Filed pursuant to General Instruction II.K.
of Form F-9; File No. 333-89714.
PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 6, 2002)
[GRAPHIC]
US$300,000,000
Husky Energy Inc.
6.15% Notes due 2019
-------
The notes will bear interest at the rate of 6.15% per year. Interest on
the notes is payable on June 15 and December 15 of each year, beginning on
December 15, 2004. The notes will mature on June 15, 2019. We may redeem some or
all of the notes at any time. The redemption prices are discussed under the
caption "Description of the Notes--Optional Redemption". We may also redeem all
of the notes at any time in the event that certain changes affecting Canadian
withholding taxes occur.
-------
INVESTING IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 26 OF THE ACCOMPANYING PROSPECTUS.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WE ARE PERMITTED TO PREPARE THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IN ACCORDANCE WITH CANADIAN DISCLOSURE REQUIREMENTS,
WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES. WE PREPARE OUR FINANCIAL
STATEMENTS IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
AND THEY ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS. AS
A RESULT, THEY MAY NOT BE COMPARABLE TO THE FINANCIAL STATEMENTS OF UNITED
STATES COMPANIES.
OWNING THE NOTES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN THE UNITED
STATES AND IN CANADA. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE TAX
DISCUSSION CONTAINED IN THIS PROSPECTUS SUPPLEMENT.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES
FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN
CANADA, ALL OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT RESIDENTS OF THE
UNITED STATES, AND MOST OF OUR ASSETS ARE LOCATED IN CANADA.
-------
Per Note Total
-------- --------------
Public Offering Price............................. 99.575% US$298,725,000
Underwriting Discount............................. 0.750% US$ 2,250,000
Proceeds to Husky Energy (before expenses)........ 98.825% US$296,475,000
Interest on the notes will accrue from June 18, 2004 to the date of
delivery.
-------
The underwriters expect to deliver the notes in book-entry form through
The Depository Trust Company to purchasers on or about June 18, 2004.
Under applicable Canadian securities legislation, we may be considered
to be a connected issuer of each of the underwriters as each is a subsidiary or
affiliate of a bank which is a lender to us. See "Underwriting".
-------
Sole Active Book-Runner
CITIGROUP
-------
Joint Book-Runners
CIBC WORLD MARKETS HSBC
-------
BNP PARIBAS
HARRIS NESBITT
RBC CAPITAL MARKETS
TD SECURITIES
LAZARD
SCOTIA CAPITAL
June 15, 2004
IMPORTANT NOTICE ABOUT INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of the notes we are offering and
also adds to and updates certain information contained in the accompanying
prospectus and the documents incorporated by reference. The second part is the
accompanying prospectus, dated June 6, 2002, which gives more general
information, some of which may not apply to the notes we are offering. The
accompanying base prospectus is referred to as the "prospectus" in this
prospectus supplement.
IF THE DESCRIPTION OF THE NOTES VARIES BETWEEN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE HAVE NOT, AND THE
UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN
OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS
NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS, AS WELL AS INFORMATION IN ANY DOCUMENT
INCORPORATED BY REFERENCE THAT WE PREVIOUSLY FILED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION AND WITH THE ALBERTA SECURITIES COMMISSION, IS ACCURATE ONLY
AS OF ITS RESPECTIVE DATE.
In this prospectus supplement, all capitalized terms and acronyms used
and not otherwise defined herein have the meanings provided in the prospectus.
In this prospectus supplement, the prospectus and any document incorporated by
reference, unless otherwise specified, all dollar amounts are expressed in
Canadian dollars, and all financial information is determined using Canadian
generally accepted accounting principles which are in effect from time to time,
referred to as "Canadian GAAP". "U.S. GAAP" means generally accepted accounting
principles which are in effect from time to time in the United States. For a
discussion of the principal differences between our financial results as
calculated under Canadian GAAP and under U.S. GAAP, you should refer to Note 20
of our consolidated financial statements for the year ended December 31, 2003,
incorporated by reference into the prospectus. Unless otherwise specified or the
context otherwise requires, all references in this prospectus supplement, the
prospectus and any document incorporated by reference to "Husky", "we", "us" and
"our" mean Husky Energy Inc. and its subsidiaries, partnership interests and
joint venture investments.
S-2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Documents Incorporated by Reference.................................... S-4
Exchange Rate Data..................................................... S-5
Forward-Looking Statements............................................. S-5
Summary of the Offering................................................ S-7
Husky Energy Inc....................................................... S-9
Selected Financial Information......................................... S-11
Use of Proceeds........................................................ S-13
Consolidated Capitalization............................................ S-13
Pro Forma Interest Coverage............................................ S-14
Credit Ratings......................................................... S-15
Description of the Notes............................................... S-16
Certain Income Tax Consequences........................................ S-21
Underwriting........................................................... S-24
Legal Matters.......................................................... S-26
Consent of KPMG LLP.................................................... S-27
PROSPECTUS
About this Prospectus.................................................. 2
Where You Can Find More Information.................................... 3
Forward-Looking Statements............................................. 5
Husky Energy Inc....................................................... 7
Use of Proceeds........................................................ 7
Interest Coverage...................................................... 8
Description of Debt Securities......................................... 8
Risk Factors........................................................... 26
Certain Income Tax Consequences........................................ 28
Plan of Distribution................................................... 28
Legal Matters.......................................................... 29
Experts................................................................ 29
Documents Filed as Part of the Registration Statement.................. 30
S-3
DOCUMENTS INCORPORATED BY REFERENCE
This prospectus supplement is deemed to be incorporated by reference
into the prospectus solely for the purposes of the notes offered hereby. Other
documents are also incorporated or deemed to be incorporated by reference into
the prospectus. The following documents which have been filed with the
securities commission or similar authority in each of the provinces of Canada
are also specifically incorporated by reference in and form an integral part of
the prospectus and this prospectus supplement:
o our Annual Information Form dated March 18, 2004 (including
Management's Discussion and Analysis for the year ended
December 31, 2003, incorporated therein by reference);
o our audited comparative consolidated financial statements for
the year ended December 31, 2003, including the auditor's
report thereon;
o our unaudited comparative interim consolidated financial
statements for the three month period ended March 31, 2004 and
the accompanying Management's Discussion and Analysis; and
o our Management Information Circular dated March 18, 2004
relating to the annual meeting of our shareholders held on
April 22, 2004 (excluding those portions under the headings
"Report on Executive Compensation", "Performance Graph" and
"Statement of Corporate Governance Practices").
ANY STATEMENT CONTAINED IN THE PROSPECTUS, IN THIS PROSPECTUS
SUPPLEMENT OR IN ANY DOCUMENT (OR PART THEREOF) INCORPORATED BY REFERENCE, OR
DEEMED TO BE INCORPORATED BY REFERENCE, INTO THE PROSPECTUS FOR THE PURPOSE OF
THE OFFERING OF THE NOTES OFFERED HEREBY SHALL BE DEEMED TO BE MODIFIED OR
SUPERSEDED TO THE EXTENT THAT A STATEMENT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT (OR PART THEREOF) THAT
ALSO IS, OR IS DEEMED TO BE, INCORPORATED BY REFERENCE IN THE PROSPECTUS
MODIFIES OR SUPERSEDES THAT STATEMENT. ANY STATEMENT SO MODIFIED OR SUPERSEDED
SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO CONSTITUTE PART OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. THE MODIFYING OR SUPERSEDING
STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR
INCLUDE ANY OTHER INFORMATION SET FORTH IN THE DOCUMENT WHICH IT MODIFIES OR
SUPERSEDES.
You may obtain a copy of our Annual Information Form and other
information identified above by writing or calling us at the following address
and telephone number:
Husky Energy Inc.
707 - 8th Avenue S.W.
Calgary, Alberta T2P 3G7
P.O. Box 6525, Station D
(403) 298-6068
Attention: Vice President & Chief Financial Officer
S-4
EXCHANGE RATE DATA
We publish our consolidated financial statements in Canadian dollars.
In this prospectus supplement, unless otherwise specified, all dollar amounts
are expressed in Canadian dollars, references to "dollars" or "$" are to
Canadian dollars and references to "US$" are to United States dollars.
The following table sets out certain exchange rates based on the noon
buying rate of The City of New York for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York (the
"noon buying rate"). These rates are set out as United States dollars per $1.00
and are the inverse of rates quoted by the Federal Reserve Bank of New York for
Canadian dollars per US$1.00. On June 15, 2004, the inverse of the noon buying
rate was US$0.7300 equals $1.00.
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31,
---------------------------- ---------------------------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
High.................................. US$0.7880 US$0.6822 US$0.7738 US$0.6619 US$0.6697
Low................................... 0.7418 0.6349 0.6349 0.6200 0.6241
Average(1)............................ 0.7587 0.6687 0.7186 0.6368 0.6444
Period End............................ 0.7634 0.6805 0.7738 0.6329 0.6279
- -----------
(1) The average of the inverse of the noon buying rate on the last day of each
month during the applicable period.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act of 1995
relating, but not limited, to our operations, anticipated financial performance,
business prospects and strategies and which are based on our current
expectations, estimates, projections and assumptions and were made by us in
light of our experience and our perception of historical trends. All statements
that address expectations or projections about the future, including statements
about our strategy for growth, expected expenditures, commodity prices, costs,
schedules and production volumes, operating or financial results, are
forward-looking statements. Some of our forward-looking statements may be
identified by words like "expects", "anticipates", "plans", "intends",
"believes", "projects", "indicates", "could", "vision", "goal", "objective" and
similar expressions. Our business is subject to risks and uncertainties, some of
which are similar to other energy companies and some of which are unique to us.
Our actual results may differ materially from those expressed or implied by our
forward-looking statements as a result of known and unknown risks, uncertainties
and other factors.
You are cautioned not to place undue reliance on our forward-looking
statements. By their nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and specific, that
contribute to the possibility that the predicted outcomes will not occur. The
risks, uncertainties and other factors, many of which are beyond our control,
that could influence our actual results include, but are not limited to:
o changes in general economic, market and business conditions;
o fluctuations in supply and demand for our products;
o fluctuations in commodity prices;
o fluctuations in the cost of borrowing;
o our use of derivative financial instruments to hedge exposure
to changes in commodity prices, interest rates and currency
exchange rates;
S-5
o political and economic developments, expropriation, royalty
and tax increases, retroactive tax claims and changes to
import and export regulations and other foreign laws and
policies in the countries in which we operate;
o our ability to receive timely regulatory approvals;
o the integrity and reliability of our capital assets;
o the cumulative impact of other resource development projects;
o the accuracy of our reserve estimates, production estimates
and production levels and our success at exploration and
development drilling and related activities;
o the maintenance of satisfactory relationships with unions,
employee associations, joint venturers and partners;
o competitive actions of other companies, including increased
competition from other oil and gas companies or from companies
that provide alternative sources of energy;
o the uncertainties resulting from potential delays or changes
in plans with respect to exploration or development projects
or capital expenditures;
o actions by governmental authorities, including changes in
environmental and other regulations;
o the ability and willingness of parties with whom we have
material relationships to fulfill their obligations to us; and
o the occurrence of unexpected events such as fires, blowouts,
freeze-ups, equipment failures and other similar events
affecting us or other parties whose operations or assets
directly or indirectly affect us.
We caution that the foregoing list of important factors is not
exhaustive. Events or circumstances could cause our actual results to differ
materially from those estimated or projected and expressed in, or implied by,
these forward-looking statements. You should also carefully consider the matters
discussed under "Risk Factors" included and incorporated by reference in the
prospectus. We undertake no obligation to update publicly or otherwise revise
any forward-looking information, whether as a result of new information, future
events or otherwise, or the foregoing list of factors affecting this
information.
S-6
SUMMARY OF THE OFFERING
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION ABOUT US, THE NOTES WE ARE SELLING IN THIS OFFERING AND THE
ADDITIONAL DOCUMENTS INCORPORATED BY REFERENCE IN THE PROSPECTUS.
ISSUER......................... Husky Energy Inc.
NOTES OFFERED.................. US$300,000,000 aggregate principal amount of
6.15% notes due 2019.
MATURITY DATE.................. June 15, 2019.
INTEREST....................... 6.15% per annum, payable semi-annually in
arrears on June 15 and December 15 commencing
on December 15, 2004.
RANKING........................ The notes will be our unsecured and
unsubordinated obligations and will rank
equally with all of our other unsecured and
unsubordinated indebtedness.
Upon closing of this offering, we will advance
the proceeds of this offering to our
subsidiary, Husky Oil Operations Limited
("HOOL"), and HOOL will issue us a note (the
"HOOL note") in the amount of such proceeds.
The principal amount of the HOOL note, plus
accrued and unpaid interest equal to accrued
and unpaid interest on the notes, will become
due and payable upon any event of default with
respect to the notes, and will be fully and
unconditionally guaranteed by Husky Oil
Limited Partnership ("HOLP"). The HOOL note
and the HOLP guarantee will be pledged in
favour of the Trustee for the benefit of the
holders of the notes. A breach under the
collateral documents relating to this pledge
will be an event of default under the
Indenture. As a result, for so long as this
intercompany arrangement and pledge are in
place, the Trustee on behalf of the holders of
notes will have a claim against HOOL and HOLP
in an amount equal to the amount due under the
notes and, therefore, the notes will in effect
rank pari passu with any unsecured and
unsubordinated debt issued or guaranteed by
HOOL or HOLP. See "Description of the
Notes--Pledge Termination" in this prospectus
supplement.
REDEMPTION..................... We may redeem some or all of the notes at any
time at the redemption prices described in
this prospectus supplement. See "Description
of the Notes--Optional Redemption" in this
prospectus supplement. We may also redeem all
of the notes at the redemption prices
described in the accompanying prospectus at
any time in the event certain changes
affecting Canadian withholding taxes occur.
See "Description of Debt Securities--Tax
Redemption" in the prospectus.
FORM AND DENOMINATIONS......... The notes will be represented by one or more
fully registered global securities registered
in the name of a nominee of The Depository
Trust Company. Beneficial interests in any
global security will be in denominations of
US$1,000 and integral multiplies thereof.
Except as described under "Description of the
Notes" in this prospectus supplement and
"Description of Debt Securities" in the
prospectus, notes in definitive form will not
be issued.
S-7
ADDITIONAL AMOUNTS............. We will make payments on the notes without
withholding or deduction for Canadian taxes
unless required to be withheld or deducted by
law or the interpretation or administration
thereof in which case, subject to certain
exceptions, we will pay such additional
amounts as may be necessary so that the net
amount received by holders of the notes after
such withholding or deduction will not be less
than the amount that such holders would have
received in the absence of such withholding or
deduction. See "Description of Debt
Securities--Additional Amounts" in the
prospectus.
USE OF PROCEEDS................ The net proceeds of this offering will be used
to repay outstanding bank indebtedness.
GOVERNING LAW.................. The notes and the indenture governing the
notes will be governed by the laws of the
State of New York.
S-8
HUSKY ENERGY INC.
OVERVIEW
We are a Canadian based integrated energy and energy related company
headquartered in Calgary, Alberta. Our registered and principal office is
located at 707 - 8th Avenue S.W., Calgary, Alberta, T2P 1H5. Our common shares
are listed for trading on the Toronto Stock Exchange under the trading symbol
"HSE".
Our operating activities are divided into three segments. The upstream
segment includes the exploration for, and the development and production of,
crude oil and natural gas in western Canada, offshore the east coast of Canada
and in certain international areas. The midstream segment includes heavy crude
oil upgrading operations, commodity marketing, and infrastructure operations,
which include pipeline, processing, storage and cogeneration. The refined
products segment includes the refining of crude oil and marketing of refined
petroleum products.
Our growth strategy is based on exploiting our existing portfolio of
core assets and development projects. In addition, we are continuing to evaluate
alternatives to enhance shareholder value. These include mergers, acquisitions,
asset sales and financial restructurings. For example, we continue to evaluate
options with respect to certain midstream and refined products assets that may
provide a higher return to shareholders on the value of these businesses.
UPSTREAM
Our upstream portfolio of assets includes properties that produce
light, medium and heavy gravity crude oil, natural gas liquids ("NGL"), natural
gas and sulphur. We have a high degree of operational control in the upstream
operating properties, which accounted for approximately 87% of our total working
interest production as of December 31, 2003. Our upstream operations are
primarily in western Canada and offshore the east coast of Canada (Jeanne d'Arc
Basin). We also have international upstream operations in China, Indonesia and
Libya. Our average gross daily production in 2003 was 210,700 barrels of crude
oil and NGL and 610.6 million cubic feet of natural gas. At the end of 2003, we
had net proved developed reserves, after royalties, of 394.5 million barrels of
crude oil and NGL and 1,422.9 billion cubic feet of natural gas. For more
information regarding the method with which we calculate our reserves, please
consult the section entitled "Supplemental Information on Oil and Gas
Exploration and Production Activities" contained in our Annual Information Form
dated March 18, 2004, incorporated by reference in this prospectus supplement.
MIDSTREAM
Our midstream operations include the upgrading of heavy crude oil
feedstock into synthetic crude oil, pipeline transportation and processing of
heavy crude oil, storage of crude oil, diluent and natural gas, cogeneration of
electrical and thermal energy, and the marketing of our and third party produced
crude oil, natural gas, NGL, sulphur and petroleum coke.
We own and operate the Husky Lloydminster Upgrader (the "Upgrader"),
which processes heavy oil from the Lloydminster and Cold Lake areas of Alberta
and Saskatchewan into synthetic crude oil, a premium light gravity oil. The
Upgrader's current rated capacity exceeds 61,000 barrels per day of synthetic
crude oil. Sales of synthetic crude oil in 2003 averaged 63,600 barrels per day
and an average of 10,900 barrels per day of diluent were produced from the
Upgrader in 2003. We have been operating a 17 billion cubic feet natural gas
storage facility at Hussar, Alberta since April 2000. Our crude oil pipeline
systems include approximately 2,050 kilometres of pipelines and are capable of
transporting in excess of 575,000 barrels per day of blended heavy crude oil,
diluent and synthetic crude oil.
S-9
REFINED PRODUCTS
Our refined products operations include refining of heavy and light
crude oil, marketing of refined petroleum products, including asphalt and
alternate fuels, and processing of grain, primarily for ethanol production. We
sell and distribute transportation fuels, including ethanol blended fuels,
through approximately 550 independently operated Husky and Mohawk branded
petroleum outlets, including service stations, truck stops and bulk distribution
facilities located from the west coast of Canada to the eastern border of
Ontario. We own and operate a 10 million litre per year ethanol production
facility in Minnedosa, Manitoba that produces nine million litres per year of
fuel ethanol and one million litres per year of industrial alcohol. During the
first quarter of 2004, we announced that we are proceeding with the engineering
and design work for the construction of a 130 million litre per year ethanol
production facility at Lloydminster, Saskatchewan. Start up of the Lloydminster
plant is expected in the fall of 2005.
We own and operate a refinery at Prince George, British Columbia, which
has capacity to refine more than 10,000 barrels per day of light crude oil into
a full range of refined petroleum products.
We own and operate a refinery in Lloydminster, Alberta, which has
capacity to process 25,000 barrels per day of heavy crude oil into a full range
of asphalt products, offroad diesel and specialty oilfield products. We have
been in the paving and specialty asphalt business for over 50 years. We supply
asphalt across western Canada and the northwestern and midwestern United States.
S-10
SELECTED FINANCIAL INFORMATION
The following table sets forth our selected consolidated financial
information for the years ended December 31, 2003, 2002 and 2001 derived from
our audited consolidated financial statements which have been audited by KPMG
LLP and our unaudited consolidated financial statements for the three months
ended March 31, 2004 and 2003. Our consolidated financial statements are
prepared in accordance with Canadian GAAP, which differs in certain respects
from U.S. GAAP. For a discussion of the principal differences between our
financial results as calculated under Canadian GAAP and under U.S. GAAP, you
should refer to Note 20 of our consolidated financial statements for the year
ended December 31, 2003, incorporated by reference into the prospectus. You
should read this selected consolidated financial information in conjunction with
our audited consolidated financial statements and the related notes, our
unaudited consolidated interim financial statements, and other information
included in the documents incorporated by reference in the prospectus. Our
consolidated financial statements for the years ended December 31, 2003, 2002
and 2001 have been restated for the retroactive adoption of the new Canadian
accounting standard for asset retirement obligations which became effective on
January 1, 2004.
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ ----------------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
(unaudited)
(millions of dollars, except ratios)
INCOME STATEMENT ITEMS:
Sales and operating revenues, net of royalties................ $ 2,086 $ 2,218 $ 7,658 $ 6,384 $6,596
Net earnings.................................................. 263 408 1,334 814 664
CASH FLOW STATEMENT ITEMS:
Cash flow from operations..................................... $ 583 $ 747 $ 2,459 $ 2,096 $1,946
Capital expenditures.......................................... 582 500 1,905 1,692 1,473
BALANCE SHEET ITEMS (AT PERIOD END):
Total assets.................................................. $12,314 $11,230 $11,946 $10,633 $9,434
Total debt.................................................... 1,731 2,121 1,769 2,385 2,192
Shareholders' equity.......................................... 6,134 5,497 5,911 5,136 4,485
OTHER FINANCIAL DATA AND RATIOS:
EBITDA(1)..................................................... $ 648 $ 832 $ 2,711 $ 2,280 $2,076
Interest(2)................................................... 27 30 125 130 152
Total debt to EBITDA(1)(3)(4)................................. 0.7x 0.8x 0.7x 1.0x 1.1x
EBITDA to interest(1)(2)(5)................................... 24.0x 27.7x 21.7x 17.5x 13.7x
Total debt to total capitalization............................ 22% 28% 23% 32% 33%
- -----------
(1) EBITDA represents net earnings before depletion, depreciation and
amortization, accretion, interest--net, foreign exchange and income taxes.
EBITDA is not a measure that has any standardized meaning prescribed by
Canadian GAAP and is considered a non-GAAP measure. Therefore, this measure
may not be comparable to similar measures presented by other issuers.
EBITDA is presented because it is frequently used to evaluate a company's
ability to service debt. We believe that EBITDA, while providing useful
information, should not be considered in isolation or as a substitute for
net earnings, as an indicator of operating performance or as an alternative
to cash flow as a measure of liquidity.
S-11
The following table provides a reconciliation of EBITDA from net earnings:
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------- --------------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
(millions of dollars)
Net earnings.............................................................. $263 $408 $1,334 $ 814 $ 664
Add:
Depletion, depreciation and amortization............................... 283 246 1,021 908 778
Accretion.............................................................. 6 5 22 17 16
Interest--net.......................................................... 10 21 73 104 101
Foreign exchange....................................................... 8 (100) (215) 13 94
Income taxes........................................................... 78 252 476 424 423
-- --- --- --- ---
EBITDA.................................................................... $648 $832 $2,711 $2,280 $2,076
==== ==== ====== ====== ======
(2) Interest includes both expensed and capitalized interest incurred net of
interest income.
(3) Calculated based on trailing twelve month period.
(4) The following table sets forth a ratio of total debt to net earnings, the
nearest comparable Canadian GAAP measure to EBITDA:
THREE MONTHS YEARS ENDED
ENDED MARCH 31, DECEMBER 31,
--------------- --------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
Total debt to net earnings*............................................................... 1.5x 1.9x 1.3x 2.9x 3.3x
- -----------
* Calculated based on trailing twelve month period.
(5) The following table sets forth a ratio of net earnings, the nearest
comparable Canadian GAAP measure to EBITDA, to interest:
THREE MONTHS YEARS ENDED
ENDED MARCH 31, DECEMBER 31,
--------------- ---------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
Net earnings to interest*.............................................................. 9.7x 13.6x 10.7x 6.3x 4.4x
- -----------
*Interest includes both expensed and capitalized interest incurred net of
interest income.
S-12
USE OF PROCEEDS
The net proceeds to us from this offering will be approximately
US$296,000,000, after deducting the underwriting discount and estimated expenses
payable by us of approximately US$475,000. The net proceeds received by us from
the sale of the notes will be used to repay outstanding bank indebtedness.
CONSOLIDATED CAPITALIZATION
The following table summarizes our consolidated capitalization at March
31, 2004, as adjusted to give effect to the issuance of the notes offered by
this prospectus supplement, the transactions described in note 1 to the table
and the application of the net proceeds as described under "Use of Proceeds".
You should read the selected unaudited financial information included elsewhere
in this prospectus supplement. In the "As Adjusted" column the U.S. dollar
amount of the notes offered hereby has been converted to Canadian dollars using
the inverse of the noon buying rate of US$0.7634 equals $1.00 at March 31, 2004.
AS AT MARCH 31, 2004
---------------------------
ACTUAL AS ADJUSTED
------ -----------
(unaudited)
(millions of dollars)
Short-term debt(1)............................................... $ 33 $ 22
Long-term debt, including portions due within one year:
Senior notes and debentures.................................... 1,022 1,022
Medium term notes(1)........................................... 500 300
Senior secured bonds........................................... 176 176
Revolving syndicated credit facility(1)........................ -- --
Revolving bilateral credit facilities(1)....................... -- --
Notes offered hereby........................................... -- 393
------ ------
Total long-term debt............................................. 1,698 1,891
------ ------
Shareholders' equity:
8.90% Capital securities(2).................................... 295 295
Contributed surplus............................................ 16 16
Common shares.................................................. 3,498 3,498
Retained earnings.............................................. 2,325 2,325
------ ------
Total shareholders' equity....................................... 6,134 6,134
------ ------
Total capitalization............................................. $7,865 $8,047
====== ======
- -----------
(1) Subsequent to March 31, 2004 we incurred approximately $377 million of
additional bank indebtedness, in the form of short-term debt under our
operating credit facilities and long-term debt under our revolving
syndicated and revolving bilateral credit facilities, to repay $200
million of medium term notes and for general corporate purposes.
Proceeds of the sale of the notes offered hereby will be used to repay
bank indebtedness under these credit facilities. See "Use of Proceeds".
(2) Under U.S. GAAP, the Capital securities would be included in long-term
debt.
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PRO FORMA INTEREST COVERAGE
The following pro forma interest coverage ratios, which have been
prepared in accordance with Canadian securities requirements, are included in
this prospectus supplement in accordance with Canadian disclosure requirements.
The following consolidated financial ratios are calculated for the
twelve month periods ended December 31, 2003 and March 31, 2004 based on
audited, in the case of December 31, 2003, and unaudited, in the case of March
31, 2004, financial information. The pro forma financial ratios give effect to
the issuance of the notes offered by this prospectus supplement and the
application of the net proceeds to repay outstanding bank indebtedness as
discussed under "Use of Proceeds". The actual financial ratios do not give
effect to the issuance of the notes offered by this prospectus supplement. The
pro forma interest coverage ratios set forth below do not purport to be
indicative of the actual interest coverage ratios that would have occurred on
the foregoing dates. The interest coverage ratios set forth below are not
indicative of interest coverage ratios for any future periods. The ratios have
been calculated based on Canadian GAAP.
PRO FORMA PRO FORMA
DECEMBER 31, 2003 MARCH 31, 2004
----------------- --------------
Interest coverage ratios on long-term debt:
Earnings......................................... 13.6 times 11.7 times
Cash flow........................................ 19.3 times 18.9 times
Interest coverage on long-term debt on an earnings basis is equal to
earnings before interest expense on long-term debt and income taxes divided by
interest expense and capitalized interest. Interest coverage on long-term debt
on a cash flow basis is equal to cash flow from operations before interest
expense and current income taxes divided by interest expense and capitalized
interest. For purposes of calculating the pro forma interest coverage ratios set
forth in this prospectus supplement, long-term debt includes the current portion
of long-term debt.
Our earnings before interest expense on long-term debt and income taxes
for the twelve month period ended December 31, 2003 was $1,887 million which is
14.6 times our interest expense and capitalized interest for this period. Our
interest expense and capitalized interest on long-term debt, after giving effect
to the issuance of the notes offered by this prospectus supplement and the
application of the net proceeds to repay outstanding bank indebtedness as
discussed under "Use of Proceeds", would amount to $139 million for the 12 month
period ended December 31, 2003.
Additionally, the above interest coverage ratios have been calculated
without including the annual carrying charges relating to our issue of the 8.90%
Capital Securities. If our Capital Securities were classified as long-term debt
(as they would be under U.S. GAAP), and the annual carrying charges were
included in interest expense, our interest coverage ratios would have been as
follows:
PRO FORMA PRO FORMA
DECEMBER 31, 2003 MARCH 31, 2004
----------------- --------------
Interest coverage ratios on long-term
debt and Capital Securities:
Earnings.................................. 11.3 times 9.7 times
Cash flow................................. 16.1 times 15.7 times
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CREDIT RATINGS
The notes have received ratings of "Baa2", outlook stable, by Moody's
Investors Service, Inc. ("Moody's") and "BBB", outlook positive, by Standard &
Poor's Corporation ("S&P"). Credit ratings are intended to provide investors
with an independent measure of credit quality of any issue of securities. The
credit ratings accorded to the notes by the rating agencies are not
recommendations to purchase, hold or sell the notes inasmuch as such ratings do
not comment as to market price or suitability for a particular investor. Any
rating may not remain in effect for any given period of time or may be revised
or withdrawn entirely by a rating agency in the future if in its judgment
circumstances so warrant, and if any such rating is so revised or withdrawn, we
are under no obligation to update this prospectus supplement.
Moody's credit ratings are on a long-term debt rating scale that ranges
from Aaa to C, which represents the range from highest to lowest quality of such
securities rated. According to the Moody's rating system, debt securities rated
Baa are considered as medium-grade obligations; they are neither highly
protected nor poorly secured. Interest payments and principal security appear
adequate for the present but certain proactive elements may be lacking or may be
characteristically unreliable over any great length of time. Such securities
lack outstanding involvement characteristics and in fact have speculative
characteristics as well. The addition of a 1, 2 or 3 modifier after a rating
indicates the relative standing within a particular rating category. The
modifier 1 indicates that the issue ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P's credit ratings are on a long-term debt rating scale that ranges
from AAA to D, which represents the range from highest to lowest quality of such
securities rated. According to the S&P rating system, debt securities rated BBB
exhibit adequate protection parameters. However, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet the financial commitments on the notes. The addition of a plus
(+) or minus (-) designation after a rating indicates the relative standing
within a particular rating category.
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DESCRIPTION OF THE NOTES
The following description of the terms of the notes (referred to in the
prospectus as the "debt securities") supplements, and to the extent inconsistent
therewith replaces the description set forth under "Description of Debt
Securities" in the prospectus and should be read in conjunction with such
description. Capitalized terms used but not defined in this prospectus
supplement have the meanings ascribed to them in the prospectus. In this section
only, "we", "us", "our", or "Husky" refers only to Husky Energy Inc. and not any
of its subsidiaries, partnership interests or joint venture investments.
GENERAL
The notes initially will be issued in an aggregate principal amount of
US$300,000,000. The notes will mature on June 15, 2019. The notes will bear
interest at the rate of 6.15% per annum. Interest will be payable semi-annually
on June 15 and December 15 of each year, commencing December 15, 2004, to the
persons in whose names the notes are registered at the close of business on the
preceding June 1 or December 1, respectively.
The notes will be our direct unsecured obligations and will rank at
least equally and ratably with all of our other unsubordinated and unsecured
indebtedness. Upon closing of this offering, we will advance the proceeds of
this offering to our subsidiary, Husky Oil Operations Limited ("HOOL"), and HOOL
will issue us a note (the "HOOL note") in the amount of such proceeds. The
principal amount of the HOOL note, plus accrued and unpaid interest equal to
accrued and unpaid interest on the notes, will become due and payable upon any
event of default with respect to the notes, and will be fully and
unconditionally guaranteed by Husky Oil Limited Partnership ("HOLP"). The HOOL
note and the HOLP guarantee will be pledged in favour of the Trustee for the
benefit of the holders of the notes. A breach under the collateral documents
relating to this pledge will be an event of default under the Indenture. As a
result, for so long as this intercompany arrangement and pledge are in place,
the Trustee on behalf of the holders of notes will have a claim against HOOL and
HOLP in an amount equal to the amount due under the notes and, therefore, the
notes will in effect rank pari passu with any unsecured and unsubordinated debt
issued or guaranteed by HOOL or HOLP.
The provisions of the Indenture relating to the payment of Additional
Amounts in respect of withholding taxes in certain circumstances (described
under the caption "Description of Debt Securities--Additional Amounts" in the
accompanying prospectus) and the provisions of the Indenture relating to the
redemption of notes in the event of specified changes in withholding tax law on
or after the date of this prospectus supplement (described under the caption
"Description of Debt Securities--Tax Redemption" in the prospectus) will apply
to the notes.
We may from time to time without notice to, or the consent of, the
holders of the notes, create and issue additional notes under the Indenture,
equal in rank to the notes, in all respects (except for the payment of interest
accruing prior to the issue date of the new notes, and except for the first
payment of interest following the issue date of the new notes) so that the new
notes may be consolidated and form a single series with the notes, and have the
same terms as to status, redemption and otherwise as the notes.
The notes will not be entitled to the benefit of any sinking fund. We
may issue debt securities and incur additional indebtedness other than through
the offering of notes pursuant to this prospectus supplement.
PLEDGE TERMINATION
Under the circumstances set forth below, we may terminate the pledge of
the HOOL note and the HOLP guarantee.
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We shall notify S&P and Moody's and the Trustee of our intention to
exercise our option to terminate the pledge of the HOOL note and the HOLP
guarantee at least 45 days prior to the proposed date of such termination (the
"Release Date"). In order to effect the termination of the pledge of the HOOL
note and the HOLP guarantee, on the proposed Release Date we will deliver to the
Trustee an officer's certificate stating that we have satisfied each of the
conditions specified below and that we have not been notified by either of S&P
or Moody's that the rating assigned to the notes will be downgraded, or receive
a negative change in outlook, as a result of the termination of the pledge of
the HOOL note and the HOLP guarantee, or notice thereof.
After delivery of such officer's certificate, we may, at our option and
without the consent of the holders of the notes, permanently terminate the
pledge of the HOOL note and the HOLP guarantee, provided that at the time of
such termination:
o neither HOOL nor HOLP shall be the primary obligor or
guarantor with respect to any indebtedness, other than
Indebtedness which in the aggregate does not exceed an amount
equal to 10% of Consolidated Net Tangible Assets;
o the rating assigned to the notes by each of S&P and Moody's is
equal to or higher than BBB (or equivalent) by S&P or Baa3 (or
equivalent) by Moody's; and
o no event which is, or after notice or passage of time or both
would be, an event of default or an event of default has
occurred and is continuing under the Indenture.
GOVERNING LAW
The Indenture provides that it and the notes will be governed by, and
construed in accordance with, the laws of the State of New York. In addition,
the pledge agreement, the HOOL note and the HOLP guarantee will be governed by,
and construed in accordance with the laws of Alberta, Canada, in each case,
without giving effect to applicable principles of conflicts of law to the extent
that the application of the law of another jurisdiction would be required
thereby.
OPTIONAL REDEMPTION
The notes will be redeemable, in whole or in part, at our option at any
time at a redemption price equal to the greater of:
o 100% of the principal amount of the notes to be redeemed, and
o as determined by the Quotation Agent (as defined below), the
sum of the present values of the remaining scheduled payments
of principal and interest on the notes to be redeemed (not
including any portion of the payments of interest accrued as
of the date of redemption), discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as
defined below) plus 30 basis points,
in either case, plus accrued interest thereon to the date of redemption.
Notice of any redemption will be delivered by first-class mail at least
30 days, but not more than 60 days, before the redemption date to each holder of
the notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portions of the
notes called for redemption.
"ADJUSTED TREASURY RATE" means, with respect to any redemption date,
the rate per year equal to the semi-annual equivalent yield to maturity or
interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for the redemption
date.
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"COMPARABLE TREASURY ISSUE" means the United States Treasury security
or securities selected by the Quotation Agent as having an actual or
interpolated maturity comparable to the remaining term of the notes to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the notes.
"COMPARABLE TREASURY PRICE" means, with respect to any redemption date,
(A) the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if fewer than four such Reference Treasury Dealer Quotations
are obtained, the average of all such quotations.
"QUOTATION AGENT" means one of the Reference Treasury Dealers, which is
appointed by us.
"REFERENCE TREASURY DEALER" means (A) each of Citigroup Global Markets
Inc., CIBC World Markets Corp. and HSBC Securities (USA) Inc. or their
affiliates which are primary U.S. Government securities dealers and their
respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be a primary U.S. Government securities dealer in The
City of New York (a "Primary Treasury Dealer"), we shall substitute another
Primary Treasury Dealer; and (B) any other Primary Treasury Dealer selected by
us.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Quotation Agent by such Reference Treasury Dealer at 3:30 p.m.
(New York time) on the third business day preceding such redemption date.
BOOK-ENTRY SYSTEM
The Depository Trust Company (hereinafter referred to as the
"Depositary") will act as securities depository for the notes. The notes will be
issued as fully registered notes registered in the name of Cede & Co. (the
Depositary's nominee) or such other name as may be requested by an authorized
representative of the Depositary. One or more fully registered global notes
(hereinafter referred to as the "global notes") will be issued for each of the
notes, in the aggregate principal amount of the issue, and will be deposited
with the Depositary. The provisions set forth under "Description of Debt
Securities--Global Securities" in the prospectus will be applicable to the
notes.
The following is based on information furnished by the Depositary:
The Depositary 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
U.S. Securities Exchange Act of 1934. The Depositary also facilitates the
settlement among participants of notes transactions, such as transfers and
pledges, in deposited notes through electronic computerized book-entry charges
in participants' accounts, thereby eliminating the need for physical movement of
notes certificates. Direct participants include:
o securities brokers and dealers;
o banks;
o trust companies;
o depositories for Euroclear and Clearstream;
o clearing corporations; and
o certain other organizations.
S-18
The Depositary is owned by a number of its direct participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, LLC, and the
National Association of Securities Dealers, Inc. Access to the Depositary's
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, in the case of "indirect
participants". The rules applicable to the Depositary and its participants are
on file with the SEC.
Purchases of notes under the Depositary's system must be made by or
through direct participants, which will receive a credit for the notes on the
Depositary's records. The ownership interest of each actual purchaser of notes
represented by the global notes by a "beneficial owner" is in turn to be
recorded on the direct and indirect participant's records. Beneficial owners
will not receive written confirmation from the Depositary of their purchases but
beneficial owners are expected to receive written confirmation providing details
of the transaction, as well as periodic statements of their holdings, from the
direct or indirect participants through which the beneficial owners entered into
the transaction. Transfers of ownership interest in the global notes
representing the notes are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners of the
global notes representing notes will not receive notes in definitive form
representing their ownership interests, except in the event that use of the
book-entry system for the notes is discontinued or upon the occurrence of
certain other events described in this prospectus supplement.
To facilitate subsequent transfers, the global notes representing notes
which are deposited with the Depositary are registered in the name of the
Depositary's nominee, Cede & Co., or such other name as may be requested by an
authorized representative of the Depositary. The deposit of the global notes
with the Depositary and its registration in the name of Cede & Co. or such other
nominee effect no change in beneficial ownership. The Depositary has no
knowledge of the actual beneficial owners of the global notes representing the
notes. The Depositary's records reflect only the identity of the direct
participants to whose accounts the notes are credited, which may or may not be
the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
direct participants, by direct participants to indirect participants and by
direct participants and indirect participants to beneficial owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. (nor any other Depositary
nominee) will consent or vote with respect to the global notes representing the
notes. Under its usual procedures, the Depositary mails an "omnibus proxy" to us
as soon as possible after the applicable record date. The omnibus proxy assigns
Cede & Co.'s consenting or voting rights to those direct participants whose
accounts the notes are credited on the applicable record date (identified in a
listing attached to the omnibus proxy).
Principal, premium, if any, and interest payments on the global notes
representing the notes will be made to the Depositary. The Depositary's practice
is to credit direct participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive payment on
that date. Payments by direct and indirect participants to beneficial owners
will be governed by standing instructions and customary practices, as is the
case with notes held for the account of customers in bearer form or registered
in "street name", and will be the responsibility of the direct or indirect
participant and not of the Depositary, the Trustee or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and interest to the Depositary is the
responsibility of us or the Trustee, disbursement of these payments to direct
participants shall be the responsibility of the Depositary, and disbursement of
these payments to the beneficial owners shall be
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the responsibility of direct and indirect participants. Neither we nor the
Trustee will have any responsibility or liability for disbursements of payments
in respect of ownership interest in the notes by the Depositary or the direct or
indirect participants or for maintaining or reviewing any records of the
Depositary or the direct or indirect participants relating to ownership
interests in the notes or the disbursement of payments in respect of the notes.
The Depositary may discontinue providing its services as depository
with respect to the notes at any time by giving reasonable notice to us and the
Trustee. Under these circumstances, and in the event that a successor depository
is not appointed, notes in certificated form are required to be printed and
delivered. We may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor depository). In that event,
notes in definitive form will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that we believe to be
reliable, but is subject to any changes to the arrangements between us and the
Depositary and any changes to these procedures that may be instituted
unilaterally by the Depositary.
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CERTAIN INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED
TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PROSPECTIVE
INVESTOR AND NO REPRESENTATION WITH RESPECT TO THE TAX CONSEQUENCES TO ANY
PARTICULAR INVESTOR IS MADE. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSULT
WITH THEIR OWN TAX ADVISORS FOR ADVICE WITH RESPECT TO THE INCOME TAX
CONSEQUENCES TO THEM HAVING REGARD TO THEIR OWN PARTICULAR CIRCUMSTANCES,
INCLUDING ANY CONSEQUENCES OF AN INVESTMENT IN THE NOTES ARISING UNDER STATE,
PROVINCIAL OR LOCAL TAX LAWS IN THE UNITED STATES OR CANADA OR TAX LAWS OF
JURISDICTIONS OUTSIDE THE UNITED STATES OR CANADA.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summary addresses the material Canadian federal income
tax considerations of purchasing, owning and disposing of the notes to an
initial purchaser of notes under this offering (a "Holder") who, for the
purposes of the Income Tax Act (Canada) (the "ITA") and at all relevant times,
deals at arm's length with Husky Energy Inc., is not resident or deemed to be
resident in Canada, holds the notes as capital property, does not use or hold,
and is not deemed or considered to use or hold, the notes in connection with a
business carried on in Canada. Special rules which are not discussed in this
summary may apply to a Holder that is an insurer that carries on an insurance
business in Canada and elsewhere. For the purposes of the ITA, related persons
(as defined therein) are deemed not to deal at arm's length and it is a question
of fact whether persons not related to each other deal at arm's length.
This summary is based on the current provisions of the ITA and the
regulations thereunder, all specific proposals to amend the ITA and the
regulations thereunder publicly announced by or on behalf of the Minister of
Finance (Canada) before the date of this prospectus supplement, and an
understanding of the current published administrative practices of the Canada
Revenue Agency (the "CRA"). This summary does not otherwise take into account or
anticipate changes in the law or in the assessment and administrative practices
of the CRA, whether by judicial, governmental or legislative decision or action
nor does it take into account tax legislation or considerations of any province
or territory of Canada or any jurisdiction other than Canada. This summary is of
a general nature only and is not intended to be, and should not be interpreted
as, legal or tax advice to any particular Holder of notes.
The payment of interest, premium, if any, and principal in respect of
the notes by Husky Energy Inc. to a Holder will not be subject to non-resident
withholding tax under the ITA. No other tax on income (including capital gains)
will be payable by a Holder under the ITA in respect of the holding, repayment,
redemption or disposition of the notes, or the receipt of interest, premium, if
any, or principal thereon.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain material U.S. federal income
tax consequences that may be relevant to the purchase, ownership and disposition
of notes by United States persons (as defined below) who purchase notes in this
offering at the issue price set forth on the cover of this prospectus supplement
and who hold the notes as capital assets ("U.S. Holders") within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
discussion does not purport to deal with all aspects of U.S. federal income
taxation that may be relevant to particular holders in light of their particular
circumstances nor does it deal with persons that are subject to special tax
rules, such as dealers in securities or currencies, financial institutions,
insurance companies, tax-exempt organizations, persons holding the notes as a
part of a straddle, hedge, or conversion transaction or a synthetic security or
other integrated transaction, U.S. Holders whose "functional currency" is not
the U.S. dollar, and holders who are not U.S. Holders. In addition, this summary
does
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not address the tax consequences applicable to subsequent purchasers of the
notes and does not address any aspect of gift, estate or inheritance or state,
local or foreign tax law. Furthermore, the discussion below is based upon the
provisions of the Code and United States Treasury regulations, rulings and
judicial decisions under the Code as of the date of this prospectus supplement,
and those authorities may be repealed, revoked or modified (possibly with
retroactive effect) so as to result in U.S. federal income tax consequences that
may be materially different from those discussed below. There can be no
assurance that the Internal Revenue Service ("IRS") will take a similar view as
to any of the tax consequences described in this summary.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE OR OF ANY LOCAL OR FOREIGN TAXING
JURISDICTION.
As used in this section, the term "United States person" means a
beneficial owner of a note that is (i) a citizen or resident of the United
States, (ii) a corporation or other entity treated as a corporation for U.S.
federal income tax purposes, created or organized in or under the laws of the
United States or any political subdivision of the United States, (iii) an
estate, the income of which is subject to U.S. federal income taxation
regardless of its source or (iv) a trust, if (A) a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust, or (B) the trust has validly made an
election to be treated as a United States person under applicable United States
Treasury regulations.
If a partnership holds notes, the U.S. federal income tax treatment of
a partner of the partnership generally will depend on the status of the partner
and the activities of the partnership. Partners of partnerships that hold notes
should consult their own tax advisors regarding the U.S. federal income tax
consequences of the purchase, ownership and disposition of notes.
PAYMENTS OF INTEREST ON THE NOTES
Interest on a note will generally be includible by a U.S. Holder as
ordinary income at the time the interest is paid or accrued, depending on the
U.S. Holder's method of accounting for U.S. federal income tax purposes. In
addition to interest on the notes, if any additional amounts are paid on account
of Canadian withholding taxes, a U.S. Holder would be required to include such
additional amounts in income. As a result, a U.S. Holder may be required to
include more interest in gross income than the amount of cash it actually
receives.
A U.S. Holder may be entitled to deduct or credit foreign withheld tax,
subject to applicable limitations in the Code. For U.S. foreign tax credit
purposes, interest income on a note generally will constitute foreign source
income and be considered "passive income" or "financial services income". If the
applicable rate of Canadian withholding tax is 5% or more, however, interest on
the notes will be treated as "high withholding tax interest" for U.S. foreign
tax credit purposes. The rules governing the U.S. foreign tax credit are complex
and investors are urged to consult their tax advisors regarding the availability
of the credit under their particular circumstances.
ORIGINAL ISSUE DISCOUNT
It is not expected that the notes will be issued with original issue
discount ("OID"). If, however, the notes are issued with more than a de minimis
amount of OID, then such OID would be treated for U.S. federal income tax
purposes as accruing over the notes' term as interest income of the U.S.
Holders. A U.S. Holder's adjusted tax basis in a note would be increased by the
amount of any OID included in its gross income. In compliance with United States
Treasury regulations, if we
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determine that the notes have OID, we will provide certain information to the
IRS and/or U.S. Holders that is relevant to determining the amount of OID in
each accrual period.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a U.S. Holder
generally will recognize a taxable gain or loss equal to the difference between
the amount realized (reduced by any amounts attributable to accrued but unpaid
interest, which will be taxable as ordinary income) and the U.S. Holder's
adjusted tax basis in the note. Such gain or loss generally will constitute a
long-term capital gain or loss if the note was held by such U.S. Holder for more
than one year and otherwise will be short-term capital gain or loss. Under
current law, net long-term capital gains of certain non-corporate taxpayers
(including individuals) are, under some circumstances, taxed at lower rates than
items of ordinary income. The deductibility of capital losses is subject to
limitations. In the case of a U.S. Holder who is a United States resident (as
defined in Section 865 of the Code), any such gain or loss will generally be
treated as U.S. source, unless it is attributable to an office or other fixed
place of business outside the United States and certain other conditions are
met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments
of interest on, and the proceeds of disposition of, a note to U.S. Holders other
than certain exempt recipients (such as corporations). In general, backup
withholding, at the then applicable rate, will be applicable to a U.S. Holder
that is not an exempt recipient if such U.S. Holder:
o fails to furnish its correct taxpayer identification number
which, for an individual, would be his or her Social Security
Number;
o is notified by the IRS that it has failed to properly report
payments of interest or dividends; or
o in some circumstances, fails to certify, under penalties of
perjury, that the holder has furnished a correct taxpayer
identification number and has not been notified by the IRS
that it is subject to backup withholding for failure to report
interest and dividend payments.
Any amount withheld from payment to a U.S. Holder under the backup
withholding rules will be allowed as a credit against the U.S. Holder's U.S.
federal income tax liability and may entitle the U.S. Holder to a refund,
provided the required information is furnished to the IRS. A U.S. Holder that
does not provide a correct taxpayer identification number may be subject to
penalties imposed by the IRS. U.S. Holders of notes should consult their tax
advisors regarding the application of backup withholding in their particular
situation, the availability of an exemption from backup withholding and the
procedure for obtaining such an exemption, if available.
THE DISCUSSION OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE
IS FOR GENERAL INFORMATION ONLY. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF THE CHANGES IN U.S.
FEDERAL OR OTHER TAX LAWS.
S-23
UNDERWRITING
Citigroup Global Markets Inc., CIBC World Markets Corp. and HSBC
Securities (USA) Inc. are acting as joint book-running managers of the offering.
Citigroup Global Markets Inc. is acting as the sole active book-running manager
and the representative of the underwriters named below.
Subject to the terms and conditions stated in the underwriting
agreement dated the date of this prospectus supplement, each underwriter named
below has agreed to purchase, and we have agreed to sell to that underwriter,
the principal amount of notes set forth opposite the underwriter's name.
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
- ----------- ----------------
Citigroup Global Markets Inc....................... US$ 90,000,000
CIBC World Markets Corp............................ 45,000,000
HSBC Securities (USA) Inc. ........................ 45,000,000
BNP Paribas Securities Corp........................ 22,500,000
Harris Nesbitt Corp................................ 22,500,000
RBC Capital Markets Corporation.................... 22,500,000
TD Securities (USA) Inc............................ 22,500,000
Lazard Freres & Co. LLC............................ 15,000,000
Scotia Capital (USA) Inc........................... 15,000,000
--------------
Total............................................ US$300,000,000
==============
The underwriting agreement provides that the obligations of the
underwriters to purchase the notes included in this offering are subject to
approval of legal matters by counsel and to other conditions. The underwriters
are obligated to purchase all the notes if they purchase any of the notes.
The underwriters propose to offer some of the notes directly to the
public at the public offering price set forth on the cover page of this
prospectus supplement and some of the notes to dealers at the public offering
price less a concession not to exceed 0.45% of the principal amount of the
notes. The underwriters may allow, and other such dealers may reallow a
commission not in excess of 0.25% of the principal amount of the notes. After
the initial offering of the notes to the public, the representatives may change
the public offering price and concessions.
The following table shows the underwriting discounts and commissions
that we are to pay to the underwriters in connection with this offering
(expressed as a percentage of the principal amount of the notes).
PAID BY
HUSKY
-------------
Per note............................................ 0.750%
In connection with this offering, Citigroup, on behalf of the
underwriters, may purchase and sell notes in the open market. These transactions
may include over-allotment, syndicate covering transactions and stabilizing
transactions. Over-allotment involves syndicate sales of the notes in excess of
the principal amount of the notes to be purchased by the underwriters in this
offering, which creates a syndicate short position. Syndicate covering
transactions may involve purchases of the notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of the notes made
for the purpose of preventing or retarding a decline in the market price of the
notes while the offering is in progress.
S-24
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Citigroup, in covering syndicate short positions or making stabilizing
purchases, repurchases notes originally sold by that syndicate member.
Any of these activities may have the effect of preventing or retarding
a decline in the market price of the notes. They may also cause the price of the
notes to be higher than the price that otherwise would exist in the open market
in the absence of these transactions. The underwriters may conduct these
transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
The notes are a new issue of securities with no established trading
market. The notes will not be listed on any securities exchange or on any
automated dealer quotation system. The underwriters may make a market in the
notes after completion of the offering, but will not be obligated to do so and
may discontinue any market-making activities at any time without notice. No
assurance can be given as to the liquidity of the trading market for the notes
or that an active public market for the notes will develop. If an active public
trading market for the notes does not develop, the market price and liquidity of
the notes may be adversely affected.
We estimate that our total expenses for this offering will be
US$475,000.
Some of the underwriters have performed investment banking and advisory
services for us from time to time for which they have received customary fees
and expenses. The underwriters may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their business.
Certain of the underwriters are affiliated with entities that are agents for and
members of syndicates of lenders which made available revolving and term
facilities to us.
All of the underwriters are, directly or indirectly, majority owned
subsidiaries of banks that are currently lenders to us (the "Lenders") and as a
result under applicable Canadian securities legislation we may be considered to
be a connected issuer to each of the underwriters. We were indebted to the
Lenders for approximately $151 million as of May 31, 2004, under various credit
facilities, representing approximately 8% of our total indebtedness as of that
date. The net proceeds of the offering will be used to repay outstanding bank
indebtedness owed to the Lenders. We are in compliance with the terms of such
credit facilities and none of the banks affiliated with the underwriters were
involved in the decision to offer the notes or in the determination of the terms
of the distribution of the notes. See "Use of Proceeds" in this prospectus
supplement.
Because more than 10% of the proceeds of this offering, not including
underwriting compensation, may be received by members or affiliates of members
of the National Association of Securities Dealers, Inc., this offering is being
conducted in compliance with the NASD Conduct Rule 2710(h). Pursuant to that
rule, the appointment of a qualified independent underwriter is not necessary in
connection with this offering, as the offering is of a class of securities rated
Baa or better by Moody's rating service or BBB or better by S&P's rating
service.
A prospectus supplement in electronic format may be made available on
the websites maintained by one or more of the underwriters.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the U.S. Securities Act of 1933, or to
contribute to payments the underwriters may be required to make because of any
of those liabilities.
Lazard Freres & Co. LLC ("Lazard") has entered into an agreement with
Mitsubishi Securities (USA), Inc. ("Mitsubishi") pursuant to which Mitsubishi
provides certain advisory and/or other services to Lazard, including in respect
of this offering. In return for the provision of such services by Mitsubishi to
Lazard, Lazard will pay to Mitsubishi a mutually agreed upon fee.
S-25
LEGAL MATTERS
Certain legal matters in connection with the offering will be passed
upon for us by Borden Ladner Gervais LLP, Calgary, Alberta, Canada (concerning
matters of Canadian law), and by Paul, Weiss, Rifkind, Wharton & Garrison LLP,
New York, New York (concerning matters of U.S. law). Certain legal matters in
connection with the offering will be passed upon for the underwriters by
Shearman & Sterling LLP, Toronto, Ontario, Canada and New York, New York
(concerning matters of U.S. law).
The partners and associates of Borden Ladner Gervais LLP and Paul,
Weiss, Rifkind, Wharton & Garrison LLP as a group beneficially own, directly or
indirectly, less than 1% of our securities of any class.
S-26
CONSENT OF KPMG LLP
The Board of Directors of Husky Energy Inc.
We have read the prospectus supplement of Husky Energy Inc. (the
"Company") dated June 15, 2004 to the base shelf prospectus dated June 6, 2002
relating to the sale and issue from time to time of up to U.S.$1,000,000,000 of
debt securities of the Company. We have complied with Canadian generally
accepted standards for an auditors' involvement with offering documents.
We consent to the incorporation by reference in the above-mentioned
prospectus supplement of our report to the shareholders of the Company on the
consolidated balance sheets of the Company as at December 31, 2003, 2002 and
2001 and the consolidated statements of earnings, retained earnings and cash
flows for each of the years in the three-year period ended December 31, 2003.
Our report is dated February 2, 2004.
"KPMG LLP"
Chartered Accountants
Calgary, Canada
June 15, 2004
S-27
PROSPECTUS
[GRAPHIC]
Husky Energy Inc.
US$1,000,000,000
Debt Securities
We may offer for sale from time to time, debt securities up to an
aggregate principal amount of US$1,000,000,000 (or the equivalent in other
currencies or currency units) during the 25 month period that this prospectus,
including any amendments hereto, remains effective. Debt securities may be
offered separately or together, in amounts, at prices and on terms to be
determined based on market conditions at the time of sale and set forth in an
accompanying prospectus supplement.
We will provide the specific terms of these debt securities and all
information omitted from this prospectus in supplements to this prospectus. You
should read this prospectus and any applicable prospectus supplement carefully
before you invest.
-------
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE DEBT SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------
WE ARE PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE WITH CANADIAN
DISCLOSURE REQUIREMENTS, WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES. WE
PREPARE OUR FINANCIAL STATEMENTS IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, AND THEY MAY BE SUBJECT TO CANADIAN AUDITING AND AUDITOR
INDEPENDENCE STANDARDS. THEY MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF
UNITED STATES COMPANIES.
OWNING THE DEBT SECURITIES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN
THE UNITED STATES AND CANADA. THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS
SUPPLEMENT MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE
TAX DISCUSSION IN ANY APPLICABLE PROSPECTUS SUPPLEMENT.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES
FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN
CANADA, ALL OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS
PROSPECTUS ARE NOT RESIDENTS OF THE UNITED STATES, AND MOST OF OUR ASSETS ARE
LOCATED IN CANADA.
The date of this prospectus is June 6, 2002
TABLE OF CONTENTS
Page
----
About This Prospectus...................................................... 2
Where You Can Find More Information........................................ 3
Forward-Looking Statements................................................. 5
Husky Energy Inc........................................................... 7
Use of Proceeds............................................................ 7
Interest Coverage.......................................................... 8
Description of Debt Securities............................................. 8
Risk Factors............................................................... 26
Certain Income Tax Consequences............................................ 28
Plan of Distribution....................................................... 28
Legal Matters.............................................................. 29
Experts.................................................................... 29
Documents Filed as Part of the Registration Statement...................... 30
ABOUT THIS PROSPECTUS
In this prospectus and in any prospectus supplement, unless otherwise
specified or the context otherwise requires, all dollar amounts are expressed in
Canadian dollars, references to "dollars" or "$" are to Canadian dollars and
references to "US$" are to United States dollars. Unless otherwise indicated,
all financial information included and incorporated by reference in this
prospectus or included in any prospectus supplement is determined using Canadian
generally accepted accounting principles which are in effect from time to time,
referred to as "Canadian GAAP". "U.S. GAAP" means generally accepted accounting
principles which are in effect from time to time in the United States. For a
discussion of the principal differences between our financial results as
calculated under Canadian GAAP and under U.S. GAAP, you should refer to Note 17
of our consolidated financial statements for the year ended December 31, 2001
and incorporated by reference into this prospectus. Except as set forth under
"Description of Debt Securities", and unless the context otherwise requires, all
references in this prospectus and any prospectus supplement to "Husky", "we",
"us" and "our" mean Husky Energy Inc. and its subsidiaries, partnership
interests and joint venture investments.
This prospectus is part of a registration statement on Form F-9
relating to the debt securities that we have filed with the U.S. Securities and
Exchange Commission ("SEC"). Under the registration statement, we may, from time
to time, sell any combination of the debt securities described in this
prospectus in one or more offerings up to an aggregate principal amount of
US$1,000,000,000. This prospectus provides you with a general description of the
debt securities that we may offer. Each time we sell debt securities under the
registration statement, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. Before you invest, you should read both this prospectus and any
applicable prospectus supplement together with additional information described
under the heading "Where You Can Find More Information". This prospectus does
not contain all of the information set forth in the registration statement,
certain parts of which are omitted in accordance with the rules and regulations
of the SEC. You may refer to the registration statement and the exhibits to the
registration statement for further information with respect to us and the debt
securities.
2
WHERE YOU CAN FIND MORE INFORMATION
We file with the securities commissions or similar authorities in each
of the provinces of Canada, commissions of authority similar to the SEC,
material change, annual and quarterly reports and other information. We are
subject to the informational requirements of the U.S. Securities Exchange Act of
1934, as amended (the "Exchange Act") and, in accordance with the Exchange Act,
we also file certain reports with and furnish other information to the SEC.
Under the multijurisdictional disclosure system adopted by the United States and
Canada, these reports and other information may be prepared in accordance with
the disclosure requirements of Canada, which differ from those in the United
States. You may read any document we furnish to the SEC at the SEC's public
reference rooms at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
500 West Meridian Street, Suite 1400, Chicago, Illinois 60661 and 233 Broadway,
New York, New York 10279. You may also obtain copies of the same documents from
the public reference room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 by paying a fee. Please call the SEC at 1-800-SEC-0330 or contact them at
www.sec.gov for further information on the public reference rooms.
Under the multijurisdictional disclosure system adopted by the United
States and Canada, the SEC and the securities commission or similar authority in
each of the provinces of Canada allow us to "incorporate by reference" certain
information we file with them, which means that we can disclose important
information to you by referring you to those documents. Information that is
incorporated by reference is an important part of this prospectus. We
incorporate by reference the documents listed below, which were filed with the
securities commission or similar authority in each of the provinces of Canada
under applicable Canadian securities laws and with the SEC.
The following documents which have been filed with the securities
commission or similar authority in each of the provinces of Canada and with the
SEC are specifically incorporated by reference in and form an integral part of
this prospectus:
o our audited consolidated financial statements for the year
ended December 31, 2001, including the notes thereto and the
auditors' report thereon included in our Annual Report to
Shareholders;
o our Renewal Annual Information Form dated April 2, 2002
(including Management's Discussion and Analysis of Financial
Condition and Results of Operations for the year ended
December 31, 2001, incorporated therein by reference);
o our Management Information Circular dated March 26, 2002
relating to the annual meeting of our shareholders held on May
2, 2002, excluding those portions thereof which appear under
the headings "Report on Executive Compensation", "Performance
Graph" and "Statement of Corporate Governance Practices"
(which portions shall be deemed not to be incorporated by
reference in this prospectus); and
o our unaudited interim financial statements for the three month
period ended March 31, 2002 (including Management's Discussion
and Analysis of Financial Condition and Results of Operations
for that period).
Any documents of the type referred to above (including all material
change reports but excluding confidential material change reports), subsequently
filed by us with the securities commission or similar authority in each of the
relevant provinces of Canada after the date of this prospectus and prior to the
termination of the offering of debt securities shall be deemed to be
incorporated by reference into this prospectus. These documents are available
through the internet on the System for Electronic Document Analysis and
Retrieval which can be accessed at www.sedar.com. In addition, any report filed
or furnished by us with the SEC pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act after the date of this prospectus shall be deemed to be
incorporated by reference into this prospectus and the
3
registration statement of which this prospectus forms a part if and to the
extent expressly provided in such report until all of the debt securities are
sold.
A prospectus supplement or prospectus supplements containing the
specific variable terms for an issue of debt securities will be delivered to
purchasers of such debt securities together with this prospectus and will be
deemed to be incorporated by reference into this prospectus as of the date of
such prospectus supplement and only for the purposes of the debt securities
issued under that prospectus supplement.
ANY STATEMENT CONTAINED IN THIS PROSPECTUS OR IN A DOCUMENT
INCORPORATED, OR DEEMED TO BE INCORPORATED, BY REFERENCE IN THIS PROSPECTUS
SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED, FOR PURPOSES OF THIS PROSPECTUS,
TO THE EXTENT THAT A STATEMENT CONTAINED IN THIS PROSPECTUS OR IN ANY
SUBSEQUENTLY FILED DOCUMENT THAT ALSO IS, OR IS DEEMED TO BE, INCORPORATED BY
REFERENCE IN THIS PROSPECTUS MODIFIES OR REPLACES SUCH STATEMENT. ANY STATEMENT
SO MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR
SUPERSEDED, TO CONSTITUTE PART OF THIS PROSPECTUS. THE MODIFYING OR SUPERSEDING
STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR
INCLUDE ANY OTHER INFORMATION SET FORTH IN THE DOCUMENT WHICH IT MODIFIES OR
SUPERSEDES.
Upon a new Annual Information Form and related annual financial
statements and related Management's Discussion and Analysis being filed by us
with, and where required, accepted by, the applicable securities regulatory
authorities during the currency of this prospectus, the previous Annual
Information Form, the previous annual financial statements and Management's
Discussion and Analysis and all interim financial statements, material change
reports and management information circulars filed prior to the commencement of
our financial year in which such new Annual Information Form is filed shall be
deemed no longer to be incorporated into this prospectus for purposes of future
offers and sales of debt securities under this prospectus.
Updated interest coverage ratios will be filed quarterly with the
applicable securities regulatory authorities, either as part of a prospectus
supplement or as exhibits to our unaudited interim financial statements and
audited annual financial statements and will be deemed to be incorporated by
reference in this prospectus for the purpose of the offering of the debt
securities.
The SEC permits oil and natural gas companies, in their filings with
the SEC, to disclose only proved reserves net of royalties and interests of
others that a company has demonstrated by actual production or conclusive
formation tests to be economically producible under existing economic and
operating conditions. Canadian securities laws permit oil and natural gas
companies, in their filings with Canadian securities regulators, to disclose
probable reserves. Probable reserves are of a higher risk and are generally
believed to be less likely to be recovered than proved reserves. Certain reserve
information included in the documents incorporated by reference to describe our
reserves, such as "probable" reserve information, is prohibited in filings with
the SEC by U.S. companies. For a discussion of this and additional differences
between Canadian and U.S. standards of reporting reserves, see "Risk Factors --
Differences between U.S. and Canadian practices for reporting reserves and
production" in this prospectus.
You may obtain a copy of the documents incorporated by reference in
this prospectus and other information mentioned above by writing or calling us
at the following address and telephone number:
Husky Energy Inc.
707 - 8th Avenue S.W.
P.O. Box 6525 Station D
Calgary, Alberta T2P 1H5
(403) 298-6068
Attention: Vice President & Chief Financial Officer
4
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT AND ON THE
OTHER INFORMATION INCLUDED IN THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS FORMS A PART. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT OR ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE DEBT
SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED BY LAW. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THE APPLICABLE PROSPECTUS SUPPLEMENT.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act of 1995
relating, but not limited, to our operations, anticipated financial performance,
business prospects and strategies and which are based on our current
expectations, estimates, projections and assumptions and were made by us in
light of our experience and our perception of historical trends. All statements
that address expectations or projections about the future, including statements
about our strategy for growth, expected expenditures, commodity prices, costs,
schedules and production volumes, operating or financial results, are
forward-looking statements. Some of the forward-looking statements may be
identified by words like "expects", "anticipates", "plans", "intends",
"believes", "projects", "indicates", "could", "vision", "goal", "objective" and
similar expressions. Our business is subject to risks and uncertainties, some of
which are similar to other energy companies and some of which are unique to us.
Our actual results may differ materially from those expressed or implied by our
forward-looking statements as a result of known and unknown risks, uncertainties
and other factors.
You are cautioned not to place undue reliance on our forward-looking
statements. By their nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and specific, that
contribute to the possibility that the predicted outcomes will not occur. The
risks, uncertainties and other factors, many of which are beyond our control,
that could influence our actual results include, but are not limited to:
o changes in general economic, market and business conditions;
o fluctuations in supply and demand for our products;
o fluctuations in commodity prices;
o fluctuations in the cost of borrowing;
o our use of derivative instruments to hedge exposure to changes
in commodity prices and fluctuations in interest rates and
currency exchange rates;
o political and economic developments, expropriation, royalty
and tax increases, retroactive tax claims and changes to
import and export regulations and other foreign laws and
policies in the countries in which we operate;
o our ability to receive timely regulatory approvals;
o the integrity and reliability of our capital assets;
o the cumulative impact of other resource development projects;
o the accuracy of our reserve estimates, production estimates
and production levels and our success at exploration and
development drilling and related activities;
o the maintenance of satisfactory relationships with unions,
employee associations, joint venturers and partners;
5
o competitive actions of other companies, including increased
competition from other oil and gas companies or from companies
which provide alternative sources of energy;
o the uncertainties resulting from potential delays or changes
in plans with respect to exploration or development projects
or capital expenditures;
o actions by governmental authorities including changes in
environmental and other regulations;
o the ability and willingness of parties with whom we have
material relationships to fulfill their obligations to us; and
o the occurrence of unexpected events such as fires, blowouts,
freeze-ups, equipment failures and other similar events
affecting us or other parties whose operations or assets
directly or indirectly affect us.
We caution that the foregoing list of important factors is not
exhaustive. Events or circumstances could cause our actual results to differ
materially from those estimated or projected and expressed in, or implied by,
these forward-looking statements. You should also carefully consider the matters
discussed under "Risk Factors" included and incorporated by reference in this
prospectus. We undertake no obligation to update publicly or otherwise revise
any forward-looking information, whether as a result of new information, future
events or otherwise, or the foregoing list of factors affecting this
information.
6
HUSKY ENERGY INC.
Overview
We are a Canadian based integrated energy and energy related company
headquartered in Calgary, Alberta. Our registered and principal office is
located at 707 - 8th Avenue S.W., Calgary, Alberta, T2P 3G7. Our common shares
are listed for trading on the Toronto Stock Exchange under the trading symbol
"HSE".
Our operating activities are divided into three segments. The upstream
segment includes the exploration for and the development and production of crude
oil and natural gas in western Canada, offshore the east coast of Canada and in
certain international areas. The midstream segment includes heavy crude oil
upgrading operations, commodity marketing, and infrastructure operations, which
include pipeline, processing, storage and cogeneration. The refined products
segment includes the refining of crude oil and marketing of refined petroleum
products.
Upstream
Our portfolio of assets includes properties that produce light, medium
and heavy gravity crude oil, natural gas liquids, natural gas and sulphur. We
have a high degree of operational control in the upstream operating properties,
which accounted for approximately 90% of our total working interest production
as of December 31, 2001. We have an undeveloped land base in the Western Canada
Sedimentary Basin, offshore the east coast of Canada, in the Wenchang area in
the South China Sea and in the Madura Strait area offshore Indonesia. Our
upstream operations are primarily in western Canada and offshore the east coast
of Canada (Jeanne d'Arc Basin). We also have international upstream operations
in China, Indonesia and Libya.
Midstream
Midstream operations include the upgrading of heavy crude oil feedstock
into synthetic crude oil, pipeline transportation and processing of heavy crude
oil, storage of crude oil, diluent and natural gas, and cogeneration of
electrical and thermal energy, and the marketing of our and third party
producer's crude oil, natural gas, natural gas liquids, sulphur and petroleum
coke.
Refined products
Refined products operations include refining of heavy and light crude
oil, marketing of refined petroleum products, including asphalt and alternate
fuels, and processing of grain, primarily for ethanol production. Light oil
refined products are produced at our refinery in Prince George, British Columbia
and from third party refiners. We sell and distribute transportation fuels,
including ethanol blended fuels, through 578 independently operated Husky and
Mohawk branded petroleum outlets, including service stations, truck stops and
bulk distribution facilities located from the west coast of Canada to the
eastern border of Ontario.
USE OF PROCEEDS
Unless otherwise indicated in an applicable prospectus supplement, we
will use the net proceeds we receive from the sale of the debt securities for
general corporate purposes relating to our primary areas of operation in western
Canada, offshore the east coast of Canada, the Wenchang oilfields in the South
China Sea and in the Madura Strait area offshore Indonesia. We may also use the
net proceeds for the repayment of indebtedness. The amount of net proceeds to be
used for any such purpose will be described in an applicable prospectus
supplement. We may invest funds that we do not immediately require in short-term
marketable debt securities.
7
INTEREST COVERAGE
The following consolidated financial ratios are calculated for the
twelve month periods ended December 31, 2001 and March 31, 2002 based on
audited, in the case of December 31, 2001, and unaudited, in the case of March
31, 2002, financial information. The financial ratios do not give effect to the
debt securities offered by this prospectus since the aggregate principal amount
of debt securities that will be issued under this prospectus and their terms are
not presently known. The interest coverage ratios set forth below do not purport
to be indicative of interest coverage ratios for any future periods. The ratios
have been calculated based on Canadian GAAP.
December 31, 2001 March 31, 2002 (1)
----------------- ------------------
Interest coverage ratios on long-term debt:
Earnings.......................................... 8.1 times 7.0 times
Cash flow......................................... 13.5 times 12.9 times
- -----------
(1) Based on 2001 financial information that has been restated to reflect
the adoption, effective January 1, 2002, of the recommendations of the
Canadian Institute of Chartered Accountants on foreign currency
translation.
Interest coverage on long-term debt on an earnings basis is equal to
earnings before interest on long-term debt and income taxes divided by interest
expense and capitalized interest. Interest coverage on long-term debt on a cash
flow basis is equal to cash flow from operations before interest expense and
cash income taxes divided by interest expense and capitalized interest. For
purposes of calculating the interest coverage ratios set forth in this
prospectus, long-term debt includes the current portion of long-term debt.
The above interest coverage ratios have been calculated without
including the annual carrying charges relating to our issue of 8.90% Capital
Securities. If our Capital Securities were classified as long-term debt (as they
would be under U.S. GAAP), and the annual carrying charges included in interest
expense, our interest coverage ratios would be as follows:
December 31, 2001 March 31, 2002 (1)
----------------- ------------------
Interest coverage ratios on long-term debt:
Earnings............................................ 6.7 times 5.7 times
Cash flow........................................... 11.2 times 10.5 times
- -----------
(1) Based on 2001 financial information that has been restated to reflect
the adoption, effective January 1, 2002, of the recommendations of the
Canadian Institute of Chartered Accountants on foreign currency
translation.
DESCRIPTION OF DEBT SECURITIES
In this section only, "we", "us", "our" or "Husky" refers only to Husky
Energy Inc. and not any of its subsidiaries. The following description describes
certain general terms and provisions of the debt securities We will provide the
particular terms and provisions of a series of debt securities and a description
of how the general terms and provisions described below may apply to that series
in a supplement to this prospectus.
The debt securities will be issued under an indenture to be entered
into between us and The Bank of Nova Scotia Trust Company of New York, as
trustee (the "Trustee") (hereinafter referred to as the "Indenture"). The
Indenture will be subject to and governed by the U.S. Trust Indenture Act of
1939, as amended. A copy of the form of Indenture has been filed as an exhibit
to the registration statement filed with the SEC. The following is a summary of
the Indenture which sets forth certain general terms and provisions of the debt
securities and is not intended to be complete. For a more complete description,
including the definition of capitalized terms used but not defined under this
section,
8
prospective investors should refer to the Indenture. Whenever we refer to
particular provisions of the Indenture, those provisions are qualified in their
entirety by reference to the Indenture.
We may issue debt securities and incur additional indebtedness other
than through the offering of debt securities under this prospectus.
GENERAL
The Indenture does not limit the aggregate principal amount of debt
securities which we may issue under the Indenture and does not limit the amount
of other indebtedness we may incur. The Indenture provides that debt securities
may be issued from time to time in one or more series and may be denominated and
payable in U.S. dollars or any foreign currency. Special Canadian and U.S.
federal income tax considerations applicable to any of the debt securities
denominated in a currency other than U.S. dollars will be described in the
prospectus supplement relating to any offering of debt securities denominated in
a currency other than U.S. dollars. Unless otherwise indicated in a prospectus
supplement, the debt securities will be unsecured obligations. The debt
securities offered pursuant to this prospectus will be issued in an aggregate
principal amount of up to US$1,000,000,000 or the equivalent in a foreign
currency. The Indenture also permits us to increase the principal amount of any
series of the debt securities previously issued and to issue that increased
principal amount.
The applicable prospectus supplement will describe the specific terms
of the debt securities of any series being offered and may include, but is not
limited to, any of the following:
o the title and the aggregate principal amount of the debt
securities;
o the date or dates, or the method by which such date or dates
will be determined or extended, on which the principal of (and
premium, if any, on) the debt securities will be payable and
the portion (if less than the principal amount) to be payable
upon a declaration of acceleration of maturity;
o the rate or rates (whether fixed or variable) at which the
debt securities will bear interest, if any, or the method by
which such rate or rates will be determined and the date or
dates from which such interest will accrue;
o the date or dates, or the method by which such date or dates
will be determined or extended, on which any interest will be
payable and the regular record dates for the payment of
interest on the debt securities in registered form;
o the place or places where the principal of (and premium, if
any) and interest, if any, on the debt securities will be
payable and each office or agency where the debt securities
may be presented for registration of transfer or exchange;
o each office or agency where the principal of (and premium, if
any) and interest, if any, on the debt securities of such
series will be payable;
o the period or periods within which, the price or prices at
which, the currency or currency unit in which, and other terms
and conditions upon which the debt securities may be redeemed
or purchased, in whole or in part, by us;
o the terms and conditions upon which you may redeem the debt
securities prior to maturity and the price or prices at which
and the currency or currency unit in which the debt securities
are payable;
o any mandatory or optional redemption or sinking fund or
analogous provisions;
o if other than denominations of US$1,000 and any integral
multiple thereof, the denomination or denominations in which
any registered debt securities of the series shall be issuable
and, if other
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than the denomination of US$5,000, the denomination or
denominations in which any bearer debt securities of the
series shall be issuable;
o if other than U.S. dollars, the currency or currency unit in
which the debt securities are denominated or in which currency
payment of the principal of (and premium, if any) or interest,
if any, on such debt securities will be payable;
o any index formula or other method used to determine the amount
of payments of principal of (and premium, if any) or interest,
if any, on the debt securities;
o whether the series of the debt securities are to be registered
debt securities, bearer debt securities (with or without
coupons) or both;
o whether the debt securities will be issuable in the form of
one or more global debt securities and, if so, the identity of
the depository for the global debt securities;
o whether and under what circumstances we will be required to
pay any Additional Amounts (defined below under "Additional
Amounts") for withholding or deduction for Canadian taxes with
respect to the debt securities, and whether we will have the
option to redeem the debt securities rather than pay the
Additional Amounts;
o the terms, if any, on which the debt securities may be
converted or exchanged for other of our debt securities or
debt securities of other entities;
o if payment of the debt securities will be guaranteed by any
other person;
o the extent and manner, if any, in which payment on or in
respect of the debt securities will be senior or will be
subordinated to the prior payment of our other liabilities and
obligations;
o the percentage or percentages of principal amount at which the
debt securities will be issued;
o any applicable Canadian and U.S. federal income tax
consequences; and
o any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) of the debt
securities including covenants and events of default which
apply solely to a particular series of the debt securities
being offered which do not apply generally to other debt
securities, or any covenants or events of default generally
applicable to the debt securities which do not apply to a
particular series of the debt securities.
Unless otherwise indicated in a prospectus supplement, the Indenture
does not afford holders of the debt securities the right to tender such debt
securities to us for repurchase or provide for any increase in the rate or rates
of interest at which the debt securities will bear interest, in the event we
should become involved in a highly leveraged transaction or in the event we have
a change in control.
The debt securities may be issued under the Indenture bearing no
interest or at a discount below their stated principal amount. The Canadian and
U.S. federal income tax consequences and other special considerations applicable
to any such discounted debt securities or other debt securities offered and sold
at par which are treated as having been issued at a discount for Canadian and/or
U.S. federal income tax purposes will be described in a prospectus supplement.
RANKING AND OTHER INDEBTEDNESS
Unless otherwise indicated in an applicable prospectus supplement, the
debt securities will be unsecured obligations and will rank equally with all of
our other unsecured senior indebtedness from time to time outstanding and
equally with other debt securities issued under the Indenture. Unless otherwise
indicated in an applicable prospectus supplement, the debt securities will be
structurally subordinated to all existing and future liabilities, including
trade payables and other indebtedness, of our subsidiaries.
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FORM, DENOMINATIONS AND EXCHANGE
A series of the debt securities may be issued solely as registered debt
securities, solely as bearer debt securities or as both registered debt
securities and bearer debt securities. Registered debt securities will be
issuable in denominations of US$1,000 and any integral multiple thereof and
bearer debt securities will be issuable in denominations of US$5,000 or, in each
case, in such other denominations as may be set out in the terms of the debt
securities of any particular series. The Indenture will provide that a series of
the debt securities may be issuable in global form. Unless otherwise indicated
in a prospectus supplement, bearer debt securities will have interest coupons
attached.
Registered debt securities of any series will be exchangeable for other
registered debt securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. If, but only if,
provided in a prospectus supplement, bearer debt securities (with all uninsured
coupons, except as provided below, and all matured coupons in default) of any
series may be exchanged for registered debt securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor. In
such event, bearer debt securities surrendered in a permitted exchange for
registered debt securities between a regular record date or a special record
date and the relevant date for payment of interest shall be surrendered without
the coupon relating to such date for payment of interest, and interest will not
be payable on such date for payment of interest in respect of the registered
security issued in exchange for such bearer security, but will be payable only
to the holder of such coupon when due in accordance with the terms of the
Indenture.
The applicable prospectus supplement may indicate the places to
register a transfer of the debt securities. Except for certain restrictions set
forth in the Indenture, no service charge will be made for any registration of
transfer or exchange of the debt securities, but we may, in certain instances,
require a sum sufficient to cover any tax or other governmental charges payable
in connection with these transactions.
We shall not be required to:
o issue, register the transfer of or exchange any series of the
debt securities during a period beginning at the opening of
business 15 days before any selection of that series of the
debt securities to be redeemed and ending at the close of
business on (i) if the series of the debt securities are
issuable only as registered debt securities, the day of
mailing of the relevant notice of redemption and (ii) if the
series of the debt securities are issuable as bearer debt
securities, the day of the first publication of the relevant
notice of redemption or, if the series of the debt securities
are also issuable as registered debt securities and there is
no publication, the mailing of the relevant notice of
redemption;
o register the transfer of or exchange any registered security,
or portion thereof, called for redemption, except the
unredeemed portion of any registered security being redeemed
in part;
o exchange any bearer security selected for redemption, except
that, to the extent provided with respect to such bearer
security, such bearer security may be exchanged for a
registered security of that series and like tenor, provided
that such registered security shall be immediately surrendered
for redemption with written instruction for payment consistent
with the provisions of the Indenture; or
o issue, register the transfer of, or exchange any of the debt
securities which have been surrendered for repayment at the
option of the holder, except the portion, if any, thereof not
to be so repaid.
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PAYMENT
Unless otherwise indicated in a prospectus supplement, payment of
principal of (and premium, if any) and interest on the debt securities will be
made at the office or agency of the Trustee, at One Liberty Plaza, 23rd Floor,
New York, New York 10006.
Unless otherwise indicated in a prospectus supplement, payment of any
interest will be made to the persons in whose name the debt securities are
registered at the close of business on the day or days specified by us.
GLOBAL DEBT SECURITIES
A series of the debt securities may be issued in whole or in part in
global form as a "global security" and will be registered in the name of and be
deposited with a depositary, or its nominee, each of which will be identified in
the prospectus supplement relating to that series. Unless and until exchanged,
in whole or in part, for the debt securities in definitive registered form, a
global security may not be transferred except as a whole by the depositary for
such global security to a nominee of the depositary, by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any such nominee to a successor of the depositary or a nominee of
the successor.
The specific terms of the depositary arrangement with respect to any
portion of a particular series of the debt securities to be represented by a
global security will be described in a prospectus supplement relating to such
series. We anticipate that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a global security, the depositary therefor or its
nominee will credit, on its book entry and registration system, the respective
principal amounts of the debt securities represented by the global security to
the accounts of such persons, designated as "participants", having accounts with
such depositary or its nominee. Such accounts shall be designated by the
underwriters, dealers or agents participating in the distribution of the debt
securities or by us if such debt securities are offered and sold directly by us.
Ownership of beneficial interests in a global security will be limited to
participants or persons that may hold beneficial interests through participants.
Ownership of beneficial interests in a global security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the depositary therefor or its nominee (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants). The laws of some
states in the United States may require that certain purchasers of debt
securities take physical delivery of such debt securities in definitive form.
So long as the depositary for a global security or its nominee is the
registered owner of the global security, such depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in a global security will not
be entitled to have a series of the debt securities represented by the global
security registered in their names, will not receive or be entitled to receive
physical delivery of such series of the debt securities in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Any payments of principal (and premium, if any) and interest, if any,
on global debt securities registered in the name of a depositary or its nominee
will be made to the depositary or its nominee, as the case may be, as the
registered owner of the global security representing such debt securities. None
of us, the Trustee or any paying agent for the debt securities represented by
the global debt securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the global security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
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We expect that the depositary for a global security or its nominee,
upon receipt of any payment of principal, premium or interest, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the records of such depositary or its nominee. We also expect that
payments by participants to owners of beneficial interests in a global security
held through such participants will be governed by standing instructions and
customary practices, as is now the case with debt securities held for the
accounts of customers registered in "street name", and will be the
responsibility of such participants.
If a depositary for a global security representing a particular series
of the debt securities is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by us within 90 days, we
will issue such series of debt securities in definitive form in exchange for a
global security representing such series of debt securities. In addition, we may
at any time and in our sole discretion determine not to have a series of debt
securities represented by a global security and, in such event, will issue a
series of debt securities in definitive form in exchange for all of the global
debt securities representing the series of debt securities.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"ATTRIBUTABLE DEBT" means, at the time of determination, the then
present value (discounted at the actual rate of interest of such transaction) of
the obligation of the lessee for net rental payments during the remaining term
of the lease (including any period for which such lease has been extended or
may, at the option of the lessor, be extended).
"CAPITAL LEASE OBLIGATION" means the obligation of a person, as lessee,
to pay rent or other amounts to the lessor under a lease of real or personal
property which is required to be classified and accounted for as a capital lease
on a consolidated balance sheet of such person in accordance with GAAP.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets of
Husky on a consolidated basis after deducting therefrom:
o all current liabilities (excluding any current liabilities
which are by their terms extendible or renewable at the option
of the obligor thereon to a time more than 12 months after the
time as of which the amount thereof is being computed);
o all goodwill, trade names, trademarks, patents, unamortized
debt discount, and expense and other similar intangibles; and
o appropriate adjustments on account of minority interests of
other persons holding stock of Husky's Subsidiaries;
in each case, as shown on the most recent annual audited or quarterly unaudited
consolidated balance sheet of Husky and its consolidated Subsidiaries and
computed in accordance with GAAP.
"CURRENT ASSETS" means current assets as determined in accordance with
GAAP.
"FACILITIES" means any drilling equipment, production equipment and
platforms or mining equipment; pipelines, pumping stations and other pipeline
facilities; terminals, warehouses and storage facilities; bulk plants;
production, separation, dehydration, extraction, treating and processing
facilities; gasification or natural gas liquifying facilities, flares, stacks
and burning towers; flotation mills, crushers and ore handling facilities; tank
cars, tankers, barges, ships, trucks, automobiles, airplanes and other marine,
automotive, aeronautical and other similar moveable facilities or equipment;
computer systems and associated programs or office equipment; roads, airports,
docks (including drydocks); reservoirs and
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waste disposal facilities; sewers, generating plants and electric lines;
telephone and telegraph lines, radio and other communications facilities;
townsites, housing facilities, recreation halls, stores and other related
facilities; and similar facilities and equipment of or associated with any of
the foregoing.
"FINANCIAL INSTRUMENT OBLIGATIONS" means obligations arising under:
o interest rate swap agreements, forward rate agreements, floor,
cap or collar agreements, futures or options, insurance or
other similar agreements or arrangements, or any combination
thereof, entered into by a person relating to interest rates
or pursuant to which the price, value or amount payable
thereunder is dependent or based upon interest rates in effect
from time to time or fluctuations in interest rates occurring
from time to time;
o currency swap agreements, cross-currency agreements, forward
agreements, floor, cap or collar agreements, futures or
options, insurance or other similar agreements or
arrangements, or any combination thereof, entered into by a
person relating to currency exchange rates or pursuant to
which the price, value or amount payable thereunder is
dependent or based upon currency exchange rates in effect from
time to time or fluctuations in currency exchange rates
occurring from time to time; and
o commodity swap or hedging agreements, floor, cap or collar
agreements, commodity futures or options or other similar
agreements or arrangements, or any combination thereof,
entered into by a person relating to one or more commodities
or pursuant to which the price, value or amount payable
thereunder is dependent or based upon the price of one or more
commodities in effect from time to time or fluctuations in the
price of one or more commodities occurring from time to time.
"FUNDED DEBT" means Indebtedness of Husky and its Subsidiaries, whether
incurred, assumed or guaranteed, which by its terms matures more than one year
from the date of creation thereof, or which is extendable or renewable at the
sole option of the obligor so that it may become payable more than one year from
such date.
"GAAP" means generally accepted accounting principles in Canada in
which Husky reports its financial statements and which are in effect from time
to time, unless Husky's most recent audited or quarterly unaudited financial
statements are not prepared in accordance with Canadian generally accepted
accounting principles, in which case GAAP shall mean generally accepted
accounting principles in the United States in effect from time to time.
"INDEBTEDNESS" means, as at the date of determination, all items of
indebtedness in respect of any amounts borrowed which, in accordance with GAAP,
would be recorded as debt in the consolidated financial statements of any
person, including:
o any obligation for borrowed money;
o any obligation evidenced by bonds, debentures, notes, or other
similar instruments;
o any Capital Lease Obligation;
o any payment obligation under Financial Instrument Obligations;
and
o any guarantee of Indebtedness of another person (without
duplication).
"ISSUE DATE" means the date that any series of debt securities is first
issued.
"NON-RECOURSE DEBT" means Indebtedness to finance the creation,
development, construction or acquisition of assets and any increases in or
extension, renewals or refundings of such Indebtedness, provided that the
recourse of the lender thereof (including any agent, trustee, receiver or other
person acting on behalf of such entity) in respect of such Indebtedness is
limited in all circumstances to the assets created, developed, constructed or
acquired in respect of which such Indebtedness has been
14
incurred and to the receivables, inventory, equipment, chattels payable,
contracts, intangibles and other assets, rights or collateral connected with the
assets created, developed, constructed or acquired and to which such lender has
recourse.
"PROPERTY" means all property owned by Husky or a Restricted
Subsidiary, except such property which is determined by a resolution of our
board of directors delivered to the Trustee, not to be property of material
importance to the total business conducted by us and our Restricted
Subsidiaries.
"RESTRICTED SUBSIDIARY" means a Subsidiary of Husky, provided, however,
such term shall not include any Subsidiary of Husky if the amount of Husky's
share of the consolidated net tangible assets of such Subsidiary does not, at
the time of determination, exceed 2% of Consolidated Net Tangible Assets.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any lender or investor or to which any such lender or investor
is a party providing for the leasing to Husky or a Subsidiary of Husky of any
property, whether owned by Husky or any of its Subsidiaries at the Issue Date or
later acquired, which has been or is to be sold or transferred by Husky or such
Subsidiary of Husky to such lender or investor or to any other person from whom
funds have been or are to be advanced by such lender or investor on the security
of such property.
"SECURITY INTEREST" means any security by way of an assignment,
mortgage, charge, pledge, lien, encumbrance, title retention agreement or other
security interest whatsoever, howsoever created or arising, whether absolute or
contingent, fixed or floating, perfected or not, but not including any security
interest in respect of a lease which is not a Capital Lease Obligation or any
encumbrance that may be deemed to arise solely as a result of entering into an
agreement not in violation of the terms of the Indenture to sell or otherwise
transfer assets or property.
"SHAREHOLDERS' Equity" means the aggregate amount of shareholders'
equity (including but not limited to share capital, contributed surplus and
retained earnings) of Husky as shown on the most recent annual audited or
quarterly unaudited consolidated balance sheet of Husky and computed in
accordance with GAAP.
"SUBSIDIARY" of any person means, at the date of determination, any
corporation or other person of which Voting Shares or other interests carrying
more than 50% of the voting rights attached to all outstanding Voting Shares or
other interests are owned, directly or indirectly, by or for such person or one
or more Subsidiaries thereof.
"VOTING SHARES" means shares of any class of a corporation having under
all circumstances the right to vote for the election of the directors of such
corporation, provided that, for the purpose of this definition, shares which
only carry the right to vote conditionally on the happening of an event shall
not be considered Voting Shares whether or not such event shall have happened.
COVENANTS
LIMITATION ON LIENS
So long as any debt securities remain outstanding, and subject to all
the provisions of the Indenture, Husky will not, and will not permit any
Restricted Subsidiary to, create assume or otherwise have outstanding any
Security Interest on or over any of its or their respective Property, present or
future, securing any Indebtedness, unless at the time thereof or prior thereto
the debt securities then outstanding under the Indenture are equally and ratably
secured with such Indebtedness; provided, however, that such covenant shall not
apply to or operate to prevent the following permitted encumbrances:
o any Security Interest existing as of the date of the
Indenture, or arising thereafter pursuant to contractual
commitments entered into prior to such date;
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o any Security Interest existing on the property of any person
when such person becomes a Restricted Subsidiary, or arising
thereafter pursuant to contractual commitments (including
under indentures, trust deeds and similar instruments) entered
into prior to and not in contemplation of such person becoming
a Restricted Subsidiary, or is merged into or amalgamated or
consolidated with Husky or a Restricted Subsidiary or such
property is otherwise acquired by Husky or a Restricted
Subsidiary, provided such Security Interest does not attach to
property owned by Husky or a Restricted Subsidiary prior to
such merger, amalgamation or consolidation;
o any Security Interest arising under partnership agreements,
oil and natural gas leases, overriding royalty agreements, net
profits agreements, royalty trust agreements, master limited
partnership agreements, farm-out agreements, division orders,
unitization and pooling designations, declarations, orders and
agreements, development agreements, operating agreements,
production sales contracts (including security in respect of
take or pay or similar obligations thereunder), area of mutual
interest agreements, natural gas balancing or deferred
production agreements, injection, repressuring and recycling
agreements, salt water or other disposal agreements, seismic
or geophysical permits or agreements, which in each of the
foregoing cases is customary in the oil and natural gas
business, and other similar agreements which are customary in
the oil and natural gas business, provided in all instances
that such Security Interest is limited to the assets that are
the subject of the relevant agreement;
o any Security Interest already existing on property acquired
(including by way of lease) by Husky or any Restricted
Subsidiaries at the time of such acquisition, provided that
such Security Interest was not incurred in anticipation of
such acquisition;
o any Security Interest in favor of Husky or any Restricted
Subsidiary;
o any Security Interest on property securing: (i) all or any
portion of the cost of acquisition, exploration, drilling,
development, extraction, operation, construction, alteration,
repair or improvement of all or any part of such property,
(ii) all or any portion of the cost of acquiring, developing,
constructing, altering, improving, operating or repairing any
property or assets, real or personal, or improvements used or
to be used in connection with such properties, whether or not
located (or located from time to time) at or on such
properties and (iii) Indebtedness incurred by Husky or any
Subsidiary to provide funds for the activities set forth in
clauses (i) and (ii) above or to refinance Indebtedness
incurred for such purposes. Without limiting the generality of
the foregoing, costs incurred after the date hereof with
respect to (i) or (ii) above shall include costs incurred for
all facilities relating to such properties, or to projects,
ventures or other arrangements of which such properties form a
part or which relate to such properties, which facilities
shall include, without limitation, Facilities, whether or not
in whole or in part located (or from time to time located) at
or on such properties;
o any Security Interest in connection with Indebtedness which by
its terms is Non-Recourse Debt to Husky or a Subsidiary of
Husky;
o any Security Interest given on Current Assets in the ordinary
course of business to any bank or banks or other lending
institution or institutions to secure any Indebtedness
repayable on demand or maturing, including any right of
extension or renewal, within 12 months after the date such
obligation is incurred;
o any Security Interest on any oil and/or gas property or
products derived from such property to secure obligations, or
guarantees of obligations, incurred in connection with or
necessarily incidental to commitments of purchase or sale of,
or the transportation, storage or distribution of, such
property or the products derived from such property;
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o any Security Interest granted in the ordinary course of
business in connection with Financial Instrument Obligations;
o any Security Interest on Indebtedness issued by Husky or any
of its Subsidiaries and owed to Husky or any of its
Subsidiaries in favor of a trustee or other collateral agent,
for the benefit of holders of publicly issued Indebtedness of
Husky that is issued in connection with, at the same time and
in the same principal amount as such Indebtedness;
o any Security Interest upon specific items of inventory or
other goods and proceeds of Husky or its Restricted
Subsidiaries securing Husky's or such Restricted Subsidiary's
obligations in respect of bankers' acceptances issued or
created for the account of Husky or such Restricted Subsidiary
to facilitate the purchase, shipment or storage of such
inventory or other goods;
o any Security Interest in respect of (i) liens for taxes and
assessments not at the time overdue or any liens securing
workmen's compensation assessments, unemployment insurance or
other social security obligations, provided, however, that if
any such liens, duties or assessments are then overdue, Husky
or the Restricted Subsidiary, as the case may be, shall be
prosecuting an appeal or proceedings for review with respect
to which it shall be entitled to or shall have secured a stay
in the enforcement of any such obligations, (ii) any lien for
specified taxes and assessments which is overdue but the
validity of which is being contested at the time by Husky or
the Restricted Subsidiary, as the case may be, in good faith,
(iii) any liens or rights of distress reserved in or
exercisable under any lease for rent and for compliance with
the terms of such lease, (iv) any obligations or duties,
affecting the property of Husky or that of a Restricted
Subsidiary to any municipality or governmental, statutory or
public authority, with respect to any franchise, grant,
license or permit and any defects in title to structures or
other facilities arising from the fact that such structures or
facilities are constructed or installed on lands held by Husky
or the Restricted Subsidiary under government permits, leases,
licenses or other grants, (v) any deposits or liens in
connection with contracts, bids, tenders or expropriation
proceedings, surety or appeal bonds, costs of litigation when
required by law, public and statutory obligations and liens or
claims incidental to current construction or operations
including but not limited to, builders' mechanics', laborers',
materialmen's, warehousemen's carrier's and other similar
liens, (vi) the right reserved to or vested in any
municipality or governmental or other public authority by any
statutory provision or by the terms of any lease, license,
franchise, grant or permit to periodic payments as a condition
to the continuance thereof, (vii) any Security Interest the
validity of which is being contested at the time by Husky or a
Restricted Subsidiary in good faith or payment of which has
been provided for by creation of a reserve in an amount in
cash sufficient to pay the same in full, (viii) any easements,
rights-of-way and servitudes (including, without in any way
limiting the generality of the foregoing, easements, light and
power or telephone conduits, poles, wires and cables) and
minor defects, or irregularities of title that, in the opinion
of Husky, will not in the aggregate materially and adversely
impair the use or value of the land concerned for security to
a public utility or any municipality or governmental or other
public authority when required by such utility or other
authority in connection with the operations of Husky or the
Restricted Subsidiary, as the case may be, (ix) any liens and
privileges arising out of judgments or awards rendered as
claims filed with respect to which Husky or the Restricted
Subsidiary, as the case may be, is contesting in good faith,
and (x) reservations, limitations, provisos and conditions, if
any, expressed in or affecting any grant of real or immovable
property or any interest therein;
o any extension, renewal, alteration, refinancing, replacement,
exchange or refunding (or successive extensions, renewals,
alterations, refinancings, replacements, exchanges or
refundings) of all or part of any Security Interest referred
to in the foregoing clauses; provided, however that (i) such
new Security Interest shall be limited to all or part of the
property which is secured by the Security Interest plus
improvements on such property and (ii) the Indebtedness
secured by the
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new Security Interest is not increased from the amount of the
Indebtedness then existing at the time of such extension,
renewal, alteration, refinancing, replacement, exchange or
refunding, plus an amount necessary to pay fees and expenses,
including premiums, related to such extensions, renewals,
alterations, refinancings, replacements, exchanges or
refundings; and
o any Security Interest that would not be permitted by the
foregoing clauses (including any successive extensions,
renewals, alterations, refinancings, replacements, exchanges
or refundings thereof), provided that the aggregate
Indebtedness outstanding and secured under this clause and all
Attributable Debt in respect of Sale and Leaseback
Transactions entered into after the date hereof (other than
Sale and Leaseback Transactions permitted by clauses (i) or
(iii) of the "Limitation on Sale and Leaseback Transactions"
covenant described below) does not (calculated at the time of
the granting of the Security Interest) exceed an amount equal
to 10% of Consolidated Net Tangible Assets.
Notwithstanding the foregoing, transactions such as: (i) the sale
(including any forward sale) or other transfer of oil, gas, minerals or other
resources of a primary nature, whether in place or when produced, for a period
of time until, or in an amount such that, the purchaser will realize therefrom a
specified amount of money or a specified rate of return (however determined), or
a specified amount of such oil, gas, minerals, or other resources of a primary
nature; or (ii) the transfer of any other interest in property of the character
commonly referred to as "production payment", will not constitute a Security
Interest and will not result in Husky or a Restricted Subsidiary being required
to secure the debt securities.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Husky will not, nor will it permit any of its Subsidiaries to, enter
into any Sale and Leaseback Transaction unless (i) such transaction involves a
lease or right to possession or use for a temporary period not to exceed three
years following such sale, by the end of which it is intended that the use of
such property by the lessee will be discontinued, or (ii) Husky or such
Subsidiary would, on the effective date of such transaction, be entitled to
issue, assume or guarantee Indebtedness secured by a Security Interest on such
property at least equal in amount to the Attributable Debt in respect thereof,
without equally and ratably securing the debt securities then outstanding, as
set forth under the "Limitation on Liens" covenant described above, or (iii) if
the proceeds of such sale (A) are equal to or greater than the fair market value
(as determined by a committee of any two members of the Board of Directors of
Husky appointed by the Board of Directors of Husky for such purposes) of such
property and (B) are applied within 270 days after the receipt of the proceeds
of sale or transfer, to either the purchase or acquisition of fixed assets or
equipment used in the operation of the business or the construction of fixed
improvements on real property, or to the repayment of Funded Debt (including
debt securities then outstanding) of Husky or any of its Subsidiaries ranking on
a parity with the debt securities then outstanding. The preceding restrictions
shall not apply to any Sale and Leaseback Transaction between Husky and its
Subsidiaries or between Subsidiaries of Husky.
CONSOLIDATION, AMALGAMATION, MERGER AND SALE OF ASSETS
Husky may not consolidate or amalgamate with or merge into or enter
into any statutory arrangement with any other corporation, or convey, transfer
or lease all or substantially all its properties and assets to any person,
unless:
o the entity formed by or continuing from such consolidation or
amalgamation or into which Husky is merged or with which Husky
enters into such arrangement or the person which acquires or
leases all or substantially all of Husky's properties and
assets is organized and existing under the laws of the United
States, any state thereof or the District of Columbia, the
laws of Canada or any province or territory thereof, or, if
such consolidation, amalgamation,
18
merger, arrangement or other transaction would not impair the
rights of holders of the debt securities, in any other
country, provided that if such successor entity is organized
under the laws of a jurisdiction other than the United States,
any state thereof or the District of Columbia, or the laws of
Canada or any province or territory thereof, the successor
entity assumes Husky's obligations under the debt securities
and the Indenture to pay Additional Amounts, substituting the
name of such successor jurisdiction for Canada in each place
that Canada appears in "-- Additional Amounts", below;
o the successor entity expressly assumes or assumes by operation
of law all of Husky's obligations under the debt securities
and under the Indenture; and
o immediately before and after giving effect to such
transaction, no default or event of default shall have
happened and be continuing.
If, as a result of any such transaction, any of Husky's property or any
property of any Restricted Subsidiary becomes subject to a Security Interest,
then, unless such Security Interest could be created pursuant to the Indenture
provisions described under the "Limitation on Liens" covenant above without
equally and ratably securing the debt securities, Husky, simultaneously with or
prior to such transaction, will cause the debt securities to be secured equally
and ratably with or prior to the Indebtedness secured by such Security Interest.
ADDITIONAL AMOUNTS
Unless otherwise specified in a prospectus supplement, all payments
made by us under or with respect to the debt securities will be made free and
clear of and without withholding or deduction for or on account of any present
or future tax, duty, levy, impost, assessment or other governmental charge
(including penalties, interest and other liabilities related thereto) imposed or
levied by or on behalf of the Government of Canada or any province or territory
thereof or by any authority or agency therein or thereof having power to tax
("Canadian Taxes"), unless we are required to withhold or deduct Canadian Taxes
by law or by the interpretation or administration thereof. If we are so required
to withhold or deduct any amount for or on account of Canadian Taxes from any
payment made under or with respect to the debt securities, we will pay to each
holder of such debt securities as additional interest such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each such holder after such withholding or deduction (and after deducting any
Canadian Taxes on such Additional Amounts) will not be less than the amount such
holder would have received if such Canadian Taxes had not been withheld or
deducted. However, no Additional Amounts will be payable with respect to a
payment made to a debt securities holder (such holder, an "Excluded Holder") in
respect of the beneficial owner thereof:
o with which we do not deal at arm's length (within the meaning
of the Income Tax Act (Canada)) at the time of making such
payment;
o which is subject to such Canadian Taxes by reason of the
holder of the debt securities being a resident, domicile or
national of, or engaged in business or maintaining a permanent
establishment or other physical presence in or otherwise
having some connection with Canada or any province or
territory thereof otherwise than by the mere holding of debt
securities or the receipt of payments thereunder;
o which is subject to such Canadian Taxes by reason of the
holder of the debt securities failure to comply with any
certification, identification, documentation or other
reporting requirements if compliance is required by law,
regulation, administrative practice or an applicable treaty as
a precondition to exemption from, or a reduction in the rate
of deduction or withholding of, such Canadian Taxes; or
19
o which is subject to such Canadian Taxes by reason of the legal
nature of the holder of the debt securities disentitling such
holder to the benefit of an applicable treaty.
We will also (i) make such withholding or deduction and (ii) remit the
full amount deducted or withheld to the relevant authority in accordance with
applicable law.
We will furnish to the holders of the debt securities, within 60 days
after the date the payment of any Canadian Taxes is due pursuant to applicable
law, certified copies of tax receipts or other documents evidencing such payment
by us.
We will indemnify and hold harmless each holder of debt securities
(other than an Excluded Holder) and upon written request reimburse each such
holder for the amount, excluding any payment of Additional Amounts by us, of:
o any Canadian Taxes levied or imposed and paid by such holder
as a result of payments made under or with respect to the debt
securities;
o any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto; and
o any Canadian Taxes imposed with respect to any reimbursement
under the preceding two bullet points, but excluding any such
Canadian Taxes on such holder's net income.
Wherever in the Indenture there is mentioned, in any context, the
payment of principal (and premium, if any), interest or any other amount payable
under or with respect to a debt security, such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
TAX REDEMPTION
Unless otherwise specified in a prospectus supplement, a series of debt
securities will be subject to redemption at any time, in whole but not in part,
at a redemption price equal to the principal amount thereof together with
accrued and unpaid interest to the date fixed for redemption, upon the giving of
a notice as described below, if we (or our successor) determine that (i) as a
result of (A) any amendment to or change (including any announced prospective
change) in the laws (or any regulations thereunder) of Canada (or our
successor's jurisdiction of organization) or of any political subdivision or
taxing authority thereof or therein, as applicable, or (B) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination), which amendment or change is announced or becomes
effective on or after the date specified in the applicable prospectus supplement
(or the date a party organized in a jurisdiction other than Canada or the United
States becomes our successor), we have or will become obligated to pay, on the
next succeeding date on which interest is due, additional amounts with respect
to any debt security of such series as described under "Additional Amounts", or
(ii) on or after the date specified in the applicable prospectus supplement (or
the date a party organized in a jurisdiction other than Canada or the United
States becomes our successor), any action has been taken by any taxing authority
of, or any decision has been rendered by a court of competent jurisdiction in,
Canada (or our successor's jurisdiction of organization) or any political
subdivision or taxing authority thereof or therein, including any of those
actions specified in (i) above, whether or not such action was taken or decision
was rendered with respect to us, or any change, amendment, application or
interpretation shall be officially proposed, which, in any such case, in the
written opinion to us of legal counsel of recognized standing, will result in
our becoming obligated to pay, on the next succeeding date on which interest is
due, Additional Amounts with respect to any debt security of such series and, in
any such case, we, in our business judgment, determine that such obligation
cannot be avoided by the use of reasonable measures available to us.
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In the event that we elect to redeem a series of the debt securities
pursuant to the provisions set forth in the preceding paragraph, we shall
deliver to the Trustee a certificate, signed by an authorized officer, stating
that we are entitled to redeem such series of the debt securities pursuant to
their terms.
Notice of intention to redeem such series of our debt securities will
be given not more than 60 nor less than 30 days prior to the date fixed for
redemption and will specify the date fixed for redemption.
PROVISION OF FINANCIAL INFORMATION
We will file with the Trustee, within 15 days after we file them with
the SEC, copies of our annual and quarterly reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which we are required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that we may not remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, we will continue to
provide the Trustee:
o within the time periods required for the filing of such forms
by the SEC, annual reports on Form 40-F or Form 20-F, as
applicable, or any successor form; and
o within 65 days after the end of each of the first three fiscal
quarters of each fiscal year, the information required to be
contained in reports on Form 6-K (or any successor form),
containing the information which, regardless of applicable
requirements shall, at a minimum, contain such information
required to be provided in quarterly reports under the laws of
Canada or any province thereof to security holders of a
corporation with securities listed on the Toronto Stock
Exchange, whether or not we have any of our securities listed
on such exchange. Each of such reports, to the extent
permitted by the rules and regulations of the SEC will be
prepared in accordance with Canadian disclosure requirements
and GAAP provided, however, that we shall not be obligated to
file such reports with the SEC if the SEC does not permit such
filings.
EVENTS OF DEFAULT
The following are summaries of events with respect to any series of our
debt securities which will constitute an event of default with respect to the
debt securities of that series:
o default in the payment of any interest on any debt security of
that series, when it becomes due and payable, and continuance
of such default for a period of 30 days;
o default in the payment of the principal of (or premium, if
any, on) any debt security of that series when it becomes due
and payable;
o default in the performance, or breach, of any covenant or
warranty in the Indenture in respect of the debt securities of
that series, and continuance of such default or breach for a
period of 60 days after written notice has been given to us by
the Trustee or by the holders of at least 25% in principal
amount of all outstanding debt securities of any series
affected thereby;
o if an event of default (as defined in any indenture or
instrument under which we or any Subsidiary have at the time
of the Indenture or shall thereafter have outstanding any
Indebtedness) shall happen and be continuing, or we or any
Subsidiary shall have failed to pay principal amounts with
respect to such Indebtedness at maturity (whether or not
constituting an event of default) and such event of default or
failure to pay shall result in such Indebtedness being
declared due and payable and become accelerated, in either
event so that an amount in excess of the greater of
US$75,000,000 and 2.5% of our Shareholders' Equity shall be or
become due and payable and become accelerated upon such
declaration or prior to the date on which
21
the same would otherwise have become due and payable and
become accelerated (the "Accelerated Indebtedness"), and such
acceleration shall not be rescinded or annulled, or such event
of default or failure to pay under such indenture or
instrument shall not be remedied or cured, whether by payment
or otherwise, or waived by the holders of such Accelerated
Indebtedness, then (i) if the Accelerated Indebtedness shall
be as a result of an event of default which is not related to
the failure to pay principal or interest on the conditions set
out in any such indenture or instrument, it shall not be
considered an event of default for purposes of the Indenture
until 30 days after such Indebtedness has been accelerated, or
(ii) if the Accelerated Indebtedness shall occur as a result
of such failure to pay principal or interest or as a result of
an event of default which is related to the failure to pay
principal or interest on the conditions set out in any such
indenture or instrument, then (A) if such Accelerated
Indebtedness is, by its terms, Non-Recourse Debt to us or a
Subsidiary, it shall not be considered an event of default for
purposes of the Indenture; or (B) if such Accelerated
Indebtedness is recourse to us or a Subsidiary, any
requirement for the giving of notice or the lapse of time or
the happening of any further condition, event or act under
such other indenture or instrument in connection with such
failure to pay principal or event of default shall be
applicable together with an additional seven days before being
considered an event of default for purposes of the Indenture;
o the taking or entering against us or any of our Subsidiaries
of a judgment or decree for the payment of money in excess of
the greater of US$75,000,000 and 2.5% of the Shareholders'
Equity in the aggregate, if we or such Subsidiary, as
applicable, fail to file an appeal therefrom within the
applicable appeal period or, if we or such Subsidiary, as
applicable, file an appeal therefrom within such period, such
judgment or decree is not, and does not remain either vacated,
discharged or stayed within a period of 60 days from the date
of such appeal or the end of the applicable appeal period;
o certain events in bankruptcy, insolvency, assignment for the
benefit of creditors or analogous process have occurred with
respect to us; or
o any other events of default provided with respect to debt
securities of that series.
If an event of default occurs and is continuing with respect to debt
securities of any series, unless the principal of all of the debt securities of
that series shall have already become due and payable, the Trustee may, in its
discretion, and shall upon request in writing made by the holders of not less
than 25% in principal amount of the outstanding debt securities of that series,
declare the principal of (and premium, if any, on) all the outstanding debt
securities of that series and the interest accrued thereon and all other money,
if any, owing under the provisions of the Indenture in respect of those debt
securities to be immediately due and payable.
Subject to certain conditions, the holders of a majority of the
aggregate principal amount of the debt securities of the affected series can
rescind this accelerated payment requirement.
Reference is made to the prospectus supplement relating to each series
of the debt securities which are original issue discount debt securities for the
particular provisions relating to acceleration of the maturity of a portion of
the principal amount of such original issue discount debt securities upon the
occurrence of any event of default and the continuation thereof.
Subject to certain limitations set forth in the Indenture, the holders
of a majority in principal amount of the outstanding debt securities of all
series affected by an event of default shall 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 debt securities of all series affected by such event of default.
22
No holder of a debt security of any series will have any right to
institute any proceeding with respect to the Indenture, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless:
o such holder has previously given to the Trustee written notice
of a continuing event of default with respect to the debt
securities of such series affected by such event of default;
o the holders of at least 25% in aggregate principal amount of
the outstanding debt securities of such series (voting as one
class) affected by such event of default have made written
request, and such holder or holders have offered reasonable
indemnity, to the Trustee to institute such proceeding as
Trustee; and
o the Trustee has failed to institute such proceeding, and has
not received from the holders of a majority in aggregate
principal amount of the outstanding debt securities of such
series affected by such event of default a direction
inconsistent with such request, within 60 days after such
notice, request and offer.
However, such above-mentioned limitations do not apply to a suit
instituted by the holder of a debt security for the enforcement of payment of
the principal of or any premium, if any, or interest on such debt security on or
after the applicable due date specified in such debt security.
We will annually furnish to the Trustee a statement by one of either of
our Chief Executive Officer, Chief Financial Officer or other senior accounting
or financial officers as to whether or not Husky, to the best of their
knowledge, is in compliance with all conditions and covenants of the Indenture
and, if not, specifying all such known defaults. We will also be required under
the Indenture to notify the Trustee as soon as practicable upon becoming aware
of any event of default.
DEFEASANCE
Unless otherwise specified in the applicable prospectus supplement, the
Indenture provides that, at our option, we will be discharged from any and all
obligations in respect of the outstanding debt securities of any series upon
irrevocable deposit with the Trustee, in trust, of money and/or government debt
securities which will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent chartered accountants to pay the
principal of and premium, if any, and each installment of interest on the
outstanding debt securities of such series (hereinafter referred to as a
"Defeasance") (except with respect to the authentication, transfer, exchange or
replacement of our debt securities or the maintenance of a place of payment and
certain other obligations set forth in the Indenture). Such trust may only be
established if, among other things:
o we have delivered to the Trustee an opinion of counsel in the
United States stating that (i) Husky has received from, or
there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of the Indenture,
there has been a change in the applicable U.S. federal income
tax law, in either case to the effect that the holders of the
outstanding debt securities of such series will not recognize
income, gain or loss for U.S. federal income tax purposes as a
result of such Defeasance and will be subject to U.S. 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 had
not occurred;
o we have delivered to the Trustee an opinion of counsel in
Canada or a ruling from Canada Customs and Revenue Agency to
the effect that the holders of the outstanding debt securities
of such series will not recognize income, gain or loss for
Canadian federal or provincial income or other tax purposes as
a result of such Defeasance and will be subject to Canadian
federal or provincial income and other tax on the same
amounts, in the same manner and at the same times as would
have been the case had such Defeasance not occurred (and for
the purposes of
23
such opinion, such Canadian counsel shall assume that holders
of the outstanding debt securities of such series include
holders who are not resident in Canada);
o we are not an "insolvent person" within the meaning of the
Bankruptcy and Insolvency Act (Canada) on the date of such
deposit or at any time during the period ending on the 91st
day following such deposit; and
o no event of default or event that, with the passing of time or
the giving of notice, or both, shall constitute an event of
default shall have occurred and be continuing on the date of
such deposit.
We may exercise our Defeasance option notwithstanding our prior
exercise of our Covenant Defeasance option described in the following paragraph
if we meet the conditions described in the preceding sentence at the time we
exercise the Defeasance option.
The Indenture provides that, at our option, unless and until we have
exercised our Defeasance option described in the preceding paragraph, we may
omit to comply with the "Limitation on Liens", "Limitation on Sale and Leaseback
Transactions" and "Consolidation, Amalgamation, Merger and Sale of Assets"
covenants and certain other covenants and such omission shall not be deemed to
be an event of default under the Indenture and its outstanding debt securities
upon irrevocable deposit with the Trustee, in trust, of money and/or government
debt securities which will provide money in an amount sufficient in the opinion
of a nationally recognized firm of independent chartered accountants to pay the
principal of and premium, if any, and each installment of interest, if any, on
the outstanding debt securities (hereinafter referred to as "Covenant
Defeasance"). If we exercise our Covenant Defeasance option, the obligations
under the Indenture other than with respect to such covenants and the events of
default other than with respect to such covenants shall remain in full force and
effect. Such trust may only be established if, among other things:
o we have delivered to the Trustee an opinion of counsel in the
United States to the effect that the holders of the
outstanding debt securities will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such
Covenant Defeasance and will be subject to U.S. federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance
had not occurred;
o we have delivered to the Trustee an opinion of counsel in
Canada or a ruling from Canada Customs and Revenue Agency to
the effect that the holders of the outstanding debt securities
will not recognize income, gain or loss for Canadian federal
or provincial income or other tax purposes as a result of such
Covenant Defeasance and will be subject to Canadian federal or
provincial income and other tax on the same amounts, in the
same manner and at the same times as would have been the case
had such Covenant Defeasance not occurred (and for the
purposes of such opinion, such Canadian counsel shall assume
that holders of our outstanding debt securities include
holders who are not resident in Canada);
o we are not an "insolvent person" within the meaning of the
Bankruptcy and Insolvency Act (Canada) on the date of such
deposit or at any time during the period ending on the 91st
day following such deposit; and
o no event of default or event that, with the passing of time or
the giving of notice, or both, shall constitute an event of
default shall have occurred and be continuing on the date of
such deposit.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by us and the
Trustee with the consent of the holders of a majority in principal amount of the
outstanding debt securities of each series issued under the Indenture affected
by such modification or amendment (voting as one class);
24
PROVIDED, HOWEVER, that no such modification or amendment may, without the
consent of the holder of each outstanding debt security of such affected series:
o change the stated maturity of the principal of, or any
installment of interest, if any, on any debt security;
o reduce the principal amount of, or the premium, if any, or
interest rate, if any, on any debt security;
o change the place of payment;
o change the currency or currency unit of payment of principal
of (or premium, if any) or interest, if any, on any debt
security;
o impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security;
o reduce the percentage of principal amount of outstanding debt
securities of such series, the consent of the holders of which
is required for modification or amendment of the applicable
Indenture provisions or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults;
or
o modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of
past defaults or covenants except as otherwise specified in
the Indenture.
The holders of a majority in principal amount of the outstanding debt
securities of any series may on behalf of the holders of all debt securities of
that series waive, insofar as that series is concerned, compliance by us with
certain restrictive provisions of the Indenture. The holders of a majority in
principal amount of outstanding debt securities of any series may waive any past
default under the Indenture with respect to that series, except a default in the
payment of the principal of (or premium, if any) and interest, if any, on any
debt security of that series or in respect of a provision which under the
Indenture cannot be modified or amended without the consent of the holder of
each outstanding debt security of that series. The Indenture or the debt
securities may be amended or supplemented, without the consent of any holder of
such debt securities, in order to, among other things, cure any ambiguity or
inconsistency or to make any change that, in each case, does not adversely
affect the rights of any holder of such debt securities.
RESIGNATION OF TRUSTEE
The Trustee may resign or be removed with respect to one or more series
of the debt securities and a successor Trustee may be appointed to act with
respect to such series. In the event that two or more persons are acting as
Trustee with respect to different series of debt securities, each such Trustee
shall be a Trustee of a trust under the Indenture separate and apart from the
trust administered by any other such Trustee, and any action described herein to
be taken by the "Trustee" may then be taken by each such Trustee with respect
to, and only with respect to, the one or more series of debt securities for
which it is Trustee.
CONSENT TO JURISDICTION AND SERVICE
Under the Indenture, we irrevocably appoint CT Corporation System, 111
- - 8th Avenue, 13th Floor, New York, New York 10011, as our authorized agent for
service of process in any suit or proceeding arising out of or relating to the
debt securities or the Indenture and for actions brought under federal or state
securities laws in any federal or state court located in the Borough of
Manhattan in The City of New York, and we irrevocably submit to the
non-exclusive jurisdiction of such courts.
25
GOVERNING LAW
Our debt securities and the Indenture will be governed by and construed
in accordance with the laws of the State of New York.
ENFORCEABILITY OF CIVIL LIABILITIES UNDER THE U.S. FEDERAL SECURITIES LAWS
We are incorporated and governed by the laws of Alberta, Canada.
Substantially all of our assets are located outside the United States and all of
our directors and officers and some of the experts named in this prospectus are
not residents of the United States. As a result, it may be difficult for
investors to effect service within the United States upon us and upon those
directors, officers and experts, or to realize in the United States upon
judgments of courts of the United States predicated upon our civil liability and
the civil liability of our directors, officers or experts under the United
States federal securities laws. We have been advised by Borden Ladner Gervais
LLP that there is doubt as to the enforceability in Canada by a court in
original actions, or in actions to enforce judgments of United States courts, of
civil liabilities predicated upon United States federal securities laws.
RISK FACTORS
You should consider carefully the risk factors set forth below as well
as the other information contained in and incorporated by reference in this
prospectus and in the applicable prospectus supplement before purchasing the
debt securities. If any event arising from these risks occurs, our business,
prospects, financial condition, results of operation or cash flows could be
materially adversely affected.
DIFFERENCES BETWEEN U.S. AND CANADIAN PRACTICES FOR REPORTING RESERVES AND
PRODUCTION
We report production and reserve quantities in accordance with Canadian
practices. These practices are different from the practices used to report
production and estimate reserves in reports and other materials filed with the
SEC by United States companies. The primary differences are summarized below:
o we follow the Canadian practice of reporting gross production
and reserve volumes, which are prior to the deduction of
royalties and similar payments. In the United States,
production and reserve volumes are reported after deducting
these amounts.
o we include in our filings made with Canadian securities
authorities, including certain of the documents incorporated
in this prospectus, estimates of probable reserves. The SEC
prohibits the inclusion of estimates of probable reserves in
filings made with the SEC.
As a consequence, our production volumes and reserve estimates may not
be comparable to those made by United States companies subject to SEC reporting
and disclosure requirements.
VOLATILITY OF OIL AND NATURAL GAS PRICES
Our results of operations and financial condition are dependent on the
prices we receive for our oil and natural gas production. Oil and natural gas
prices have fluctuated widely during recent years and are determined by local
and worldwide supply and demand factors, including actions by the Organization
of Petroleum Exporting Countries, weather conditions, political factors, the
U.S. dollar exchange rate, transportation, competition, and general economic
conditions as well as conditions in other oil producing regions, which are
beyond our control. Any material decline in oil or natural gas prices could have
a material adverse effect on our operations, financial condition, proven
reserves and the amount we spend to develop oil and natural gas reserves.
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In addition, our results of operations are also affected by the price
of refinery feedstock, the demand for our pipeline transportation capacity and
the demand for refined petroleum products. The margins we realize for refined
products are affected by crude oil price fluctuations, which affect refinery
feedstock costs, and third party refined product purchases. Our ability to
maintain product margins in an environment of higher feedstock costs is
contingent upon our ability to pass higher costs on to our customers. The
profitability of our upgrading operations is dependent upon the revenue from the
synthetic crude oil produced exceeding the costs of the blended heavy oil
feedstock and the related operating costs. An increase in the price of blended
heavy crude oil feedstock which is not accompanied by an equivalent increase in
the price of synthetic crude oil would reduce the profitability of our upgrading
operations. As we have significant heavy crude oil production, any negative
effect of such a cost increase of feedstock or synthetic crude price on the
upgrading operations would be offset by a positive effect on revenues in the
upstream segment.
NEED TO REPLACE RESERVES
Our future oil and natural gas reserves and production, and therefore
our cash flows, are highly dependent upon our success in exploiting our current
reserve base and acquiring or discovering additional reserves. Without additions
to our reserves through exploration, acquisition or development activities, our
reserves and production will decline over time as reserves are depleted. The
business of exploring for, developing or acquiring reserves is capital
intensive. To the extent our cash flows from operations are insufficient to fund
our capital expenditures and external sources of capital become limited or
unavailable, our ability to make the necessary capital investments and to
maintain and expand our oil and gas reserves will be impaired. In addition, we
may be unable to find and develop or acquire additional reserves to replace our
oil and natural gas production at acceptable costs.
UNCERTAINTY OF RESERVE ESTIMATES
There are numerous uncertainties inherent in estimating quantities of
reserves, including many factors beyond our control. The reserve information
incorporated by reference in this prospectus are our estimates. In general,
estimates of economically recoverable oil and natural gas reserves and the
future net cash flow therefrom are based upon a number of facts and assumptions
made as of the date on which the reserve estimates were determined, such as
geological and engineering estimates which have inherent uncertainties, the
assumed effects of regulation by governmental agencies and estimates of future
commodity prices and operating costs, all of which may vary considerably from
actual results. All such estimates are, to some degree, uncertain and
classifications of reserves are only attempts to define the degree of
uncertainty involved. For these reasons, estimates of the economically
recoverable oil and natural gas reserves attributable to any particular group of
properties, the classification of such reserves based on risk of recovery and
estimates of future net revenues expected therefrom, prepared by different
engineers or by the same engineers or by the same engineers at different times,
may vary substantially. Our actual production, revenues, taxes and development,
abandonment and operating expenditures with respect to our reserves will likely
vary from such estimates, and such variances could be material.
Estimates with respect to reserves that may be developed and produced
in the future are often based on volumetric calculations and upon analogy to
similar types of reserves, rather than upon actual production history. Estimates
based on these methods generally are less reliable than those based on actual
production history. Subsequent evaluation of the same reserves based upon
production history will result in variations, which may be material, in the
estimated reserves.
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ENVIRONMENTAL RISKS
All phases of the oil and natural gas business are subject to
environmental regulation pursuant to a variety of federal, provincial, state and
municipal laws and regulations, as well as international conventions
(collectively, "environmental legislation").
Environmental legislation imposes, among other things, restrictions,
liabilities and obligations in connection with the generation, handling,
storage, transportation, treatment and disposal of hazardous substances and
waste and in connection with spills, releases and emissions of various
substances to the environment. Environmental legislation also requires that
wells, facility sites and other properties associated with our operations be
operated, maintained, abandoned and reclaimed to the satisfaction of applicable
regulatory authorities. In addition, certain types of operations, including
exploration and development projects and significant changes to certain existing
projects, may require the submission and approval of environmental impact
assessment. Compliance with environmental legislation can require significant
expenditures and failure to comply with environmental legislation may result in
the imposition of fines and penalties and liability for clean up costs and
damages. We cannot assure that the costs of complying with environmental
legislation in the future will not have a material adverse effect on our
financial condition or results of operations.
We anticipate that changes in environmental legislation may require,
among other things, reductions in emissions to the environment from our
operations and result in increased capital expenditures. Further changes in
environmental legislation could occur and result in stricter standards and
enforcement, larger fines and liability, and increased capital expenditures and
operating costs, which could have a material adverse effect on our financial
condition or results of operations.
CERTAIN INCOME TAX CONSEQUENCES
The applicable prospectus supplement will describe certain Canadian
federal income tax consequences to an investor who is a non-resident of Canada
of acquiring any debt securities offered thereunder, including whether the
payments of principal of, premium, if any, and interest on the debt securities
will be subject to Canadian non-resident withholding tax.
The applicable prospectus supplement will also describe certain
material United States federal income tax consequences of the acquisition,
ownership and disposition of any debt securities offered under this prospectus
by an initial investor who is a United States Holder (as defined in such
prospectus supplement).
PLAN OF DISTRIBUTION
We may sell debt securities to or through underwriters or dealers and
may also sell debt securities directly to purchasers or through agents.
The applicable prospectus supplement will also set forth the terms of
the offering relating to the particular debt securities, including to the extent
applicable, the name or names of any underwriters or agents, the initial public
offering price, our proceeds from the offering, the underwriting discounts or
commissions, and any other discounts, commissions or concessions to be allowed
or reallowed to dealers. Any initial public offering price and any underwriting
discounts, commissions or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
The distribution of debt securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, or at prices related to such
prevailing market prices to be negotiated with purchasers.
In connection with the sale of debt securities, underwriters may
receive compensation from us or from purchasers of debt securities for whom they
may act as agents in the form of concessions or
28
commissions. Underwriters, dealers and agents that participate in the
distribution of debt securities may be deemed to be underwriters and any
commissions received by them from us and any profit on the resale of debt
securities by them may be deemed to be underwriting commissions under the U.S.
Securities Act of 1933 (the "Securities Act").
If so indicated in the applicable prospectus supplement, we may
authorize dealers or other persons acting as our agents to solicit offers by
certain institutions to purchase the debt securities directly from us pursuant
to contracts providing for payment and delivery on a future date. These
contracts will be subject only to the conditions set forth in the applicable
prospectus supplement or supplements, which will also set forth the commission
payable for solicitation of these contracts.
Under agreements which may be entered into by us, underwriters, dealers
and agents who participate in the distribution of debt securities may be
entitled to indemnification by us against certain liabilities, including
liabilities under the Securities Act and Canadian provincial securities
legislation, or to contributions with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. The
underwriters, dealers and agents with whom we enter into agreements may be
customers of, engage in transactions with or perform services for us in the
ordinary course of business.
Each series of debt securities will be a new issue of debt securities
with no established trading market. Unless otherwise specified in a prospectus
supplement relating to a series of debt securities, the debt securities will not
be listed on any securities exchange or on any automated dealer quotation
system. Certain broker-dealers may make a market in the debt securities, but
will not be obligated to do so and may discontinue any market making at any time
without notice. We cannot assure you that any broker-dealer will make a market
in the debt securities of any series or as to the liquidity of the trading
market, if any, for the debt securities of any series.
LEGAL MATTERS
Unless otherwise specified in the applicable prospectus supplement,
certain legal matters relating to Canadian law will be passed upon for us by
Borden Ladner Gervais LLP, Calgary, Alberta, Canada. Certain legal matters
relating to United States law will be passed upon for us by Paul, Weiss,
Rifkind, Wharton & Garrison, New York, New York.
The partners and associates of Borden Ladner Gervais LLP and Paul,
Weiss, Rifkind, Wharton & Garrison as a group beneficially own, directly or
indirectly, less than 1% of our securities of any class.
EXPERTS
The consolidated financial statements incorporated in this prospectus
for the years ended December 31, 2001, 2000 and 1999 have been so incorporated
in reliance on the report of KPMG LLP, Chartered Accountants, given on the
authority of said firm as experts in auditing and accounting.
Certain information relating to our reserves incorporated by reference
in this prospectus has been calculated by us and audited and opined upon as of
December 31, 2001 by McDaniel and Associates Consultants Ltd. ("McDaniel"),
independent petroleum engineering consultants retained by us, and has been so
included in reliance on the opinion and analysis of McDaniel, given upon the
authority of said firm as experts in reserve engineering. The partners of
McDaniel as a group beneficially own, directly or indirectly, less than 1% of
our securities of any class.
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DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of the
registration statement of which this prospectus is a part:
o the documents listed in the third paragraph under "Where You
Can Find More Information" in this prospectus;
o the consent of our accountants KPMG LLP;
o the consent of our counsel Borden Ladner Gervais LLP;
o the consent of independent petroleum consultant McDaniel and
Associates Consultants Ltd.;
o powers of attorney from directors and officers of Husky Energy
Inc.;
o the form of indenture relating to the debt securities;
o statement of eligibility of the trustee on Form T-1; and
o calculation of interest coverage ratios.
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US$300,000,000
Husky Energy Inc.
6.15% Notes due 2019
[GRAPHIC]
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PROSPECTUS SUPPLEMENT
June 15, 2004
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Citigroup Global Markets Inc.
CIBC World Markets
HSBC
BNP PARIBAS
Harris Nesbitt
RBC Capital Markets
TD Securities
Lazard
Scotia Capital
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