As filed with the Securities and Exchange Commission on May 11, 2001
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
QUESTAR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Utah 4922 87-0307414
(State or other (Primary Standard (I.R.S.
jurisdiction of Industrial Employer
incorporation Classification Identification
or organization) Code Number) Number)
----------------
180 East 100 South
P.O. Box 45360
Salt Lake City, Utah 84145-0360
(801) 324-5555
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
----------------
Connie C. Holbrook, Esq.
Questar Pipeline Company
180 East 100 South
P.O. Box 45360
Salt Lake City, Utah 84145-0360
(801) 324-5202
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
Richard J. Grossman, Esq. Paul C. Pringle, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Sidley Austin Brown & Wood LLP
Four Times Square 555 California Street
New York, New York 10036 Suite 5000
San Francisco, California 94104
----------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable from time to time after the effective date of this
registration statement as determined in light of market conditions.
------------------
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
|_| ________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_| ________
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Aggregate Registration
to be Registered Registered Price Per Note Offering Price Fee
- -------------------------------------------------------------------------------
Medium-Term Notes, $250,000,000 100%* $250,000,000* $62,500
Series B.........
===============================================================================
* Estimated solely for purposes of calculating the registration fee.
----------------
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
===============================================================================
SUBJECT TO COMPLETION, DATED MAY 11, 2001
PROSPECTUS
Information contained in this prospectus is not complete and may be
changed. We may not sell these notes until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is not
permitted.
$250,000,000
QUESTAR PIPELINE COMPANY
(an indirect subsidiary of Questar Corporation)
Medium-Term Notes, Series
B Due from 9 Months to 30 Years from
Date of Issue
----------------
The Company: Questar Pipeline Company, our executive offices are located at
180 East 100 South Street, P.O. Box 45360, Salt Lake City, Utah 84145-0360,
and our telephone number is (801) 324-5555.
Terms: We may offer from time to time up to $250,000,000 of medium-term
notes. The following terms may apply to the notes. We will provide the
final terms for each note in a pricing supplement.
o The notes will be senior unsecured debt securities of Questar Pipeline.
o The notes will mature in 9 months to 30 years from the date they are
originally issued.
o The notes may be subject to redemption or repayment at our option or
the option of the holder.
o We will pay amounts due on the notes in U.S. dollars.
o The notes will bear interest at either a fixed or floating rate. The
floating interest rate formula may be based on:
o Commercial Paper Rate;
o Federal Funds Rate;
o LIBOR;
o Prime Rate;
o Treasury Rate; or
o A basis, index or formula specified in the applicable pricing
supplement.
o The notes will be in certificated or book-entry form.
o Interest will be paid on fixed rate notes on June 1 and December 1 of
each year.
o Interest will be paid on floating rate notes as described in the
applicable pricing supplement.
o The notes will have minimum denominations of $1,000 increased in
multiples of $1,000.
o We will specify the final terms of each note, which may be different
from the terms described in this prospectus, in the applicable pricing
supplement.
Investing in the notes involves certain risks. See "Risk Factors"
beginning on page 2.
----------------------------------
===============================================================================
Price to Agents' Discounts Proceeds to
Public (1) and Commissions (2)(3) Company (2)(4)
- -------------------------------------------------------------------------------
Per Note..... 100% .125%-.750% 99.875%-99.250%
- -------------------------------------------------------------------------------
Total........ $250,000,000 $312,500-$1,875,000 $249,687,500-$248,125,000
===============================================================================
(1) Unless otherwise specified in the applicable pricing supplement, notes
will be issued at 100% of their principal amount.
(2) We will pay a commission to the agents in the form of a discount,
ranging from .125% to .750% of the principal amount of any note,
depending upon its stated maturity, sold through such agent, and may
sell notes to any agent, as principal, at a discount for resale to
investors or other purchasers at varying prices related to prevailing
market prices at the time of resale to be determined by such agent. No
commission will be payable on any sales made directly by us.
(3) We have agreed to indemnify the agents against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
See "Plan of Distribution."
(4) Before deducting expenses payable by us estimated at $476,000.
------------------------------
We may sell the notes to the agents as principal for resale at varying
or fixed offering prices or through the agents as agents using their
reasonable best efforts on our behalf. We will sell the notes to the public
at 100% of the principal amount unless otherwise specified in the
applicable pricing supplement. We may also sell the notes without the
assistance of the agents.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus, any prospectus supplement or any pricing
supplement, is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------------------------
Merrill Lynch & Co.
Banc of America Securities LLC
Banc One Capital Markets, Inc.
U.S. Bancorp Piper Jaffray
-----------------------------------
The date of this prospectus is , 2001.
TABLE OF CONTENTS
Page
Risk Factors..................................................................2
The Company...................................................................5
Use of Proceeds..............................................................10
Capitalization...............................................................10
Ratio of Earnings to Fixed Charges...........................................10
Description of the Medium-Term Notes.........................................11
Plan of Distribution.........................................................35
Legal Matters................................................................36
Experts......................................................................36
Where You Can Find Additional Information....................................37
You should rely only on the information contained or incorporated
by reference in this prospectus. We have not, and the agents 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 agents 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 appearing in this
prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
References in this prospectus to "the Company," "we," "us," or
"our" are to Questar Pipeline Company.
1
RISK FACTORS
Investment in the notes involves certain risks. In consultation
with financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the notes is suitable. The notes are not an appropriate
investment for unsophisticated investors.
Investing in Indexed Notes Involves Additional Risk
If your notes are indexed notes, they entail significant risks
that are not associated with an investment in a conventional fixed-rate or
floating rate debt security. Indexation of the interest rate of a note may
result in an interest rate that is less than the rate payable on a
conventional fixed-rate debt security issued at the same time, including
the possibility that no interest will be paid. Indexation of the principal
of and/or premium on a note may result in an amount of principal and/or
premium payable that is less than the original purchase price of the note,
including the possibility that no principal will be paid.
The value of an index can depend on a number of factors over which
we have no control, including economic, financial and political events.
These factors are important in determining the existence, magnitude and
longevity of the risks and their results. If the formula used to determine
the amount of principal, premium and/or interest payable with respect to
indexed notes contains a multiplier or leverage factor, the effect of any
change in the index will be magnified. In recent years, values of indices
and formulas have been volatile and you should be aware that volatility may
occur in the future. Nonetheless, the historical experience of an index
should not be taken as an indication of its future performance. In
addition, special tax rules may apply to indexed notes, which rules will be
discussed in the applicable pricing supplement. You should consult your own
financial, tax and legal advisors as to the risks entailed by an investment
in indexed notes and the suitability of the notes in light of your
particular circumstances.
Our Ability to Redeem the Notes May Adversely Affect Your Return on the Notes
If your notes are redeemable at our option or subject to mandatory
redemption, we may, in the case of optional redemption, or must, in the
case of mandatory redemption, choose to redeem the notes at times when
prevailing interest rates may be relatively low. Accordingly, you will not
be able to reinvest the redemption proceeds in a comparable security at an
interest rate as high as that of the notes.
We Cannot Assure You That a Market Will Develop For Your Notes or What the
Market Price Will Be
We cannot assure that a trading market for your notes will develop
or be maintained. In addition to our creditworthiness, many other factors
may affect the trading market for or value of the notes. These factors
include:
o complexity and volatility of the index or formula
applicable to the notes,
o method of calculating the principal, premium and interest
in respect of the notes,
2
o time remaining to the maturity of the notes,
o outstanding amount of the notes,
o redemption features of the notes,
o amount of other debt securities linked to the index or
formula applicable to the notes, and
o level, direction and volatility of market interest rates
generally.
In addition, because some notes may be designed for specific
investment objectives or strategies, these notes will have a more limited
trading market and experience more price volatility. There may be a limited
number of buyers when you decide to sell the notes. This limited market may
affect the price you receive for the notes or your ability to sell the
notes. You should not purchase the notes unless you understand, and know
you can bear, all of the investment risks involving the notes.
Our Credit Ratings May Not Reflect All the Risks of an Investment in the Notes.
Our credit ratings are an independent assessment of ability to pay
our obligations. Consequently, real or anticipated changes in our credit
ratings will generally affect the market value of your notes. Our credit
ratings, however, may not reflect the potential impact of risks related to
structural, market or other factors discussed in this prospectus on the
value of your notes.
As Our Parent Company Diversifies Into More Unregulated Business
Activities, Our Credit Ratings May Be Affected
Our credit ratings depend in part on our relationship with our
parent company and our affiliates, some of which are businesses involved in
open market competition for sales. Our parent company has announced an
intention to target as much as 70% of capital expenditures towards
non-regulated activities related to oil and gas exploration and production
and other activities over the next several years. In as much as rating
agencies tend to view those ventures as holding more business risk than
investment in rate regulated utility properties, our parent company may see
pressure on its credit ratings. This pressure could negatively impact the
ratings on the notes.
Environmental Regulation Significantly Affects Our Business
Our business operations are subject to federal, state and local
laws and regulations relating to environmental protection. If an accidental
leak or spill of hazardous materials occurs from our pipelines, storage, or
other facilities, we may have to pay a significant amount to clean up the
leak or spill. The resulting costs and liabilities could negatively affect
our level of cash flow. In addition, emission controls required under the
Federal Clean Air Act and other similar federal and state laws could
require unexpected capital expenditures at our facilities. Although
3
we cannot predict the impact of Environmental Protection Agency standards
or future environmental measures or other state and local regulations, our
costs could increase if environmental laws and regulations become stricter.
Since the costs of environmental regulation are already significant,
additional regulation could negatively affect our business.
Competition Could Lead to Lower Levels of Profits and Lower Our Cash Flow
Over Time
Our natural gas pipelines and storage facilities compete against
other existing natural gas pipelines originating from the same sources or
serving the same markets as our facilities. In addition, we also may face
competition from natural gas pipelines and storage projects that may be
built in the future. Our ability to compete also depends upon general
market conditions, which may change. We conduct our operations without the
benefit of exclusive franchises from government entities. We provide open
access transportation and storage services at filed tariffs. Demand for
storage service and transportation on our pipelines is primarily a function
of customer usage rates, economic conditions, competing transportation and
storage sources and price for service.
We Are Parties to a Complex Lawsuit Involving Our Ownership in the
TransColorado Gas Transmission Company, Which Could Expose Us to Material
Losses
KN TransColorado, Inc. ("KNTC"), a subsidiary of Kinder Morgan,
Inc., is challenging the validity of our contractual right to put our 50%
interest in the project to it. KNTC alleges we have breached our fiduciary
duty to it and to the partnership and is seeking damages in excess of $150
million plus punitive damages, and a ruling that our put option is void and
unenforceable. We have filed a counterclaim seeking affirmation of our
contractual right to exercise the put and damages of at least $185 million.
A trial is scheduled for April 2002. In the meantime, we are incurring
significant legal expenses to defend ourselves and to protect our rights.
4
THE COMPANY
Overview
We are a subsidiary of Questar Corporation ("Questar"), and are in
the business of transporting and storing natural gas in the Rocky Mountain
States of Utah, Wyoming and Colorado. We and our affiliate Questar Gas
Company ("Questar Gas", formerly Mountain Fuel Supply Company) are directly
owned by Questar Regulated Services Company which is a sub- holding company
of Questar.
As an open-access pipeline, we transport gas for affiliated and
unaffiliated customers. We own and operate the Clay Basin storage facility,
a large underground storage project in northeastern Utah, and own other
underground storage operations in Utah and Wyoming. Through a subsidiary,
we own and operate a gas processing plant. We are also involved in two
partnerships, Overthrust Pipeline Company ("Overthrust"), and TransColorado
Gas Transmission Company ("TransColorado").
We have extended our presence in other parts of the western United
States by participating in the TransColorado pipeline project and
purchasing the Southern Trails line. There are market risks associated with
these projects, as evidenced by our decision to write down our investment
in TransColorado in 1999. See "Partnership Interests." Our efforts to
complete the western section of Southern Trails are affected by our ability
to obtain firm shipper contracts.
Competition for transportation and storage services has
intensified in recent years. Changes in regulation have significantly
increased customer choices. We actively compete with other interstate
pipelines for transportation volumes throughout the Rocky Mountain region.
We have two key assets that contribute to our continued success.
We have a strategically located and integrated, low-cost transmission
system with interconnections to major pipeline systems and with access to
major producing areas and markets. We also have the Clay Basin storage
facility, a storage reservoir that has been successfully operated since
1977. Clay Basin has been expanded in response to interest from customers
and is fully subscribed by firm-service customers under contracts that are
generally long-term in nature. We intend to take advantage of these assets
by increasing our ability to quickly and reliably move gas volumes between
receipt and delivery points and by continuing to review opportunities to
increase our storage capacity and services.
Regulation
As a natural gas company under the Natural Gas Act, we are subject
to the jurisdiction of the Federal Energy Regulatory Commission (the
"FERC"), which administers the Natural Gas Act of 1938 and other federal
laws as to rates and charges for storage and transportation of gas in
interstate commerce, construction of new storage and transmission
facilities, extensions or abandonments of service and facilities, accounts
and records, and depreciation and amortization policies. We hold
certificates of public convenience and necessity granted by the FERC for
the transportation and underground storage of natural gas in interstate
commerce and for the facilities required to perform such operations.
5
We plan to maintain our current rate structure and do not
currently plan to file an application with the FERC for an increase in
rates in 2001. We, however, will continue to review our revenues and costs
as we add new facilities and make expenditures to comply with regulatory
mandates.
Affiliate Relationships
We have significant business relationships with affiliates,
particularly Questar Gas. Depending on the season, Questar Gas has reserved
66% to 69% of the total reserved firm transportation capacity on our
transmission system to serve the needs of its approximately 706,000
customers in Utah, southwestern Wyoming, and southeastern Idaho. Questar
Gas has also contracted for 26% of the firm storage capacity available at
Clay Basin and has storage contracts for 100% of the capacity of three
smaller storage reservoirs. Through a subsidiary, we have a processing
plant that extracts carbon dioxide from a portion of the gas volumes
delivered to Questar Gas. We transport natural gas owned by Questar Gas and
produced from properties operated by Wexpro Company ("Wexpro"), another
affiliate, as well as natural gas volumes purchased directly by Questar Gas
from field producers and other suppliers. We also transport volumes that
are marketed by Questar Energy Trading Company ("Questar Energy Trading"),
another affiliate.
Transmission System
Our core transmission system is strategically located in the Rocky
Mountains near large reserves of natural gas. We describe it as a "hub and
spoke" system, rather than a "long-line" pipeline, because of its physical
configuration, multiple interconnections to other interstate pipeline
systems, and access to major producing areas. Our transmission system has
connections with the pipeline systems of Colorado Interstate Gas Company
("CIG"); the middle segment of the Trailblazer Pipeline System
("Trailblazer") owned by Wyoming Interstate Company, Ltd. ("WIC"); The
Williams Companies Inc. ("Williams"), including Kern River Gas Transmission
Company ("Kern River"); TransColorado; and Overthrust. These connections
have opened markets in the western and mid-western United States outside
Questar Gas' traditional service area and allow us to transport gas for
others.
Our transmission system includes 1,734 miles of transmission lines
that link various producers of natural gas with Questar Gas' distribution
facilities in Utah and Wyoming and interconnect with other pipelines. This
total transmission mileage includes pipelines associated with our storage
fields and tap lines. It does not include the systems in which we have a
partnership interest or Southern Trails line. The system includes two major
segments, often referred to as the northern and southern systems, which are
linked together. The northern segment extends from northwestern Colorado
through southwestern Wyoming into northern Utah; the southern segment of
the transmission system extends from western Colorado to Payson, in central
Utah. The link between the two systems is provided by our transmission line
that runs from the Kanda/Coleman compressor station on the northern segment
to our Clay Basin storage reservoir and then on to our Fidlar compressor
station on the southern system.
Our largest single transportation customer is our affiliate,
Questar Gas. During 2000, we transported 108.2 million decatherms ("MMDth")
(or 39% of our total transportation) for
6
Questar Gas, compared to 105.5 MMDth in 1999 (A decatherm ("Dth") is the
amount of heat energy equal to 10 therms or one million British thermal
units ("Btu")). These transportation volumes include Questar Gas'
cost-of-service gas produced by Wexpro and volumes purchased by Questar Gas
directly from field producers and other suppliers.
Our transportation agreement with Questar Gas was extended in 1999
for three years and expires June 30, 2002. Questar Gas paid an annual
reservation charge of approximately $54.3 million in 2000, which includes
reservation charges attributable to firm and "no-notice" transportation.
Questar Gas only needs its total reserved capacity during peak-demand
situations. When it is not fully utilizing its capacity, Questar Gas
releases the capacity to others, primarily industrial transportation
customers and marketing entities.
We collect approximately 95% of our transmission revenues through
reservation charges from firm transportation customers. In other words,
these customers pay primarily for access to transportation capacity.
Consequently, our throughput volumes do not have a significant effect on
our short-term operating results. Transportation revenues are not
significantly affected by fluctuating demand based on the vagaries of
weather or gas prices. Revenues may, however, be affected if the FERC
changes its basic regulatory scheme of "straight fixed-variable" rates
described above.
Total system throughput increased from 253.5 MMDth in 1999 to
275.2 MMDth in 2000. We increased volumes transported for nonaffiliated
customers from 135.9 MMDth in 1999 to 158.6 MMDth in 2000. About 77% of our
transmission system capacity is subscribed for under firm transportation
contracts.
We also own and operate a major compressor complex near Rock
Springs, Wyoming. The Kanda/Coleman station compresses volumes of gas from
our transmission system for delivery to the WIC segment of the Trailblazer
system and to CIG. The complex has become a major delivery point on our
system. Five of our major natural gas lines are connected to the system at
the complex. In addition, both of CIG's Wyoming pipelines and the WIC
segment are connected to the complex.
Our pipelines, compressor stations, regulator stations, and other
transmission-related facilities are constructed on properties held under
long-term easements, rights of way, or fee interests sufficient for the
conduct of our business activities.
Partnership Interests
In addition to the transmission system described above, we own a
72% interest in and are the operating partner of Overthrust, a general
partnership that was organized in 1979 to construct, own, and operate the
Overthrust segment of Trailblazer. Trailblazer is a major 800- mile
pipeline system that transports gas from producing areas in the Rocky
Mountains to the Midwest. The 88-mile Overthrust segment is the
western-most segment in Trailblazer's system. Although the Overthrust
segment is currently underutilized because it was designed to flow gas
eastward, we and our partners are reviewing opportunities, including
reversing its flow ("backhauling"), to increase its value in meeting
western gas demand. The Overthrust partnership
7
agreement requires unanimous consent of all partners on major operating and
financial issues.
Questar TransColorado, Inc., which is our subsidiary, and KN
TransColorado, Inc., a subsidiary of Kinder Morgan, Inc. (formerly KN
Energy) each have a 50% interest in the TransColorado pipeline project. Our
ownership interest in the project is subject to a lawsuit described in Item
3 of our 2000 Annual Report on Form 10-K and updated in our Quarterly
Report on Form 10-Q. The pipeline, which was completed in March 1999, was
built to transport gas from the Rocky Mountain area that was traditionally
priced lower than other gas supplies to California and Midwestern markets
through interconnections with major pipeline systems. The pipeline
originates at a point on our system 25 miles east of Rangely in
northwestern Colorado and extends 292 miles to the Blanco hub in
northwestern New Mexico.
In its first two full years of operation, TransColorado incurred
significant losses because basis differentials, which reflect gas prices in
different producing basins, were not sufficient to encourage producers and
market aggregators to transport volumes on the line. We wrote down our
investment in TransColorado at year-end 1999 (which write-down included our
anticipated contributions of operating funds to April 1, 2001), pending the
outcome of the litigation and our ability to put our interest to our
partner. The Company has been, and may continue to be, required to
contribute operating funds to TransColorado in the amount of approximately
$2 million per quarter.
Storage Facilities
Our Clay Basin storage facility in northeastern Utah is the
largest underground storage reservoir in the Rocky Mountains. The facility
has a total capacity of 117.5 billion cubic feet ("Bcf") and a working
capacity of 51.3 Bcf. Clay Basin has been operational since 1977 and has
been successfully expanded several times. Clay Basin's firm storage
capacity is fully subscribed by customers under long-term agreements.
Questar Gas currently has 13.3 MMDth of working gas capacity at Clay Basin.
Other large customers include Williams; Puget Sound Energy Company, a
distribution utility in the state of Washington; and Duke Energy Trading
and Marketing L.L.C. Storage service is important to distribution companies
that need to match annual gas purchases with fluctuating customer demand,
improve service reliability, and avoid imbalance penalties. We offer
interruptible storage service at Clay Basin and also allow firm storage
service customers the right to release their injection and withdrawal
rights to other parties. Our storage facilities are certificated by the
FERC, and rates for storage service (based on operating costs and
investment in plant plus an allowed rate of return) are subject to approval
by the FERC.
New Projects
The Mainline 104 project is expected to commence construction
during 2001 in order to have the project in service before the winter
heating season of 2001-2002. This line, which is 75.6 miles long and 24
inches in diameter, extends from Price, Utah, near the Ferron area of
coalbed methane gas, to Questar Gas' system at Payson, Utah, and the Kern
River line near Elberta, Utah. The project is estimated to cost $80 million
and will provide approximately 272,000 Dth per day of additional firm
transportation capacity. CIG has a 31.3% interest in the
8
line and has subscribed to 94,000 Dth of capacity. Questar Gas has
contracted for 50,000 Dth of capacity all year long and 50,000 Dth of
additional capacity during the heating-season months of December, January
and February. This additional capacity will allow Questar Gas to have
additional firm capacity to meet its long-term needs. The Bureau of Land
Management has established a schedule of town meetings to consider public
response to the new line. We do not yet have the final environmental
approvals to construct, but the timetable established by the federal
agencies involved with the environmental review, if met, would allow us to
meet our schedule.
The Southern Trails Pipeline project involves converting a
700-mile oil pipeline and installing compression facilities to transport
natural gas volumes. The line extends from the Four Corners area where the
states of Utah, Colorado, New Mexico and Arizona meet to Long Beach,
California. Through a subsidiary, we are continuing to negotiate necessary
rights of way for the project. Current operating plans divide this line
into two segments. The eastern segment, with a daily capacity of 80,000
Dth, extends from the San Juan Basin to the California state line and is
expected to be in service in mid-2002. The western segment, which has a
daily capacity of 120,000 Dth and extends from the California state line to
Long Beach, needs firm shipper contracts and action by the California
Public Utilities Commission that would modify its residual load service
tariff penalty to allow completion of this segment. We have received
regulatory approval for the project from the FERC and formal certification
from the California State Lands Commission. On April 9, 2001, we announced
we had secured a long-term gas-transportation contract for the entire
initial capacity on the eastern segment of the line.
On May 2, 2001, we announced our intention to construct a high
deliverability salt cavern gas storage facility near the city of Evanston,
Wyoming. The facility will consist of four salt cavern domes that will each
hold up to 3.5 Bcf of gas which could be injected and withdrawn up to
twelve times each year. We believe the facility will be useful for those
electric power companies which require immediate delivery of gas supplies.
Depending on our ability to sign contracts with customers, the facility is
expected to be in operation by 2004.
Employees
As of December 31, 2000, we and a wholly-owned subsidiary had an
aggregated 108 employees, compared to 129 employees as of year-end 1999.
Questar Regulated Services, our parent, had 358 employees (compared to 431
at year-end 1999) who perform specified services for us, and other members
of the group. The reduction in employees reflects an early retirement
program offered to employees of the Questar Regulated Services group
effective October 31, 2000.
Headquarters
Our headquarters are located at 180 East 100 South Street, P.O.
Box 45360, Salt Lake City, Utah 84145-0360 and our telephone number is
(801) 324-5555.
9
USE OF PROCEEDS
The net proceeds from the sale of the notes will be used to redeem
our $85 million 9- 3/8% Debentures due 2021, to finance a portion of
capital expenditures and partnership investments, estimated at $180.3
million in 2001. During 2001, capital expenditures for Main Line 104 are
estimated at $77.5 million, while capital expenditures for the Southern
Trails Pipeline are estimated to be $38.0 million in 2001. At March 31,
2001, short-term debt totaled $800,000 and had an interest rate of 5.47%
per annum. Short-term debt was incurred for general corporate purposes.
CAPITALIZATION
The following table shows the capitalization of the Company as of
March 31, 2001.
March 31, 2001
-----------------------------------
Amount Percentage
------------ -----------
(Dollars in Thousands)
Short-term debt, owed to Questar .......... $800
====
Long-term debt (1) ........................ $215,025 47.5%
Common shareholder's equity ............... 237,668 52.5%
-------
Total capitalization ...................... $452,693 100.0%
======== ======
- -------------
(1) This amount reflects a discount of $375,000.
RATIO OF EARNINGS TO FIXED CHARGES
Twelve Months
Ended
Years Ended December 31, March 31, 2001
------------------------ --------------
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
Ratio of earnings
to fixed charges (1)... 3.58 4.02 3.78 .33 3.05 3.12
(1) For purposes of this presentation, earnings represent income from
continuing operations before income taxes and fixed charges. Fixed
charges consist of total interest charges, amortization of debt
issuance costs and debt discounts, and the interest portion of
rental costs.
10
DESCRIPTION OF THE MEDIUM-TERM NOTES
We will issue the notes as a new series of debt securities under
an indenture, dated as of August 17, 1998, as amended and modified from
time to time, between us and Wells Fargo Bank Northwest, National
Association (f/k/a First Security Bank, N.A.), as trustee. The following
description is only a summary of the material provisions of the notes and
of the indenture and is not complete and is qualified in its entirety by
reference to the indenture, a copy of which has been filed as an exhibit to
the registration statement of which this prospectus is a part. We urge you
to read the indenture because it, and not this description, defines your
rights as holders of the notes. A copy of the indenture is available upon
request made to us or to the agents. When we refer to securities, we refer
to all debt securities that we have issued or may issue in the future under
the indenture and include the notes. The terms and conditions described
below apply to each note unless otherwise indicated in an applicable
pricing supplement.
General
In addition to the notes we are offering in this prospectus, the
indenture provides for the issuance of additional securities, in one or
more series (including both interest bearing and original issue discount
securities), without limitation as to aggregate principal amount. The notes
will be our unsecured obligations and will rank equally with all our other
unsecured and unsubordinated indebtedness. Other than a limitation on liens
covenant, the indenture does not contain restrictive covenants which would
require us to maintain certain financial ratios or restrict our ability to
incur additional indebtedness. In addition, the indenture permits the
issuance of notes which do not pay interest for stated periods of time and
which are issued with original issue discount.
The notes being offered hereby constitute a separate series of
securities under the indenture and are currently limited to $250,000,000
aggregate initial offering amount. Such series may be reopened and the
aggregate initial offering amount of the notes may be increased from time
to time. The notes will be offered on a continuing basis, and each note
will mature on a Business Day (as defined below), not less than 9 months
nor more than 30 years from its date of issue, as selected by the initial
purchaser and agreed to by us. The notes will be denominated and be payable
in United States dollars.
The pricing supplement relating to any note will set forth the
principal amount, interest rate, issue price and agent's commission,
original issue and Maturity dates, redemption and repayment provisions, if
any, and other material terms of such note.
Unless otherwise specified in the applicable pricing supplement,
each note will be issued in registered book-entry form or in registered
certificated form, in denominations of $1,000 and integral multiples of
$1,000. Book-entry notes may be transferred or exchanged only through a
participating member of The Depository Trust Company (or such other
depositary as is identified in an applicable pricing supplement). See "Book
Entry notes; Global Securities" below. Registration of transfer or exchange
of certificated notes will be made at the corporate trust office of the
trustee. No service charge will be made for the registration of transfer or
exchange of notes, but we may require payment of a sum sufficient to cover
any tax or other governmental
11
charge payable in connection therewith (other than exchanges pursuant to
Sections 304, 906 or 1107 of the indenture, not involving any transfer).
"Business Day" means any day that is not a Saturday or Sunday, and
that in The City of New York is not a day on which banking institutions are
generally authorized or obligated by law or executive order to close, and,
with respect to any LIBOR Note, is a London Business Day. Unless otherwise
specified in the applicable pricing supplement, "London Business Day" means
any day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
"Maturity," when used with respect to any note, means the date on
which the principal of such note or an installment of principal becomes due
and payable as provided in the note or the indenture, whether at the Stated
Maturity or by declaration of acceleration, call for redemption, repayment
at the option of the holder or otherwise.
"Stated Maturity," when used with respect to any note or any
installment of principal thereof or interest thereon, means the date
specified in such note as the fixed date on which the principal of such
note or such installment of principal or interest is due and payable.
Under the indenture, notes may be issued at a discount from their
principal amount payable at stated maturity, or with such terms (such as
contingent interest, interest holidays, irregular accrual periods, interest
payable in additional notes, stepped rates, rates based on multiple or
non-conventional interest indices or notes on which payments are tied to
the value of a single stock, a basket of stocks, a commodity or a stock or
commodities index) so as to cause the notes to be subject to the original
issue discount rules of federal, state, local or foreign tax laws. In the
event notes are issued at such a discount or with such terms so as to cause
original issue discount rules to apply, the terms of such notes and
additional disclosure regarding the federal income tax treatment of such
notes as well as certain other considerations will be provided in the
applicable pricing supplement relating to such notes.
Unless otherwise indicated in a pricing supplement, the covenants
contained in the indenture and the notes would not necessarily afford
holders of the notes protection in the event of a highly leveraged or other
transaction involving us that may adversely affect holders.
Interest rates offered by us with respect to the notes may differ
depending upon, among other things, the aggregate principal amount of notes
purchased in any single transaction. Notes with similar variable terms
other than interest rates, as well as notes with different other variable
terms, may be offered concurrently to different investors. Interest rates
or formulas and other terms of notes are subject to change by us from time
to time, but no such change will affect any note previously issued or as to
which an offer to purchase has been accepted by us.
Payments
For certificated notes, payments of principal, premium, if any,
and interest payable at Maturity will be made in immediately available
funds at the corporate trust office of the trustee in Salt Lake City, Utah
or at such other place as we may designate, provided that the certificated
note is presented to the trustee in time for the trustee to make such
payments in such funds in
12
accordance with its normal procedures. Interest (other than interest
payable at Maturity) will be paid by check mailed to the address of the
holder as it appears in the security register as of the regular record
dates or, at our option, by wire transfer to an account maintained by such
holder with a bank located in the United States. Notwithstanding the
foregoing, a holder of $10,000,000 or more in aggregate principal amount of
certificated notes having the same Interest Payment Dates (as defined
below) shall be entitled, upon written request received by the trustee
prior to the regular record date in respect of an interest payment, or the
date which is fifteen days before the Stated Maturity or date of redemption
or repayment of the principal of the notes, as the case may be, to receive
payments of principal, premium, if any, and interest by wire transfer to an
account maintained by such holder with a bank located in the United States;
provided, however, that no payment of principal and premium, if any, will
be made without prior notice of presentment and surrender of the notes. If
any Stated Maturity or date of redemption or repayment would otherwise be a
day that is not a Business Day, payments due on any such day need not be
made on such day, but may be made on the next succeeding Business Day (or,
in the case of a LIBOR Note, if such day falls in the next succeeding
calendar month, the immediately preceding Business Day), with the same
force and effect as if made on the due date, and no interest shall accrue
for the period from such due date to such succeeding Business Day.
The total amount of any principal, premium, if any, or interest
due on any global security (as defined below) representing one or more
book-entry notes on any interest payment date or at Maturity will be made
available to the trustee on such date. As soon as practicable thereafter,
the trustee will make such payments to the depositary in accordance with
existing arrangements between the trustee and the depositary. The
depositary will allocate such payments to each book- entry note represented
by such global security and make payments to the registered owners or
holders thereof in accordance with its existing operating procedures.
Neither we nor the trustee shall have any responsibility or liability for
such payments by the depositary. So long as the depositary or its nominee
is the registered owner of any global security, the depositary or its
nominee, as the case may be, will be considered the sole owner or holder of
the book-entry note or book-entry notes represented by such global security
for all purposes under the indenture.
Redemption at the Option of the Company; No Sinking Fund
Unless otherwise specified in an applicable pricing supplement,
the notes will not be subject to any optional or mandatory sinking fund. If
provided in an applicable pricing supplement, the notes may be subject to
redemption, in whole or in part, prior to their Stated Maturity at our
option or through operation of a mandatory or optional sinking fund or
analogous provisions at a price or prices (including premiums, if any)
determined as set forth in a pricing supplement, together with interest
thereon payable to the date of redemption, on notice given no more than 60
nor less than 30 days prior to the date of redemption. If the notes are to
be redeemable, the notes will be subject to redemption by us on and after
the redemption date, if any, fixed at the time of sale and set forth in the
applicable pricing supplement. If no redemption date is indicated in the
applicable pricing supplement with respect to a note, such note will not be
redeemable prior to Stated Maturity.
13
Repayment at the Option of the Holder
If provided in an applicable pricing supplement, the notes will be
subject to repayment at the option of the holder of the notes in accordance
with the terms of such notes on their respective optional repayment dates,
if any, as agreed upon by us and the purchasers of such notes at the time
of sale (each, an "Optional Repayment Date"). If no Optional Repayment Date
is indicated with respect to a note, such note will not be repayable at the
option of the holder of such note prior to its Stated Maturity.
We may at any time purchase notes at any price or prices in the
open market or otherwise. Notes so purchased by us may, at our discretion,
be held, resold or surrendered to the trustee for cancellation.
Interest and Interest Rates
General
Unless otherwise specified in an applicable pricing supplement,
each note will bear interest from the date of original issue at the rate
per annum or, in the case of a Floating Rate Note, pursuant to the interest
rate formula, stated therein and in the applicable pricing supplement until
the principal thereof is paid or made available for payment. Interest will
be payable in arrears on each date specified in the applicable pricing
supplement and in a note on which an installment of interest is due and
payable (an "Interest Payment Date") and at Maturity. Interest will be
payable generally to the person in whose name a note (or any predecessor
security) is registered at the close of business on the regular record date
next preceding the related Interest Payment Date; provided, however, that
interest payable at Maturity will be payable to the person to whom
principal shall be payable. Each interest payment shall be the amount of
interest accrued from and including the later of the date of original issue
or the most recent Interest Payment Date (in respect of which interest has
been paid or duly provided for with respect to such note) to but excluding
the next succeeding Interest Payment Date (an "Interest Accrual Period").
Unless otherwise specified in the applicable pricing supplement, the first
payment of interest on any note originally issued between a regular record
date and the related Interest Payment Date will be made on the Interest
Payment Date immediately following the next succeeding regular record date
to the holder on such next succeeding regular record date. Interest rates,
interest rate formulas and other terms of the notes are subject to change
by us from time to time but no such change will affect any notes already
issued or as to which offers to purchase have been accepted by us.
Fixed Rate Notes
Unless otherwise specified in an applicable pricing supplement, we
will pay interest on Fixed Rate Notes semiannually on June 1 and December 1
of each year, and the regular record dates in respect of such Interest
Payment Dates will be the immediately preceding May 15 and November 15
(whether or not a Business Day), respectively. If any Interest Payment Date
or Maturity of a Fixed Rate Note falls on a day that is not a Business Day
with respect to such Fixed Rate Note, the payment due on such Interest
Payment Date or at Maturity will be made on the following day that is a
Business Day with respect to such Fixed Rate Note as if it were made
14
on the date such payment was due and no interest shall accrue on the amount
so payable for the period from and after such Interest Payment Date or
Maturity, as the case may be. Unless otherwise specified in the applicable
pricing supplement, interest on each Fixed Rate Note will be computed on
the basis of a 360-day year of twelve 30-day months.
Floating Rate Notes
Unless otherwise specified in an applicable pricing supplement,
Floating Rate Notes will be issued as described below. Interest on Floating
Rate Notes will be determined by reference to a "Base Rate," which may be
one or more of:
o the Commercial Paper Rate, in which case such note will
be a "Commercial Paper Rate Note";
o the Federal Funds Rate, in which case such note will be a
"Federal Funds Rate Note";
o LIBOR, in which case such note will be a "LIBOR Note";
o the Prime Rate, in which case such note will be a "Prime
Rate Note";
o the Treasury Rate, in which case such note will be a
"Treasury Rate Note"; or
o such other interest rate formula as may be set forth in
the applicable pricing supplement and Floating Rate Note.
In addition, a Floating Rate Note may bear interest at the lowest of two or
more Base Rates determined in the same manner as the Base Rates are
determined for the types of Floating Rate Notes described above (except the
interest rate for such Floating Rate Notes will not be determined with
reference to the Treasury Rate). Each Floating Rate Note will specify the
Base Rate or Rates applicable thereto.
The interest rate on each Floating Rate Note will be calculated by
reference to the specified Base Rate or the lowest of two or more specified
Base Rates, in either case plus or minus the applicable Spread, if any,
and/or multiplied by the applicable Spread Multiplier, if any. The "Spread"
is the number of basis points to be added to or subtracted from the related
Base Rate or Rates applicable to such Floating Rate Note. The "Spread
Multiplier" is the percentage of the related Base Rate or Rates applicable
to such Floating Rate Note by which said Base Rate or Rates are to be
multiplied to determine the applicable interest rate on such Floating Rate
Note. The "Index Maturity" is the period to Maturity of the instrument or
obligation with respect to which the related Base Rate or Rates are
calculated. Each Floating Rate Note will specify the Index Maturity and the
Spread, if any, and/or Spread Multiplier, if any, applicable thereto.
Each Floating Rate Note and the applicable pricing supplement will
specify whether the rate of interest on such Floating Rate Note will be
reset daily, weekly, monthly, quarterly, semiannually, annually or
otherwise (each, an "Interest Reset Period") and the date on which such
interest rate will be reset (each, an "Interest Reset Date"). Unless
otherwise specified in a
15
Floating Rate Note and the applicable pricing supplement, the Interest
Reset Date will be, in the case of a Floating Rate Note which resets:
o daily, each Business Day;
o weekly, on Wednesday of each week (with the exception of
weekly reset Floating Rate Notes as to which the Treasury
Rate is an applicable Base Rate, which will reset Tuesday
of each week, except as described below);
o monthly, the third Wednesday of each month;
o quarterly, the third Wednesday of each March, June,
September and December of each year;
o semiannually, the third Wednesday of each of the two
months specified in such pricing Supplement; and
o annually, the third Wednesday of the month specified in
such pricing supplement.
If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date
will be postponed to the next succeeding day that is a Business Day, except
that in the case of a LIBOR Note (or a Floating Rate Note for which LIBOR
is an applicable Base Rate), if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the last Business Day in
the preceding month.
The interest rate applicable to each Interest Reset Period
commencing on the Interest Reset Date or Dates with respect to such
Interest Reset Period will be the rate determined with respect to the
applicable "Interest Determination Date." Unless otherwise specified in an
applicable pricing supplement, the Interest Determination Date with respect
to the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate
will be the second Business Day preceding each Interest Reset Date for the
related note. Unless otherwise specified in an applicable pricing
supplement, the Interest Determination Date with respect to LIBOR will be
the second London Business Day preceding each Interest Reset Date. With
respect to the Treasury Rate, unless otherwise specified in an applicable
pricing supplement, the Interest Determination Date will be the day in the
week in which the Interest Reset Date falls on which day Treasury Bills are
normally auctioned (Treasury Bills are normally sold at auction on Monday
of each week, unless that day is a legal holiday, in which case the auction
is normally held on the following Tuesday, except that such auction may be
held on the preceding Friday); provided, however, that if, as a result of a
legal holiday, an auction is held on the Friday of the week preceding the
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and provided, further, that if an auction shall fall on
any Interest Reset Date, then the related Interest Reset Date shall instead
be the first Business Day immediately following such auction. Unless
otherwise specified in the applicable pricing supplement, the Interest
Determination Date pertaining to a Floating Rate Note the interest rate of
which is determined with reference to two or more Base Rates will be the
first Business Day which is at least two Business Days prior to such
Interest Reset Date for such a Floating Rate Note on which each Base Rate
16
shall be determinable. Each Base Rate shall be determined and compared on
such date, and the applicable interest rate shall take effect on the
related Interest Reset Date.
Any Floating Rate Note may also specify either or both a maximum
limit and a minimum limit on the rate at which interest may accrue during
any Interest Accrual Period. In addition to any maximum interest rate that
may be applicable to any Floating Rate Note pursuant to the preceding
sentence, the interest rate on Floating Rate Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application.
Except as provided below or in the applicable pricing supplement,
interest will be payable, in the case of a Floating Rate Note which resets:
o daily, each Business Day;
o weekly, on Wednesday of each week (with the exception of
weekly reset Floating Rate Notes as to which the Treasury
Rate is an applicable Base Rate, which will reset on
Tuesday of each week, except as described below);
o monthly, on the third Wednesday of each month;
o quarterly, on the third Wednesday of March, June,
September and December of each year;
o semiannually, on the third Wednesday of the two months of
each year specified in the applicable pricing supplement;
and
o annually, on the third Wednesday of the month specified
in the applicable pricing supplement (each, an "Interest
Payment Date");
and, in each case, at Maturity. If any Interest Payment Date for a Floating
Rate Note falls on a day that is not a Business Day with respect to such
Floating Rate Note, such Interest Payment Date will be the following day
that is a Business Day with respect to such Floating Rate Note, except
that, in the case of a LIBOR Note (or a Floating Rate Note for which LIBOR
is an applicable Base Rate), if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately
preceding day that is a Business Day with respect to such Floating Rate
Note. If the Maturity of a Floating Rate Note falls on a day that is not a
Business Day with respect to such Floating Rate Note, the payment of
principal, premium, if any, and interest will be made on the next
succeeding Business Day with respect to such Floating Rate Note, and no
interest on such payment shall accrue for the period from and after
Maturity. Unless otherwise specified in a Floating Rate Note and the
applicable pricing supplement, the regular record date or Dates for
interest payable on such Floating Rate Note will be the fifteenth day
(whether or not a Business Day) immediately preceding the related Interest
Payment Date or Dates.
The interest rate in effect with respect to a Floating Rate Note
on each day that is not an Interest Reset Date will be the interest rate
determined as of the Interest Determination Date
17
pertaining to the immediately preceding Interest Reset Date and the
interest rate in effect on any day that is an Interest Reset Date will be
the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset Date, subject in either case to
applicable provisions of law and any maximum or minimum interest rate
limitation referred to in such Floating Rate Note; provided, however, that
the interest rate in effect with respect to a Floating Rate Note for the
period from the date of original issue to the first Interest Reset Date
will be the rate specified as such in the applicable pricing supplement and
the related Floating Rate Note (the "Initial Interest Rate") and unless
otherwise specified in the applicable pricing supplement the interest rate
in effect for the ten calendar days immediately prior to a Maturity will be
the interest rate in effect on the tenth calendar day preceding such
Maturity.
Unless otherwise specified in the applicable pricing supplement,
with respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for
each day from the later of the date of issue, or from the last date to
which interest has been paid or duly provided for, to the date for which
accrued interest is being calculated. Unless otherwise specified in the
applicable pricing supplement, the interest factor for each such day is
computed by dividing the interest rate applicable to such day by 360, in
the case of Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR
Notes, or Prime Rate Notes or by the actual number of days in the year, in
the case of Treasury Rate Notes. Unless otherwise specified in an
applicable pricing supplement, the interest factor for notes for which the
interest rate is calculated with reference to two or more Base Rates will
be calculated in each period in the same manner as if only the lowest of
the applicable Base Rates applied.
All percentages resulting from any calculation on Floating Rate
Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point
rounded upward (e.g., 9.876545% (or .09876545) will be rounded upward to
9.87655% (or 0987655)), and all dollar amounts used in or resulting from
such calculation on Floating Rate Notes will be rounded to the nearest cent
(with one-half cent being rounded upward).
Unless otherwise specified in an applicable pricing supplement,
the trustee will be the calculation agent. Upon the request of the holder
of any Floating Rate Note, the calculation agent will provide the interest
rate then in effect and, if determined, the interest rate that will become
effective as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Floating Rate Note. Unless
otherwise specified in an applicable pricing supplement, the calculation
date, if applicable, pertaining to any Interest Determination Date will be
the earlier of:
o the tenth calendar day after the applicable Interest
Determination Date or, if the tenth calendar day is not a
Business Day, the next succeeding Business Day; or
o the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
18
The interest rate in effect with respect to a Floating Rate Note
from the date of original issue to the first Interest Reset Date will be
the Initial Interest Rate. The interest rate for each subsequent Interest
Reset Date will be determined by the calculation agent as follows:
Commercial Paper Rate. Commercial Paper Rate Notes will bear
interest at the interest rates (calculated with reference to the Commercial
Paper Rate and the Spread and/or Spread Multiplier, if any) specified in
such Commercial Paper Rate Notes and in an applicable pricing supplement.
Unless otherwise specified in an applicable pricing supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination
Date relating to a Commercial Paper Rate Note or any Interest Determination
Date for a note for which the Commercial Paper Rate is one of the Base
Rates (a "Commercial Paper Rate Interest Determination Date"), the Money
Market Yield (as defined below) on such date of the rate for commercial
paper having the Index Maturity specified in the applicable pricing
supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical release H.15(519), Selected Interest Rates" or any
successor publication ("H.15(519)") under the heading "Commercial Paper -
Nonfinancial" or, if unavailable, under such other heading representing
commercial paper issued by non-financial entities whose bond rating is
"AA," or the equivalent, from a nationally recognized statistical rating
organization. In the event that such rate is not published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Commercial
Paper Rate Interest Determination Date, then the Commercial Paper Rate will
be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable pricing supplement as published by the
Federal Reserve Bank of New York in its daily statistical release
"Composite 3:30 P.M. Quotations for U.S. Governmental Securities" or any
successor publication ("Composite Quotations") under the heading
"Commercial Paper" (with an Index Maturity of one month or three months
being deemed to be equivalent to an Index Maturity of thirty days or ninety
days, respectively). If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on such Calculation
Date, then the Commercial Paper Rate will he calculated by the calculation
agent and will be the Money Market Yield of the arithmetic mean of the
offered rates, as of approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date, of three leading dealers
of commercial paper in The City of New York (which may include one or more
of the agents or their affiliates) selected by the calculation agent (after
consultation with us) for commercial paper having the specified Index
Maturity placed for a nonfinancial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating organization;
provided, however, that if the dealers selected as aforesaid by the
calculation agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate determined as of such Commercial Paper Interest
Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = [ D x 360 ] x 100
--------
360 - (D x M)
19
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal and "M" refers
to the actual number of days in the interest period for which interest is
being calculated.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at
the interest rates (calculated with reference to the Federal Funds Rate and
the Spread and/or Spread Multiplier, if any) specified in such Federal
Funds Rate Notes and in an applicable pricing supplement.
Unless otherwise specified in an applicable pricing supplement,
"Federal Funds Rate" means, with respect to any Interest Determination Date
relating to a Federal Funds Rate Note or a Floating Rate Note for which the
interest rate is determined with reference to the Federal Funds Rate (a
"Federal Funds Rate Interest Determination Date"), the rate on such date
for United States dollar federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if not published by 3:00 P.M., New
York City time, on the related Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate is not
published in either H.15(519) or Composite Quotations by 3:00 P.M., New
York City time, on the related Calculation Date, then the Federal Funds
Rate on such Federal Funds Rate Interest Determination Date will be
calculated by the calculation agent and will be the arithmetic mean of the
rates for the last transaction in overnight United States dollar federal
funds arranged by three leading brokers of federal funds transactions in
The City of New York (which may include the agents or their affiliates)
selected by the calculation agent prior to 9:00 A.M., New York City time,
on such Federal Funds Rate Interest Determination Date; provided, however,
that if the brokers so selected by the calculation agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such
Federal Funds Rate Interests Determination Date will be the Federal Funds
Rate in effect on such Federal Funds Rate Interest Determination Date.
LIBOR. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread
Multiplier, if any) specified in such LIBOR Notes and in an applicable
pricing supplement.
Unless otherwise specified in an applicable pricing supplement,
"LIBOR" means the rate determined by the calculation agent in accordance
with the following provisions:
o With respect to an Interest Determination Date relating
to a LIBOR Note or any Floating Rate Note for which LIBOR
is an applicable Base Rate (a "LIBOR Interest
Determination Date"), either, as specified in the
applicable pricing supplement: (a) the arithmetic mean of
the offered rates for deposits in U.S. dollars for the
period of the Index Maturity specified in the applicable
pricing supplement, commencing on the second London
Business Day immediately following such LIBOR Interest
Determination Date, which appear on the Reuters Screen
LIBOR Page as of 11:00 A.M., London time, on the LIBOR
Interest
20
Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBOR Page ("LIBOR
Reuters"), or (b) the rate for deposits in U.S. dollars
having the Index Maturity designated in the applicable
pricing supplement, commencing on the second London
Business Day immediately following that LIBOR Interest
Determination Date, that appears on the Telerate Page
3750 as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date ("LIBOR Telerate"). Unless
otherwise indicated in the applicable pricing supplement,
"Reuters Screen LIBOR Page" means the display designated
as Page "LIBOR" on the Reuters Monitor Money Rate Service
(or such other page as may replace the LIBOR page on that
service for the purpose of displaying London interbank
offered rates of major banks). "Telerate Page 3750" means
the display designated as page "3750" on the Telerate
Service (or such other page as may replace the 3750 page
on that service or such other service or services as may
be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for
U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable pricing
supplement, LIBOR will be determined as if LIBOR Telerate
had been specified. If fewer than two offered rates
appear on the Reuters Screen LIBOR Page, or if no rate
appears on the Telerate Page 3750, as applicable, LIBOR
in respect of that LIBOR Interest Determination Date will
be determined as if the parties had specified the rate
described in the immediately following clause.
o With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear on the Reuters
Screen LIBOR Page, as described in clause (a) immediately
above, or on which no rate appears on the Telerate Page
3750, as specified in clause (b) immediately above, as
applicable, LIBOR will be determined on the basis of the
rates at which deposits in U.S. dollars having the index
Maturity designated in the applicable pricing supplement
are offered at approximately 11:00 A.M., London time, on
such LIBOR Interest Determination Date by four major
banks ("Reference Banks") in the London interbank market
selected by the calculation agent (after consultation
with us) to prime banks in the London interbank market
commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date and in a
principal amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at
such time. The calculation agent will request the
principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided,
LIBOR for such LIBOR Interest Determination Date will be
the arithmetic mean of the rates quoted at approximately
11:00 AM., New York City time, on such LIBOR Interest
Determination Date by three major banks (which may
include the agents or their affiliates) in The City of
New York selected by the calculation agent (after
consultation with us) for loans in U.S. dollars to
leading European banks having the specified Index
Maturity designated in the applicable pricing supplement
commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date and in a
principal amount equal to an
21
amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at
such time; provided, however, that if the banks selected
as aforesaid by the calculation agent are not quoting as
mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date will be LIBOR then in
effect on such LIBOR Interest Determination Date.
Prime Rate. Prime Rate Notes will bear interest at the interest
rates (calculated with reference to the Prime Rate and the Spread and/or
Spread Multiplier, if any) specified in such Prime Rate Notes and in an
applicable pricing supplement.
Unless otherwise specified in an applicable pricing supplement,
"Prime Rate" means:
o with respect to any Interest Determination Date relating
to a Prime Rate Note or a Floating Rate Note for which
the interest rate is determined with reference to the
Prime Rate (a "Prime Rate Interest Determination Date"),
the rate on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan"; or
o if the rate referred to in the first clause is not
published prior to 3:00 P.M., New York City time, on the
related Calculation Date, then the arithmetic mean of the
rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 Page (as
hereinafter defined) as such bank's prime rate or base
lending rate as in effect for such Prime Rate Interest
Determination Date; or
o if fewer than four such rates described in the second
clause appear on the Reuters Screen USPRIME1 Page for
such Prime Rate Interest Determination Date, then the
arithmetic mean of the prime rates or base lending rates
quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date
by four major money center banks (which may include
affiliates of the agents) in The City of New York
selected by the calculation agent;
o if fewer than four such quotations described in the third
clause are so provided, then the arithmetic mean of four
prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the
close of business on such Prime Rate Interest
Determination Date as furnished in The City of New York
by the major money center banks, if any, that have
provided such quotations and by a reasonable number of
substitute banks or trust companies (which may include
affiliates of the agents) to obtain four such prime rate
quotations, provided such substitute banks or trust
companies are organized and doing business under the laws
of the United States, or any State thereof, each having
total equity capital of at least $500 million and being
subject to supervision or examination by Federal or State
authority.
"Reuters Screen USPRIME1 Page" means the display on the Reuter
Monitor Money Rates Service (or any successor service) on the "USPRIME1"
page (or such other page as may
22
replace the USPRIME1 page on such service) for the purpose of displaying
prime rates or base lending rates of major United States banks.
Treasury Rate. Treasury Rate Notes will bear interest at the
interest rates (calculated with reference to the Treasury Rate and the
Spread and/or Spread Multiplier, if any) specified in such Treasury Rate
Notes and in an applicable pricing supplement.
Unless otherwise specified in an applicable pricing supplement,
"Treasury Rate" means, with respect to any Interest Determination Date
relating to a Treasury Rate Note or any Floating Rate Note for which the
interest rate is determined by reference to the Treasury Rate (a "Treasury
Rate Interest Determination Date"), the rate applicable to the most recent
auction of direct obligations of the United States ("Treasury Bills")
having the Index Maturity specified in the applicable pricing supplement,
as such rate is published in H.15(519) under the heading "Treasury
Bills--auction average (investment)" or, if not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Treasury Rate
Interest Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury.
In the event that the results of the auction of Treasury Bills
having the specified Index Maturity are not reported as provided by 3:00
P.M., New York City time, on such Calculation Date, or if no such auction
is held in a particular week, then the Treasury Rate shall be calculated by
the calculation agent and shall be a yield to Maturity (expressed as a bond
equivalent on the basis of a year of 365 days or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City time on such
Treasury Rate Interest Determination Date, of three leading primary United
States government securities dealers (which may include one or more of the
agents or their affiliates) selected by the calculation agent (after
consultation with us), for the issue of Treasury Bills with a remaining
Maturity closest to the specified index Maturity; provided, however, that
if the dealers selected as aforesaid by the calculation agent are not
quoting as mentioned in this sentence, the Treasury Rate determined as of
such Treasury Rate Interest Determination Date will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
Other Provisions; Addenda
Any provisions with respect to the determination of a Base Rate,
the specification of a Base Rate, calculation of the interest rate
applicable to a Floating Rate Note, its Interest Payment Dates or any other
matter relating thereto may be modified by the terms as specified under
"Other Provisions" on the face of the applicable notes or in an Addendum
relating to the applicable notes, if so specified on the face of the
applicable notes and described in the applicable pricing supplement.
Discount Notes
We may offer notes ("Discount Notes") from time to time that have
an issue price (as specified in the applicable pricing supplement) that is
less than 100% of the principal amount of the applicable notes by more than
a percentage equal to the product of 0.25% and the number of
23
full years to the Stated Maturity. Discount Notes may not bear any interest
currently or may bear interest at a rate that is below market rates at the
time of issuance. The difference between the issue price of a Discount Note
and 100% of the principal amount is referred to as the "discount." In the
event of redemption, repayment or acceleration of Maturity of a Discount
Note, the amount payable to the holder of such Discount Note will be equal
to the sum of (i) the issue price (increased by any accruals of discount)
and, in the event of any redemption of such Discount Note (if applicable),
multiplied by the redemption percentage (as adjusted by the annual
redemption percentage reduction, if applicable) and (ii) any unpaid
interest accrued thereon to the date of such redemption, repayment or
acceleration of Maturity, as the case may be.
Unless otherwise specified in the applicable pricing supplement,
for purposes of determining the amount of discount that has accrued as of
any date on which a redemption, repayment or acceleration of Maturity
occurs for a Discount Note, such discount will be accrued using a constant
yield method. The constant yield will be calculated using a 30-day month,
360- day year convention, a compounding period that, except for the Initial
Period (as defined below), corresponds to the shortest period between
Interest Payment Dates for the applicable Discount Note (with ratable
accruals within a compounding period), a coupon rate equal to the initial
coupon rate applicable to such Discount Note and an assumption that the
Maturity of such Discount Note will not be accelerated. If the period from
the date of issue to the initial Interest Payment Date for a Discount Note
(the "Initial Period") is shorter than the compounding period for such
Discount Note, a proportionate amount of the yield for an entire
compounding period will be accrued. If the Initial Period is longer than
the compounding periods, then such period will be divided into a regular
compounding period and a short period with the short period being treated
as provided in the preceding sentence. The accrual of the applicable
discount may differ from the accrual of original issue discount for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"),
certain Discount Notes may not be treated as having original issue discount
within the meaning of the Code, and notes other than Discount Notes may be
treated as issued with original issue discount for federal income tax
purposes. In the event notes are issued at such a discount or with such
terms so as to cause original issue discount rules under federal tax laws
to apply, the terms of such notes and additional disclosure regarding the
federal income tax treatment of such notes as well as certain other
considerations will be provided in the applicable pricing supplement
relating to such notes.
Book-Entry Notes; Global Securities
Upon issuance, all book-entry notes having the same original issue
date, Stated Maturity and otherwise having identical terms and provisions
will be represented by a single global security. Each global security
representing book-entry notes will be deposited with, or on behalf of, the
depositary. Except as set forth below, a global security may not be
transferred except as a whole by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or by the depositary or any nominee to a
successor of the depositary or a nominee of such successor.
Upon our issuance of book-entry notes represented by a global
security, the depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the book-entry notes
represented by such global security to the accounts of participants. The
accounts to be credited shall be designated by the applicable agent or the
underwriter of such
24
book-entry notes, as the case may be. Ownership of beneficial interests in
a global security will be limited to participants or persons that hold
interests through participants. Ownership of beneficial interests in
book-entry notes represented by a global security will be shown on, and the
transfer of that ownership will be effected only through, records
maintained by the depositary (with respect to interest of participants in
the depositary), or by participants in the depositary or persons that may
hold interests through such participants (with respect to persons other
than participants in the depositary). The laws of some states may require
that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interest in a global security.
So long as the depositary for a global security, or its nominee,
is the registered owner of the global security, the depositary or its
nominee, as the case may be, will be considered the sole owner or holder of
the book-entry notes represented by such global security for all purposes
under the indenture. Except as provided below, owners of beneficial
interests in book-entry notes represented by a global security will not be
entitled to have book-entry notes represented by such global security
registered in their names, will not receive or be entitled to receive or be
entitled to receive physical delivery of book-entry notes in definitive
form, known as certificated notes and will not be considered the owners or
holders of such book-entry notes under the indenture.
The Depository Trust Company, or DTC, will be the initial
depositary with respect to the book-entry notes. The book-entry notes will
be issued as fully registered securities registered in the name of Cede &
Co., DTC's partnership nominee. One fully registered global security will
be issued for each issue of book-entry notes having the same terms and
provisions, each in the aggregate principal amount of such issue, and will
be deposited with DTC. If, however, the aggregate principal amount of any
issue exceeds $200,000,000, one global security will be issued with respect
to each $200,000,000 of principal amount and an additional global security
will be issued with respect to any remaining principal amount of such
issue.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants deposit
with DTC. DTC also facilitates the clearance and settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need of physical movement
of securities certificates. Direct participants of DTC include securities
brokers and dealers (including the agents), banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to DTC's system is also available to
others, known as indirect participants, 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. The rules applicable to DTC and its participants are on file
with the Securities and Exchange Commission.
25
Purchases of book-entry notes under DTC's system must be made by
or through direct participants, which will receive a credit for such
book-entry notes on DTC's records. The ownership interest of each actual
purchaser, or beneficial owner, of each book-entry note represented by a
global security is in turn to be recorded on the records of direct
participants and indirect participants. Beneficial owners will not receive
written confirmation from DTC of their purchase, but beneficial owners are
expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
direct participants or indirect participants through which such beneficial
owner entered into the transaction. Transfer of ownership interests in a
global security representing book-entry notes are to be accomplished by
entries made on the books of participants acting on behalf of beneficial
owners. Beneficial owners of a global security representing book-entry
notes will not receive certificated notes representing their ownership
interests in such global security, except in the limited circumstances
described above.
To facilitate subsequent transfers, all global securities
representing book-entry notes which are deposited with, or on behalf of,
DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of
global securities with, or on behalf of, DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the global securities
representing the book-entry notes; DTC's records reflect only the identity
of the direct participants to whose accounts such book-entry 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 DTC to direct
participants, by direct participants to indirect participants, and by
direct participants and indirect participants to beneficial owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to
the global securities representing the book-entry notes. Under its usual
procedures, DTC 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 to whose account the
book-entry notes are credited on the applicable record date (identified in
a listing attached to the omnibus proxy).
Principal, premium, if any, and/or interest, if any, payments on
the global securities representing the book-entry notes will be made by us
through the trustee in immediately available funds to DTC or its nominee,
as the case may be, as the registered owner of such global securities. DTC'
s practice is to credit direct participants' accounts on the applicable
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment
on such date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participant and not of DTC, the trustee or ours, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment
of principal, premium, if any, and/or interest, if any, to DTC is the
responsibility of ours and the trustee, disbursement of such payments to
direct participants shall be the responsibility of DTC, and disbursement of
such payments to the beneficial owners shall be the responsibility of
26
direct participants and indirect participants. None of us, the trustee, the
Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a global security or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
If applicable, redemption notices shall be sent to Cede & Co. If
less than all of the book- entry notes are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each direct
participant in such issue to be redeemed.
Unless otherwise specified in the applicable pricing supplement,
book-entry notes represented by a global security will be exchanged for
certificated notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if:
o the depositary notifies us that it is unwilling or unable
to continue as depositary for the global securities or we
become aware that the depositary has ceased to be a
clearing agency registered under the Exchange Act and, in
any such case, we shall not have appointed a successor to
the depositary within 90 days after we receive such
notice or become aware of such ineligibility, or
o we, in our sole discretion, determine that the global
securities shall be exchanged for certificated notes.
Under such circumstances, certificated notes will be printed and delivered.
Upon any such exchange, the certificated notes shall be registered in the
names of the beneficial owners of the global security or securities
representing book-entry notes, which names shall be provided by the
depositary's relevant participants (as identified by the depositary) to the
trustee.
Limitations on Liens
Subject to certain exceptions, we will not, and will not permit
any Subsidiary to, create, assume or suffer to exist, otherwise than in
favor of us or a Subsidiary, any mortgage, pledge, lien, encumbrance, or
security interest (collectively, "Liens") upon any of our properties or
assets or upon any income or profits therefrom unless the notes shall be
equally and ratably secured. This prohibition will not apply to:
o Liens existing as of the date of the indenture;
o any purchase money mortgage or Lien created to secure all
or part of the purchase price of any property (or to
secure a loan made to us or any Subsidiary to enable it
to acquire such property), provided that such Lien shall
extend only to the property so acquired, improvements
thereon, replacements thereof and the income or profits
therefrom;
o Liens on any property at the time of the acquisition
thereof, whether or not assumed by us or a Subsidiary;
provided that such Lien shall extend only to the property
so acquired, improvements thereon, replacements thereof
and income or profits therefrom;
27
o Liens on property or any contract for the sale of any
product or service or any rights thereunder or any
proceeds therefrom, acquired or constructed by us or a
Subsidiary and created within one year after the later of
(1) the completion of such acquisition or construction or
(2) the commencement of operation of the project,
provided that such Lien shall extend only to the property
so acquired or constructed, improvements thereon,
replacements thereof and income or profits therefrom;
o Liens of Subsidiaries outstanding at the time they become
Subsidiaries;
o Liens created or assumed by us or a Subsidiary on coal,
geothermal, oil, natural gas, inert gas, other
hydrocarbon or mineral properties owned or leased by us
or a Subsidiary to secure loans to us or a Subsidiary,
for the purpose of developing such properties;
o Liens on any investment (as defined in the indenture) of
ours or a Subsidiary in any Person other than a
Subsidiary or on any security representing any investment
of ours or a Subsidiary;
o any Lien not otherwise permitted by the indenture,
provided that after giving effect to such Liens the sum
of (1) all indebtedness of ours and our Subsidiaries
secured by Liens not otherwise permitted by the indenture
and (2) all Attributable Debt of ours and our
Subsidiaries (to the extent not included in (1) above)
does not exceed 10% of Consolidated Capitalization;
o any refunding or extension of Maturity, in whole or in
part, of any obligation or indebtedness secured by
certain permitted Liens, provided that the principal
amount of the obligation or indebtedness secured by such
refunding or extension shall not exceed the principal
amount of the obligation or indebtedness then outstanding
and shall be limited in lien to the same or substituted
property and after-acquired property that secured the
refunded or extended obligation or indebtedness;
o Liens upon any office equipment, data processing
equipment or any motor vehicles, tractors or trailers;
o Liens of or upon or in current assets of ours or a
Subsidiary created or assumed to secure indebtedness
incurred in the ordinary course of business;
o any Lien which is payable, both with respect to principal
and interest, solely out of the proceeds of natural gas,
oil, coal, geothermal resources, inert gas, hydrocarbons
or minerals to be produced from the property subject
thereto and to be sold or delivered by us or a
Subsidiary;
o Liens to secure indebtedness incurred to finance advances
made by us or any Subsidiary to any third party for the
purpose of financing oil, natural gas,
28
hydrocarbon, inert gas or other mineral exploration or
development, provided that such Liens shall extend only
to the receivables of ours or such Subsidiary in respect
of such advances; and
o any rights reserved in others to take or reserve any part
of the natural gas, oil, coal, geothermal resources,
inert gas, hydrocarbons or minerals produced at any time
on any property of ours or a Subsidiary.
Also excepted from the general prohibition are various other liens
including, but not limited to: mechanics' or materialmen's liens, certain
governmental liens, certain leases, certain judgment liens, and certain
liens arising in connection with leases, easements and rights-of-way for
pipeline or distribution plant purposes.
Certain Definitions
Certain terms used in the indenture are defined and are used in
this prospectus as follows:
"Attributable Debt" means, as of the date of determination, the
present value of net rent for the remaining term of a capital lease,
determined in accordance with accounting principles generally accepted in
the United States ("GAAP"), which is part of a Sale and Leaseback
Transaction (as defined), including any periods for which the lessee has
the right to renew or extend the lease. For purposes of the foregoing, "net
rent" means the sum of capitalized rental payments required to be paid by
the lessee, other than amounts required to be paid by the lessee for
maintenance, repairs, insurance, taxes, assessments, energy, fuel,
utilities and similar charges. In the case of a capital lease which is
terminable by the lessee upon the payment of a penalty, such net amount
shall also include the amount of such penalty, but no rent shall be
considered to be required to be paid under such lease subsequent to the
first date upon which it may be so terminated.
"Consolidated Capitalization" means, without duplication, the sum of
o the principal amount of Consolidated Funded Debt of ours
and our Subsidiaries at the time outstanding,
o the total capital represented by the capital stock of
ours and our Subsidiaries at the time outstanding based,
in the case of stock having par value, upon its par
value, and in the case of stock having no par value, upon
the value stated on our books,
o the total amount of (or less the amount of any deficit
in) retained earnings and paid-in capital of ours and our
Subsidiaries,
o reserves for deferred federal and state income taxes
arising from timing differences, and
29
o Attributable Debt, all as shown on a consolidated balance
sheet of ours and our Subsidiaries prepared in accordance
with GAAP;
provided that in determining the consolidated retained earnings and paid-in
capital of ours and our Subsidiaries no effect shall be given to any
unrealized write-up or write-down in the value of assets or any
amortization thereof, except for accumulated provisions for depreciation,
depletion, amortization and property retirement which shall have been
created by charges made by us or any of our Subsidiaries on our books.
"Consolidated Funded Debt" means the Funded Debt of ours and our
Subsidiaries, consolidated in accordance with GAAP.
"Funded Debt" means all Indebtedness that will mature, pursuant to
a mandatory sinking fund or prepayment provision or otherwise, and all
installments of Indebtedness that will fall due, more than one year from
the date of determination. In calculating the Maturity of any Indebtedness,
there shall be included the term of any unexercised right of the debtor to
renew or extend such Indebtedness existing at the time of determination.
"Indebtedness" means all items of indebtedness for borrowed money
(other than unamortized debt discount and premium) which would be included
in determining total liabilities as shown on the liability side of a
balance sheet prepared in accordance with GAAP as of the date as of which
Indebtedness is to be determined, and shall include Indebtedness for
borrowed money (other than unamortized debt discount and premium) with
respect to which we or any Subsidiary customarily pays interest secured by
any mortgage, pledge or other lien or encumbrance of or upon, or any
security interest in, any properties or assets owned by us or any
Subsidiary, whether or not the Indebtedness secured thereby shall have been
assumed, and shall also include guarantees of Indebtedness of others;
provided that in determining Indebtedness of ours or any Subsidiary there
shall be included the aggregate liquidation preference of all outstanding
securities of any Subsidiary senior to its Common Stock that are not owned
by us or a Subsidiary; and provided, further, that Indebtedness of any
Person shall not include the following:
o any indebtedness evidence of which is held in treasury
(but the subsequent resale of such indebtedness shall be
deemed to constitute the creation thereof); or
o any particular indebtedness if, upon or prior to the
Maturity thereof, there shall have been deposited with a
depository (or set aside and segregated, if permitted by
the instrument creating such indebtedness), in trust,
money (or evidence of such indebtedness as permitted by
the instrument creating such indebtedness) in the
necessary amount to pay, redeem or satisfy such
indebtedness; or
o any indebtedness incurred to finance oil, natural gas,
hydrocarbon, inert gas or other mineral exploration or
development to the extent that the issuer thereof has
outstanding advances to finance oil, natural gas,
hydrocarbon, inert gas or other mineral exploration or
development, but only to the extent such advances are not
in default; or
30
o any indebtedness incurred without recourse to us or any
Subsidiary; or
o any indebtedness incurred to finance advance payments for
gas (pursuant to take- or-pay provisions or otherwise),
but only to the extent that such advance payments are
pursuant to gas purchase contracts entered into in the
normal course of business; or
o any amount (whether or not included in determining total
liabilities as shown on the liability side of a balance
sheet prepared in accordance with GAAP) representing
capitalized rent under any lease; or
o any indirect guarantees or other contingent obligations
in respect of indebtedness of other Persons, including
agreements, contingent or otherwise, with such other
Persons or with third parties with respect to, or to
permit or assure the payment of, obligations of such
other Persons, including, without limitation, agreements
to purchase or repurchase obligations of such other
Persons, to advance or supply funds to, or to invest in,
such other Persons, or to pay for property, products or
services of such other Persons (whether or not conveyed,
delivered or rendered); demand charge contracts,
through-put, take-or-pay, keep-well, make-whole or
maintenance of working capital or similar agreements; or
guarantees with respect to rental or similar periodic
payments to be made by such other Persons.
"Sale and Leaseback Transaction" means an arrangement in which we
or a Subsidiary sells any of our or its property which was placed into
service more than 120 days prior to such sale to a Person and leases it
back from that Person within 180 days of the sale.
Consolidation, Merger and Sale of Assets
Nothing contained in the indenture or in any of the notes shall
prevent any consolidation or merger of us with or into any other Person
(whether or not affiliated with us), or successive consolidations or
mergers in which we or our successor shall be a party, or shall prevent any
conveyance, transfer or lease of our property as an entirety or
substantially as an entirety, to any other Person (whether or not
affiliated with us); provided, however, that:
o in case of such a transaction, the entity formed by such
consolidation or into which we are merged or the Person
which acquires or leases our properties and assets
substantially as an entirety shall be a corporation
organized under the laws of the United States of America,
any state thereof or the District of Columbia and shall
expressly assume the due and punctual payment of the
principal of, premium, if any, and interest on and any
Additional Amounts (as defined in the indenture) with
respect to all the notes and the performance of every
other covenant of the indenture;
o immediately after giving effect to such transaction, no
event which, after notice or lapse of time, would become
an Event of Default, shall have occurred and be
continuing; and
31
o each of us and the successor Person shall have delivered
to the trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such transaction complies with
the above paragraphs (a) and (b) and that all conditions
precedent relating to such transaction have been complied
with.
Events of Default
The following are Events of Defaults under the indenture with
respect to any notes:
o failure to pay the principal of (or premium, if any, on)
any note when due;
o failure to make any mandatory sinking fund payment on any
note when due or failure to pay any interest installment
on or any Additional Amounts with respect to any note
when due, in each case, continued for 30 days;
o failure to perform any of our other covenants, continued
for 90 days after written notice as provided in the
indenture;
o the occurrence of an event of default in other
indebtedness of ours (including Securities other than the
notes) resulting in indebtedness in excess of $10,000,000
principal amount being due and payable prior to Maturity
and such acceleration shall not have been rescinded or
annulled or such indebtedness shall not have been
discharged after written notice as provided in the
indenture; and
o certain events of bankruptcy, insolvency or
reorganization.
If an Event of Default with respect to notes at the time
outstanding shall occur and be continuing, then and in every such case
(unless the principal of all the notes shall have already become due and
payable) the trustee or the holders of at least 33 1/3% in principal amount
of the outstanding notes may declare to be due and payable immediately, by
a notice in writing to us (and to the trustee if given by holders), the
entire principal amount of all the outstanding notes. At any time after
such declaration of acceleration has been made, but before a judgment or
decree for payment of the money due has been obtained by the trustee, the
holders of a majority in principal amount of the outstanding notes, by
written notice to us and the trustee, may, in certain circumstances,
rescind and annul such declaration,
No holder of any notes shall have any right to institute any
proceeding with respect to the indenture or for any remedy thereunder,
unless such holder previously shall have given to the trustee written
notice of a default and unless also the holders of at least 25% of the
principal amount of outstanding notes shall have made written request upon
the trustee, and have offered reasonable indemnity, to institute such
proceeding as the trustee may request, and the trustee shall not have
received direction inconsistent with such request in writing by the holders
of a majority in principal amount of outstanding notes and shall have
neglected or refused to institute such proceeding within 60 days. However,
the rights of any holder of any notes to enforce the payment of principal,
premium, if any, and interest due on and any Additional Amount with
32
respect to such notes on or after the dates expressed in such notes may not
be impaired or affected.
Waiver, Modification and Amendment
The holders of a majority in principal amount of the outstanding
notes may waive certain past defaults, except a default in the payment of
the principal of (or premium, if any) or interest on any note or in respect
of any covenant or provision in the indenture which under the terms of the
indenture cannot be modified without the consent of all holders of
outstanding notes. The holders of a majority in aggregate principal amount
of outstanding notes may waive our compliance with certain restrictive
provisions.
We and the trustee may modify and amend the indenture with the
consent of the holders of majority in aggregate principal amount of the
outstanding notes, provided that no such modification or amendment may,
without the consent of the holder of each note affected thereby:
o change the Stated Maturity of the principal of, or any
installment of principal of, or interest on or any
Additional Amount with respect to, any note;
o reduce the principal amount of, or the rate of interest,
if any, on, any Additional Amounts with respect to, or
any premium payable upon the redemption of any note;
o change the Place of Payment or change the currency of
payment of principal, premium, if any, interest on, or
any Additional Amounts with respect to any note;
o impair the right to institute suit for the enforcement of
any payment on or with respect to any note;
o reduce the percentages of holders of outstanding notes
specified in this or the preceding paragraph; or
o effect certain other modifications or amendments
described in the indenture.
Defeasance and Covenant Defeasance
The indenture provides that we may elect either:
o to defease and be discharged from any and all obligations
with respect to the notes ("defeasance"), or
o to be released from our obligations with respect to such
notes described above under "Limitations on Liens" and
"Consolidation, Merger and Sale of Assets" ("covenant
defeasance"), upon the irrevocable deposit with the
trustee, in trust for such purpose, of money, and/or U.S.
Government Obligations (as defined in the indenture)
which through the payment of principal and interest in
accordance
33
with their terms will provide money, in an amount
sufficient to pay the principal of, and premium, if any,
and interest on and any Additional Amounts with respect
to such notes, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due date
therefor.
Unless otherwise specified in the applicable pricing supplement, defeasance
and covenant defeasance are each conditioned upon our delivery to the
trustee of an Opinion of Counsel to the effect that the holders of the
notes will have no federal income tax consequences as a result of such
deposit. The applicable pricing supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance with
respect to the related notes (including any modifications to the provisions
described above) and the effect of such defeasance or covenant defeasance
under federal tax law.
Concerning the Trustee
Wells Fargo Bank Northwest, National Association (f/k/a First
Security Bank, N.A.) is the trustee under the indenture. The indenture
contains certain limitations on the rights of the trustee, should it become
our creditor, to obtain payment of claims in certain cases or to realize on
certain property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other transactions
with us; however, if it acquires a conflicting interest it must eliminate
such conflict or resign or otherwise comply with the Trust Indenture Act of
1939, as amended. The indenture also provides that we will indemnify the
trustee against loss, liability or expense incurred without negligence or
bad faith on the part of the trustee arising out of or in connection with
the trust under the indenture.
34
PLAN OF DISTRIBUTION
The notes are being offered on a continuing basis for sale by us
through the agents, who have agreed to use their reasonable efforts to
solicit offers to purchase the notes, and we may also sell the notes to an
agent, as principal, for resale to investors and other purchasers at
varying prices related to prevailing market prices at the time of resale to
be determined by such agent. We also reserve the right to sell notes
directly on our own behalf or through additional agents, acting either as
agent or principal, on substantially identical terms as those applicable to
the agents. We reserve the right to withdraw, cancel or modify the offer
made hereby without notice and may reject orders, in whole or in part,
whether placed directly with us or through one of the agents. The agents
will have the right, in their discretion reasonably exercised, to reject in
whole or in part any offer to purchase notes received by them. We will pay
the agents, in the form of a discount or otherwise, a commission which,
depending on the Stated Maturity of the note, will range from .125% to
.750% of the principal amount of any note sold through the agents.
In addition, the agents may offer the notes they have purchased as
principal to other dealers. The agents may sell notes to any dealer at a
discount and, unless otherwise specified in the applicable pricing
supplement, such discount allowed to any dealer will not be in excess of
the discount to be received by such agent from us. Unless otherwise
indicated in the applicable pricing supplement, any note sold to an agent
as principal will be purchased by such agent at a price equal to 100% of
the principal amount thereof less a percentage equal to the commission
applicable to any agency sale of a note of identical Maturity, and may be
resold by the agent to investors and other purchasers from time to time in
one or more transactions, including negotiated transactions, at varying
prices determined at the time of sale or, if so agreed, at a fixed public
offering price. After the initial public offering of notes to be resold to
investors and other purchasers, the public offering price (if resold on a
fixed public offering price basis), concession and discount may be changed.
Unless otherwise specified in the applicable pricing supplement,
payment of the purchase price of the notes will be required to be made in
immediately available funds in New York City on the date of settlement.
In connection with the offering of the notes purchased by one or
more agents as principal on a fixed price basis, the agents are permitted
to engage in certain transactions that stabilize the price of the notes.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the notes. If the agents create a short
position in the notes in connection with the offering, i.e., if they sell
notes in an aggregate principal amount exceeding that set forth in the
applicable pricing supplement, the agents may reduce that short position by
purchasing notes in the open market.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.
Neither we nor any of the agents makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the notes. In
addition, neither we nor any of the agents makes any representation that
the
35
agents will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The notes are a new issue of securities with no established
trading market. Unless otherwise specified in the applicable pricing
supplement, the notes will not be listed on any securities exchange. Each
of the agents may from time to time purchase and sell notes in the
secondary market, but no agent is obligated to do so, and there can be no
assurance that there will be a secondary market for the notes or liquidity
in the secondary market if one develops. From time to time, each of the
agents may make a market in the notes.
Each agent may be deemed to be an "underwriter" within the meaning
of the Securities Act. We have agreed to indemnify each of the agents
against, or to make contributions relating to, certain civil liabilities,
including civil liabilities under the Securities Act. We have agreed to
reimburse each of the agents for certain expenses.
Certain of the agents have provided and will provide from time to
time certain financial advisory services to us and Questar and certain of
our affiliates. Merrill Lynch has acted as agent for the sale of our
medium-term notes and those of Questar Gas and is a commercial paper issue
agent for Questar. Merrill Lynch, Banc of America Securities, and Banc One
Capital Markets were underwriters for the sale of the notes by another
affiliate, Questar Market Resources, in 2001. Affiliates of Banc One
Capital Markets, Banc of America Securities and U.S. Bancorp Piper Jaffray
are lenders to our affiliates. The trustee, Wells Fargo Bank Northwest,
National Association, is also a lender to our affiliates.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Connie C.
Holbrook, Senior Vice President, General Counsel and Corporate Secretary of
Questar, 180 East 100 South Street, Salt Lake City, Utah 84111, and by
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York 10036. Sidley Austin Brown & Wood LLP, 555 California Street, San
Francisco, California 94104, will act as counsel for the agents. In
rendering their opinion, Sidley Austin Brown & Wood LLP may rely upon the
opinion of Ms. Holbrook as to all matters governed by Utah law. As of March
31, 2001, Ms. Holbrook beneficially owned 226,285 shares of common stock of
Questar (including currently exercisable options to purchase 119,551 shares
of common stock of Questar).
EXPERTS
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements included in our annual report on Form
10-K for the year ended December 31, 2000, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our consolidated financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
36
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports and other
information with the Securities and Exchange Commission. You may read and
copy any document we file at the public reference facilities of the SEC
located at 450 Fifth Street, N.W., Washington, D.C. 20549. You may also
obtain information on the operation of the SEC's public reference
facilities by calling the SEC at 1-800-SEC-0330. You can also obtain copies
of this material from commercial retrieval services and electronically at
the SEC's Internet web site at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3
(Registration No. 333- [_____]). This prospectus, which constitutes part of
the registration statement, does not contain all of the information set
forth in the registration statement. Certain parts of the registration
statement are omitted from the prospectus in accordance with the rules and
regulations of the SEC.
The SEC permits us to "incorporate by reference" information we
file with them into this document, which means that we can disclose
important information to you by referring you to those documents filed with
the SEC. The information incorporated by reference is considered to be part
of this prospectus, and information that we file (or that is deemed to have
been filed) with the SEC after the date of this prospectus will
automatically update and supersede this information. This prospectus
incorporates by reference the documents set forth below that we previously
filed with the SEC. These documents contain important information about our
operations.
Filing Period
- ------------------------- -----------------------------
Annual Report on Form 10-K Year ended December 31, 2000
Quarterly Report on Form 10-Q Quarter ended March 31, 2001
We also incorporate by reference any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, until we sell all of the notes being registered or until this
offering is otherwise terminated.
If you request a copy of any or all of the documents incorporated
by reference, then we will send to you the copies you requested at no
charge. However, we will not send exhibits to the documents unless exhibits
are specifically incorporated by reference in those documents. You should
direct requests for copies to: Corporate Secretary, Questar Pipeline
Company, 180 East 100 South Street, Salt Lake City, Utah 84111; telephone
number (801) 324-5202.
37
No dealer, salesperson or other individual has been authorized to
give any information or to make any representations other than those
contained or incorporated by reference in this prospectus or any prospectus
supplement (including the applicable pricing supplement) in connection with
the offer made by this prospectus and such prospectus supplement and, if
given or made, such information or representations must not be relied upon
as having been authorized by us or any agent. Neither the delivery of this
prospectus or any prospectus supplement (including the applicable pricing
supplement) nor any sale made hereunder shall under any circumstance create
an implication that there has been no change in our affairs since the date
hereof or thereof. This prospectus or any prospectus supplement (including
the applicable pricing supplement) shall not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is
not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such
offer or solicitation.
$250,000,000
Questar Pipeline Company
(an indirect subsidiary of Questar Corporation)
[QUESTAR PIPELINE LOGO]
Medium-Term Notes, Series B
Due from 9 months to 30 years from Date of Issue
-----------------
PROSPECTUS
-----------------
Merrill Lynch & Co.
Banc of America Securities LLC
Banc One Capital Markets, Inc.
U.S. Bancorp Piper Jaffray
, 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the fees and expenses to be
incurred by us in connection with the offering described in the
Registration Statement. All such fees and expenses other than the
Securities and Exchange Commission Registration Fee are estimated.
Securities and Exchange Commission Registration Fee......... $ 62,500
Printing Expenses........................................... 30,000
Legal Fees and Expenses..................................... 145,000
Accounting Fees and Expenses................................ 75,000
Blue Sky Fees and Expenses.................................. 5,000
Trustee's Fees and Expenses................................. 5,000
Rating Agency Fees.......................................... 153,000
Miscellaneous............................................... 500
----------------
Total.............................................. $ 476,000
============
Item 15. Indemnification of Directors and Officers.
Reference is made to Section 16-10a-901 through 16-10a-909 of the
Utah Revised Business Corporation Act, which provides for indemnification
of directors and officers in certain circumstances.
Our Bylaws provide that we may voluntarily indemnify any
individual made a party to a proceeding because he is or was our director,
officer, employee or agent against liability incurred in the proceeding,
but only if we have authorized the payment in accordance with the
applicable statutory provisions of the Utah Revised Business Corporation
Act (Sections 16-10a-902, 16- 10a-904 and 16-10a-907) and a determination
has been made in accordance with the procedures set forth in such provision
that such individual conducted himself in good faith, that he reasonably
believed his conduct, in his official capacity with us, was in our best
interests and that his conduct, in all other cases, was at least not
opposed to our best interests, and that he had no reasonable cause to
believe his conduct was unlawful in the case of any criminal proceeding.
The foregoing indemnification in connection with a proceeding by or in the
right of us is limited to reasonable expenses incurred in connection with
the proceeding, which expenses may be advanced by us. Our Bylaws provide
that we may not voluntarily indemnify our director, officer, employee or
agent in connection with a proceeding by or in the right of us in which
such individual was adjudged liable to us or in connection with any other
proceeding charging
II-1
improper personal benefit to him, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him.
Our Bylaws provide further that we shall indemnify our director,
officer, employee or agent who was wholly successful, on the merits or
otherwise, in defense of any proceeding to which he was a party because he
is or was such a director, officer, employee or agent, against reasonable
expenses incurred by him in connection with the proceeding.
Our Bylaws further provide that no director of ours shall be
personally liable to us or our stockholders for monetary damages for any
action taken or any failure to take any action, as a director, except
liability for (a) the amount of a financial benefit received by a director
to which he is not entitled; (b) an intentional infliction of harm on us or
the shareholders; (c) for any action that would result in liability of the
director under the applicable statutory provision concerning unlawful
distributions; or (d) an intentional violation of criminal law.
Questar Corporation, our parent, maintains an insurance policy on
behalf of our officers and directors pursuant to which (subject to the
limits and limitations of such policy) the officers and directors are
insured against certain expenses in connection with the defense of actions
or proceedings, and certain liabilities which might be imposed as a result
of such actions or proceedings, to which any of them is made a party by
reason of being or having been a director or officer.
Reference is made to Sections 8 and 9 of the Distribution
Agreement, the form of which is filed as Exhibit 1.01 hereto, for the
description of the indemnification and contribution arrangements for this
offering.
Item 16. Exhibits.
(a) Exhibits:
Exhibit
Number Description
- ------- -----------
1.01 -- Form of Distribution Agreement (including the forms of
Terms Agreement and Administrative Procedures).
4.01* -- Indenture, dated as of August 17, 1998, between the
Company and Wells Fargo Bank Northwest, National
Association (f/k/a First Security Bank, N.A.), as
trustee, relating to the Company's Debt Securities.
4.02 -- Form of Fixed Rate Note.
4.03 -- Form of Floating Rate Note.
5.01 -- Opinion of Connie C. Holbrook, Esq.
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12.01 -- Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.01 -- Consent of Ernst & Young LLP.
23.02 -- Consent of Connie C. Holbrook, Esq. (included in Exhibit
5.01).
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.02).
II-2
24.01 -- Form of Appointment of Power of Attorney (included on
signature page to the registration statement).
25.01 -- Statement of Eligibility of Trustee on Form T-l.
- ------------
* Incorporated by reference from Registration Statement on Form S-3
(Registration No. 333-61621) filed with the Securities and
Exchange Commission on August 17, 1998.
Item 17. Undertakings.
A. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions of Utah
law and the registrant's bylaws, a summary of which is set forth in Item 15
hereof, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
C. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(l) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
D. The undersigned registrant hereby undertakes:
II-3
(1) To file, during any period in which offers or sales are
being made, a post- effective amendment to this registration statement (i)
to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement, and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; provided, however, that
paragraphs (D)(l)(i) and (D)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Salt Lake, State of Utah, on the
11th day of May, 2001.
QUESTAR PIPELINE COMPANY
By: /s/ D.N. ROSE
------------------------------
D.N. Rose
President and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of D.N. Rose and S.F. Parks his
true and lawful attorney-in- fact and agent, with full power of
substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement (or any other
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act), and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ D.N. ROSE President and Chief Executive Officer, May 10, 2001
- ------------------------ Director (Principal Executive Officer)
D.N. Rose
/s/ S.E. PARKS Vice President, Treasurer and May 10, 2001
- ------------------------ Chief Financial Officer
S.E. Parks (Principal Financial Officer)
/s/ D.M. CURTIS Controller May 10, 2001
- ----------------------- (Principal Accounting Officer)
D.M. Curtis
/s/ R.D. CASH Chairman of the Board; Director May 10, 2001
- ------------------------
R.D. Cash
/s/ K.O. RATTIE Vice Chairman of the Board; May 10, 2001
- ------------------------ Director
K.O. Rattie
/s/ U. EDWIN GARRISON Director May 10, 2001
- ------------------------
U. Edwin Garrison
/s/ SCOTT S. PARKER Director May 10, 2001
- ------------------------
Scott S. Parker
II-6
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
1.01 -- Form of Distribution Agreement (including the forms of
Terms Agreement and Administrative Procedures).
4.01* -- Indenture, dated as of August 17, 1998, between the
Company and Wells Fargo Bank Northwest, National
Association (f/k/a First Security Bank, N.A.), as
trustee, relating to the Company's Debt Securities.
4.02 -- Form of Fixed Rate Note.
4.03 -- Form of Floating Rate Note.
5.01 -- Opinion of Connie C. Holbrook, Esq.
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12.01 -- Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.01 -- Consent of Ernst & Young LLP.
23.02 -- Consent of Connie C. Holbrook, Esq. (included in Exhibit
5.01).
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.02).
24.01 -- Form of Appointment of Power of Attorney (included on
signature page to the registration statement).
25.01 -- Statement of Eligibility of Trustee on Form T-l.
- ------------
* Incorporated by reference from Registration Statement on Form S-3
(Registration No. 333-61621) filed with the Securities and
Exchange Commission on August 17, 1998.
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