the time of
entering into such Sale and Leaseback Transaction is applied to the prepayment
(other than mandatory prepayment) of any Outstanding Indenture Securities or
Funded Indebtedness of the Company or a Restricted Subsidiary (other than Funded
Indebtedness that is held by the Company or any Restricted Subsidiary or Funded
Indebtedness of the Company that is subordinate in right of payment to any
Outstanding Indenture Securities) (Section 1007).
Certain Definitions
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (excluding amounts required
to be paid on account of maintenance and repairs, services, insurance, taxes,
assessments, water rates and similar charges and contingent rents), discounted
from the respective due dates thereof at the weighted average of the rates of
interest (or Yield to Maturity, in the case of Original Issue Discount
Securities) borne by the Indenture Securities then outstanding under the
Indenture, compounded annually.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any portion thereof
constituting Funded Indebtedness) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent consolidated balance sheet of
the Company contained in the latest annual report to shareholders of the Company
and computed in accordance with generally accepted accounting principles.
"Funded Indebtedness" as applied to any Person, means all Indebtedness of
such Person maturing after, or renewable or extendable at the option of such
Person beyond, 12 months from the date of determination.
"Greeley Indenture" means that certain Indenture of Mortgage and Deed of
Trust, dated as of March 1, 1957, from Greeley Gas Company to U.S. Bank National
Association (formerly The Central Bank and Trust Company), as Trustee, as
amended and supplemented through December 1, 1993 (the Indenture of Mortgage and
Deed of Trust through the Tenth Supplemental Indenture by the Company to U.S.
Bank National Association (formerly The Central Bank and Trust Company), as
Trustee).
"Indebtedness" means obligations for money borrowed, evidenced by notes,
bonds, debentures or other similar evidences of indebtedness.
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"Lien" means any lien, mortgage, pledge, encumbrance, charge or security
interest securing Indebtedness; provided, however, that the following types of
transactions will not be considered for purposes of this definition to result in
a Lien: (i) any acquisition by the Company or any Restricted Subsidiary of any
property or assets subject to any reservation or exception under the terms of
which any vendor, lessor or assignor creates, reserves or excepts or has
created, reserved or excepted an interest in oil, gas or any other mineral in
place or the proceeds thereof, (ii) any conveyance or assignment whereby the
Company or any Restricted Subsidiary conveys or assigns to any Person or Persons
an interest in oil, gas or any other mineral in place or the proceeds thereof,
(iii) any Lien upon any property or assets either owned or leased by the Company
or any Restricted Subsidiary or in which the Company or any Restricted
Subsidiary owns an interest that secures for the benefit of the Person or
Persons paying the expenses of developing or conducting operations for the
recovery, storage, transportation or sale of the mineral resources of the such
property or assets (or property or assets with which it is unitized) the payment
to such Person or Persons of the Company's or the Restricted Subsidiary's
proportionate part of such development or operating expenses, (iv) any hedging
arrangements entered into in the ordinary course of business, including any
obligation to deliver any mineral, commodity or asset in connection therewith or
(v) any guarantees by the Company of the repayment of Indebtedness of any
Subsidiary or guarantees by any Subsidiary of the repayment of Indebtedness of
any entity, including, but not limited to, Indebtedness of Woodward Marketing,
L.L.C.
"Loan Agreement" means that certain Loan Agreement by and between the
Company and NationsBank of Texas, N.A., dated as of November 26, 1996.
"Note Purchase Agreements" collectively refers to the following Note
Purchase Agreements, as amended, which were executed by and between the Company
and the following parties on the dates indicated: (i) John Hancock Mutual Life
Insurance Company, dated December 21, 1987; (ii) Mellon Bank, N.A., Trustee
under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for
Employee Pension Plans -- AT&T -- John Hancock -- Private Placement, dated
December 21, 1987 (Agreement is identical to Hancock Agreement listed above
except as to the parties thereto and the amounts thereof); (iii) John Hancock
Mutual Life Insurance Company, dated October 11, 1989; (iv) The Variable Annuity
Life Insurance Company, dated August 29, 1991; (v) The Variable Annuity Life
Insurance Company, dated August 31, 1992; and (vi) New York Life Insurance
Company, New York Life Insurance and Annuity Corporation, The Variable Annuity
Life Insurance Company, American General Life Insurance Company and Merit Life
Insurance Company, dated November 14, 1994.
"Non-Recourse Indebtedness" means, at any time, Indebtedness incurred after
the date of the Indenture by the Company or a Restricted Subsidiary in
connection with the acquisition of property or assets by the Company or a
Restricted Subsidiary or the financing of the construction of or improvements on
property, whenever acquired, provided that, under the terms of such Indebtedness
and pursuant to applicable law, the recourse at such time and thereafter of the
lenders with respect to such Indebtedness is limited to the property or assets
so acquired, or such construction or improvements, including Indebtedness as to
which a performance or completion guarantee or similar undertaking was initially
applicable to such Indebtedness or the related property or assets if such
guarantee or similar undertaking has been satisfied and is no longer in effect.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal Property" means any natural gas distribution property or propane
property located in the United States, except any such property that in the
opinion of the Board of Directors of the Company is not of material importance
to the total business conducted by the Company and its consolidated
Subsidiaries.
"Restricted Subsidiary" means any Subsidiary that owns or leases a
Principal Property.
"Sale and Leaseback Transaction" means any arrangement with any Person
pursuant to which the Company or any Restricted Subsidiary leases any Principal
Property that has been or is to be sold or transferred by the Company or the
Restricted Subsidiary to such Person, other than (i) a lease for a term,
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including renewals at the option of the lessee, of not more than three years or
classified as an operating lease under generally accepted accounting principles,
(ii) leases between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries and (iii) leases of a Principal Property executed by the
time of, or within 12 months after the latest of, the acquisition, the
completion of construction or improvement, or the commencement of commercial
operation, of the Principal Property.
"Subsidiary" of the Company means (i) a corporation, a majority of which
Capital Stock with voting power, under ordinary circumstances, to elect
directors is owned, directly or indirectly, at the date of determination, by the
Company, by one or more Subsidiaries or by the Company and one or more
Subsidiaries or (ii) any other Person (other than a corporation) in which at the
date of determination the Company, one or more Subsidiaries or the Company and
one or more Subsidiaries, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"United Cities Indenture" means that certain Indenture of Mortgage, dated
as of July 15, 1959, from United Cities Gas Company to U.S. Bank Trust National
Association (formerly First Trust of Illinois, National Association), and M.J.
Kruger, as Trustees, as amended and supplemented through July 29, 1997 (the
Indenture of Mortgage through the Twenty-Second Supplemental Indenture by the
Company to U.S. Bank Trust National Association (formerly First Trust National
Association), and Russell C. Bergman, as Trustees) (Section 101).
DENOMINATIONS
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities are issuable only in fully registered form in denominations of $1,000
and integral multiples of $1,000. The Indenture also provides that Debt
Securities of a series may be issuable in global form. See "Book-Entry Debt
Securities" below (Sections 201, 301 and 302).
PAYMENT, TRANSFER AND EXCHANGE
The Company will be required to maintain an office or agency in each Place
of Payment for such series, and may from time to time designate additional
offices or agencies, at which the principal of (and premium, if any, on) and
interest, if any, on such series will be payable (Sections 301 and 1002). If so
provided in the Prospectus Supplement, the Place of Payment will be New York
City, and the Company will initially designate the office of the agent of the
Trustee in New York City as an office where such principal, premium and interest
will be payable. Notwithstanding the foregoing, at the option of the Company,
interest, if any, may be paid on Debt Securities (i) by check mailed to the
person entitled thereto at such person's address appearing in the Security
Register or (ii) by wire transfer to an account located inside the United States
maintained by the person entitled thereto as specified in the Security Register
(Sections 308 and 1002). Unless otherwise provided in the Prospectus Supplement,
payment of any installment of interest on Debt Securities will be made to the
person in whose name such Debt Security is registered at the close of business
on the Regular Record Date for such interest (Section 308).
The Company may from time to time designate additional offices or agencies,
approve a change in the location of any office or agency and, except as provided
above, rescind the designation of any office or agency.
All moneys paid by the Company to the Trustee or a Paying Agent for the
payment of principal of (or premium, if any, on) or interest, if any, on any
Debt Security that remains unclaimed for two years after such principal, premium
or interest becomes due and payable will be repaid to the Company, and the
holder of such Debt Security will (subject to applicable abandoned property or
similar laws) thereafter, as an unsecured general creditor, look only to the
Company for payment thereof (Section 1003).
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities of any series will be exchangeable for other
Debt Securities of the same series of any authorized denominations and of a like
aggregate principal amount (Section 306).
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities of a series may be presented for registration
of transfer and for exchange (i) at each office or agency required to be
maintained by the Company for payment of such series, as described above, and
(ii) at each other office
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or agency that the Company may designate from time to time for such purposes.
Registration of transfers and exchanges will be effected if the transfer agent
is satisfied with the evidence of ownership and identity of the person making
the request and if the transfer form thereon is duly executed. No service charge
will be made for any registration of transfer or exchange of Debt Securities,
but the Company may require payment of any tax or other governmental charge
payable in connection therewith (Section 306).
In the event of any redemption in part, the Company will not be required
(i) to register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on the date the relevant notice of redemption is mailed, (ii) to
register the transfer of or exchange any Debt Security or portion thereof called
for redemption, except the unredeemed portion, if any, of a Debt Security being
redeemed in part or (iii) to register the transfer of or exchange any Debt
Security that has been surrendered for repayment at the option of the holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
306).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any Person, unless each of the following conditions is satisfied:
(1) Immediately after giving effect to such transaction, no Event of
Default (or event that with notice or lapse of time, or both, would be
such) with respect to the Indenture Securities will have happened and be
continuing.
(2) The corporation or other entity formed by such consolidation or
into which the Company is merged, or the Person to which such properties
and assets will have been conveyed, transferred or leased, assumes the
Company's obligation as to the due and punctual payment of the principal of
(and premium, if any, on) and interest, if any, on the Indenture Securities
and the performance and observance of every covenant to be performed by the
Company under the Indenture, and will be organized under the laws of the
United States, one of the States thereof or the District of Columbia.
(3) The Company has delivered to the Trustee an Officers' Certificate
and Opinion of Counsel, each stating that the transaction complies with
these conditions (Section 801).
In the event that any transaction described in and complying with the
conditions listed in the immediately preceding paragraph occurs, the Company
would be discharged from all obligations and covenants under the Indenture and
all obligations under the Indenture Securities, with the successor corporation
or Person succeeding to such obligations and covenants of the Company (Section
802).
In the event of any such transaction, the Indenture provides that, if any
Principal Property or Restricted Securities would thereupon become subject to
any Lien, the Indenture Securities (other than any Indenture Securities not
entitled to the benefit of the "Limitation of Liens" covenant) will be secured,
as to such Principal Property or Restricted Securities, equally and ratably with
(or prior to) the Indebtedness that upon the occurrence of such transaction
would become secured by such Lien, unless such Lien could be created under the
Indenture without equally and ratably securing such Indenture Securities
(Section 803).
MODIFICATION AND WAIVER
The Indenture permits the Company and the Trustee, with the consent of the
holders of not less than a majority in aggregate principal amount of Outstanding
Indenture Securities affected thereby, to execute supplemental indentures adding
any provisions to or changing or eliminating any provisions of the Indenture or
modifying the rights of such holders, except that no such supplemental indenture
may, without the consent of the holder of each Outstanding Indenture Security
affected thereby:
(1) Change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of interest on any Indenture Security, or
reduce the principal amount thereof (or any premium, if any, thereon) or
the rate of interest, if any, thereon, or change any obligation of the
Company to pay
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Additional Amounts on any Indenture Security as contemplated by Section
1008 of the Indenture, or reduce the amount of the principal of an Indexed
Security or an Original Issue Discount Security that would be due and
payable upon an acceleration of maturity thereof or the amount thereof
provable in bankruptcy, or adversely affect the right of repayment, if any,
at the option of the holder, or change any Place of Payment where any
Indenture Security or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or on or after any Redemption Date or
Repayment Date), or adversely affect any right to convert or exchange any
Indenture Security.
(2) Reduce the aforesaid percentage in principal amount of Outstanding
Indenture Securities, the consent of the holders of which is required for
any such supplemental indenture.
(3) Reduce the percentage in principal amount of outstanding Indenture
Securities, the consent of the holders of which is necessary to modify or
waive any default under the Indenture (Section 902).
The holders of a majority in aggregate principal amount of Outstanding
Indenture Securities have the right to waive compliance by the Company with
certain covenants contained in the Indenture (Section 1009).
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any holder, for any of the following
purposes: (i) to evidence the succession of another Person to the Company as
obligor under the Indenture; (ii) to add to the covenants of the Company for the
benefit of the holders of any series of Indenture Securities; (iii) to add
Events of Default for the benefit of the holders of any such series; (iv) to
change or eliminate any provisions of the Indenture, provided that any such
change or elimination will become effective only when there is no Indenture
Security Outstanding thereunder of any series that is entitled to the benefit of
such provisions; (v) to secure the Indenture Securities Outstanding under the
Indenture pursuant to the requirements of Section 803 or 1006 of the Indenture,
or otherwise; (vi) to establish the form or terms of Indenture Securities of any
series, as permitted by Sections 201 and 301 of the Indenture; (vii) to provide
for the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee;
(viii) to close the Indenture with respect to the authentication and delivery of
additional series of Indenture Securities; (ix) to cure any ambiguity or
inconsistency in the Indenture, provided such action does not adversely affect
in any material respect the interests of holders of Indenture Securities of any
series thereunder; (x) to supplement any of the provisions of the Indenture to
the extent necessary to permit or facilitate defeasance and discharge of any
series of Indenture Securities, provided that such action does not adversely
affect in any material respect the interests of the holders of the Indenture
Securities; or (xi) to make any other change that does not affect the rights of
any holder (Section 901).
The Indenture provides that in determining whether the holders of the
requisite principal amount of Indenture Securities of a series then outstanding
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of holders of such
Indenture Securities, (i) the principal amount of an Original Issue Discount
Security that will be deemed to be outstanding will be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the maturity thereof and (ii) the principal
amount of an Indexed Security that may be counted in making such determination
or calculation and that will be deemed outstanding for such purpose will be
equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided with respect to such Indenture Security
pursuant to Section 301 (Section 101).
EVENTS OF DEFAULT
The following are Events of Default with respect to any series of Indenture
Securities: (i) default in the payment of any installment of interest upon any
Indenture Security of such series when it becomes due and payable, continued for
30 days; (ii) default in the payment of the principal of (or premium, if any,
on) any Indenture Security of such series at its Maturity; (iii) failure on the
part of the Company to observe or perform any other covenant or agreement
contained in the Indenture (other than a covenant or agreement included in the
Indenture solely for the benefit of less than all series of Indenture Securities
or a covenant the
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default in the performance of which would be covered by clause (vi) below) for
60 days after written notice of such failure, requiring the Company to remedy
the same, has been given to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of
Outstanding Indenture Securities of such series; (iv) default under any
indenture or instrument under which the Company or any Restricted Subsidiary has
at the time outstanding indebtedness for borrowed money or guarantees thereof in
any individual instance in excess of $15,000,000 and, if not already matured in
accordance with its terms, such indebtedness has been accelerated and such
acceleration is not rescinded or annulled within 15 days after notice thereof
has been given to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in aggregate principal amount of Outstanding
Indenture Securities of such series; provided that, if, prior to the entry of
judgment in favor of the Trustee for payment of the Indenture Securities of such
series, the default under such indenture or instrument has been remedied or
cured by the Company or such Restricted Subsidiary, or waived by the holders of
such indebtedness, then the Event of Default under the Indenture will be deemed
likewise to have been remedied, cured or waived; (v) certain events of
bankruptcy, insolvency or reorganization affecting the Company; and (vi) any
other Event of Default included in the Indenture for the benefit of Indenture
Securities of such series (Section 501).
If an Event of Default with respect to Indenture Securities of any series
at the time Outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series (or, if the Indenture Securities of that series are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal amount as may be specified in the terms of that series) by notice as
provided in the Indenture may declare the principal amount of all the Indenture
Securities of that series and the accrued interest thereon to be due and payable
immediately. At any time after a declaration of acceleration with respect to
Indenture Securities of any series has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series may, under certain circumstances, rescind and annul such acceleration
(Section 502).
The holders of a majority in aggregate principal amount of Outstanding
Indenture Securities of any series have the right to waive certain past defaults
under the Indenture (Section 513).
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders, unless such holders shall have
offered to the Trustee reasonable indemnity (Section 602). Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the Outstanding Securities of any series 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 conferred
on the Trustee, with respect to the Indenture Securities of that series unless
the Trustee shall determine that the action specified would be in conflict with
any rule or law (Section 512).
The Company will be required to furnish the Trustee annually a certificate
stating whether or not the Company is in default under the Indenture and, if so,
specifying all such defaults and the nature thereof (Section 1004).
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (i) to defease and
be discharged from any and all obligations with respect to all or a portion of
the Indenture Securities of any series (except for the obligations (a) to pay
Additional Amounts, if any; (b) to register the transfer of or exchange such
Indenture Securities; (c) to replace temporary or mutilated, destroyed, lost or
stolen Indenture Securities of such series; (d) to maintain an office or agency
in respect of such Indenture Securities; and (e) to hold moneys for payment in
trust) ("defeasance"); or (ii) to be released from its obligations with respect
to such outstanding Indenture Securities under Sections 1006 and 1007 of the
Indenture (being the restrictions described above under "Liens" and "Sale and
Leaseback Transactions", respectively, under the heading "Certain Covenants")
or, if so provided pursuant to the Indenture, its obligations with respect to
any other covenant, and any
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omission to comply with such obligations will not constitute a default or an
Event of Default with respect to such Indenture Securities ("covenant
defeasance"), in either case upon the irrevocable deposit by the Company with
the Trustee (or other qualifying trustee), in trust, of (i) an amount in cash;
(ii) Government Obligations (as defined below) that, through the payment of
principal and interest in accordance with their terms, will provide money in an
amount; or (iii) a combination thereof in an amount, sufficient to pay the
principal of (and premium, if any, on) and interest, if any, to Stated Maturity
(or redemption) on such Indenture Securities and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor (Article 14).
Such a trust may only be established if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the
holders of such Indenture Securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
opinion, in the case of defeasance under clause (i) above, must refer to and be
based upon a ruling of the Internal Revenue Service or a change in applicable
United States federal income tax law occurring after the date of the Indenture
(Section 1404).
In the event the Company effects covenant defeasance with respect to any
Indenture Securities and such Indenture Securities are declared due and payable
because of the occurrence of any Event of Default other than (a) an Event of
Default described in clause (iii) under "Events of Default" with respect to
Sections 1006 and 1007 of the Indenture (which Sections would no longer be
applicable to such Indenture Securities) or (b) an Event of Default described in
clause (iii) or (vi) under "Events of Default" with respect to any other
covenant as to which there has been defeasance, the realizable value of the
money and Government Obligations on deposit with the Trustee may not be
sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default, in that the required deposit
with the Trustee is based upon scheduled cash flows rather than market value,
which will vary depending upon interest rates and other factors. However, the
Company would remain liable to make payment of such shortfall amounts due at the
time of acceleration.
The Prospectus Supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Indenture Securities of
or within a particular series.
BOOK-ENTRY DEBT SECURITIES
Debt Securities of a series may be issued in whole or in part in the form
of one or more Global Securities that will be deposited with, or on behalf of, a
depository identified in the Prospectus Supplement relating to such series.
Global Securities will be issued in registered form and in either temporary or
permanent form. Unless otherwise provided in the Prospectus Supplement, Debt
Securities of a series that are represented by a Global Security may be issued
in any denomination, and will be issued in registered form only, without
coupons. Payments of principal of (and premium, if any, on) and interest, if
any, on Debt Securities of such series represented by a Global Security will be
made by the Company or the Trustee to the depository (Sections 304 and 305).
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company ("DTC"), New York, New York, that
such Global Securities will be registered in the name of DTC's nominee, and that
the following provisions will apply to the depository arrangements with respect
to any such Global Securities. Additional or differing terms of the depository
arrangement will be described in the Prospectus Supplement relating to Offered
Securities issued in the form of Global Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture. Except as described below, owners of beneficial interests in a
Global Security will not be entitled to have Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities in certificated form and
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23
will not be considered the owners or holders of Debt Securities under the
Indenture. The laws of some states require that certain purchasers of securities
take physical delivery of such securities in certificated form; accordingly,
such laws may limit the transferability of beneficial interests in a Global
Security.
Debt Securities will be issued in fully registered, certificated form
("Definitive Securities") to holders or their nominees, rather than to DTC or
its nominee only if (i) DTC notifies the Trustee in writing that DTC is no
longer willing or able to continue as depositary and a qualified successor
depository is not appointed by the Company within 90 days following such notice;
(ii) the Company, at any time and in its sole discretion, determines not to have
any Debt Securities of one or more series represented by Global Securities; or
(iii) after the occurrence of an Event of Default with respect to such Debt
Securities, a holder of Debt Securities notifies the Trustee in writing that it
wishes to receive a Definitive Security. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of Definitive Securities equal in principal amount to such beneficial interest
and registered in its name.
The following is based on information furnished by DTC:
DTC will act as securities depository for the Debt Securities. The
Debt Securities will be issued as fully registered securities registered in
the name of Cede & Co. (DTC's nominee). One fully registered Debt Security
certificate will be issued with respect to each $200 million of principal
amount of the Debt Securities of a series, and an additional certificate
will be issued with respect to any remaining principal amount of such
series.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual
purchaser of each Debt Security ("Beneficial Owner") is in turn to be
recorded on the Participants' records. A Beneficial Owner will not receive
written confirmation from DTC of its purchase, but such Beneficial Owner is
expected to receive a written confirmation providing details of the
transaction, as well as periodic statements of its holdings, from the
Participant through which such Beneficial Owner entered into the
transaction. Transfers of ownership interests in Debt 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 Debt Securities, except in the
event that use of the book-entry system for the Debt Securities is
discontinued.
To facilitate subsequent transfers, the Debt Securities will be
registered in the name of DTC's partnership nominee, Cede & Co. The deposit
of the Debt Securities with DTC and their registration in the name of Cede
& Co. will effect no change in beneficial ownership. DTC will have no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC
records will reflect only the identity of the Direct Participants to whose
accounts Debt Securities are credited, which may or may not be the
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Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Debt Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Debt Securities are credited on
the record date (identified on a list attached to the Omnibus Proxy).
Principal, premium and interest payments on the Debt Securities will
be made to DTC. DTC's practice is to credit Direct Participants' accounts
on the payment date in accordance with their respective holdings as shown
on DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of such
Participant and not of DTC, the Paying Agent or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the
Company or the Paying Agent, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository
with respect to the Debt Securities at any time by giving reasonable notice
to the Company or the Paying Agent. Under such circumstances, in the event
that a successor securities depository is not appointed, Debt Security
certificates are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that
event, Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the applicable Prospectus Supplement, the
underwriters or agents with respect to Offered Debt Securities issued as Global
Securities will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the Trustee or any Paying
Agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests in a Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
CONCERNING THE TRUSTEE
U.S. Bank Trust National Association is the Trustee under the Indenture.
The Trustee serves as trustee under (i) the Twenty-First Supplemental Indenture,
dated as of February 5, 1997, and the Twenty-Second Supplemental Indenture,
dated as of July 29, 1997, supplementing an Indenture of Mortgage, dated as of
July 15, 1959, relating to the Company's First Mortgage Bonds aggregating $111
million, and (ii) the Company's Medium Term Notes, Series A aggregating $22
million.
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PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the related Prospectus
Supplement. The Company has reserved the right to sell the Offered Securities
directly to investors on its own behalf in those jurisdictions where it is
authorized to do so.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Company also may, from time to time, authorize dealers, acting as the Company's
agents, to offer and sell the Offered Securities upon such terms and conditions
as set forth in the related Prospectus Supplement. In connection with the sale
of the Offered Securities, underwriters may receive compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Offered Securities for whom they may
act as agent. Underwriters may sell the Offered Securities 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 purchaser for whom they may act as
agents.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the related Prospectus Supplement. Dealers and agents
participating in the distribution of the Offered Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution towards certain civil
liabilities, including any liabilities under the Securities Act.
Until the distribution of the Offered Securities is completed, rules of the
Commission may limit the ability of underwriters to bid for and purchase the
Offered Securities. As an exception to these rules, underwriters are permitted
to engaged in certain transactions that stabilize the price of the Offered
Securities. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Offered Securities. If
underwriters create a short position in the Offered Securities in connection
with the offering, i.e., if they sell more Offered Securities than are set forth
on the cover page of the applicable Prospectus Supplement, underwriters may
reduce that short position by purchasing Offered Securities in the open market.
In general, purchase of a security for the purpose of stabilization or to reduce
a short position could cause the price of the security to be higher than it
might be in the absence of such purchases. Such activities, if commenced, may be
discontinued at any time.
If so indicated in the related Prospectus Supplement, the Company will
authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase such Offered Securities from the Company pursuant to
delayed delivery contracts providing for payment and delivery at a future date.
Such contracts will be subject only to those conditions set forth in the related
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Any Offered Securities issued hereunder will be new issues of securities
with no established trading market. Any underwriters or agents to or through
whom such Offered Securities are sold by the Company for public offering and
sale may make a market in such Offered Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market at any time
without notice. No assurance can be given as to the liquidity of the trading
market for any such Offered Securities.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with, and perform services for, the Company and certain
of its affiliates in the ordinary course of business.
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LEGAL MATTERS
Certain legal matters relating to the Debt Securities will be passed upon
for the Company by Locke Purnell Rain Harrell (A Professional Corporation),
Dallas, Texas. Dan Busbee, a director of the Company, is a shareholder in such
law firm. The validity of the Offered Securities will be passed upon for any
underwriters, dealers or agents by Shearman & Sterling, New York, New York.
EXPERTS
The consolidated financial statements of the Company at September 30, 1997
appearing in the Company's Annual Report on Form 10-K have been audited by Ernst
& Young LLP, independent auditors, as set forth in its report included therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of United Cities Gas Company at
December 31, 1996 appearing in the Company's Annual Report on Form 10-K have
been audited by Arthur Andersen LLP, independent auditors, as set forth in its
report included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE
UNDERWRITERS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS
CONSTITUTES AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
DEBENTURES IN ANY JURISDICTION WHERE, OR TO ANY PERSONS TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
The Company........................... S-2
Ratio of Earnings to Fixed Charges.... S-2
Use of Proceeds....................... S-3
Capitalization........................ S-3
Selected Consolidated Financial
Data................................ S-4
Description of Debentures............. S-5
Underwriting.......................... S-7
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Disclosure Regarding Forward-Looking
Statements.......................... 3
The Company........................... 3
Ratio of Earnings to Fixed Charges.... 4
Use of Proceeds....................... 4
Description of Debt Securities........ 4
Plan of Distribution.................. 17
Legal Matters......................... 18
Experts............................... 18
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$150,000,000
[ATMOS ENERGY CORP LOGO]
ATMOS ENERGY CORPORATION
% DEBENTURES DUE 2028
----------------------
PROSPECTUS SUPPLEMENT
----------------------
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY
SECURITIES LLC
EDWARD D. JONES & CO., L.P.
, 1998
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