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This filing is made pursuant
to Rule 424(b)(5) under
the Securities Act of
1933 in connection with
Registration No. 333-52224
THE INFORMATION CONTAINED IN THIS PRELIMINARY
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
Subject to Completion. Dated February 1, 2001.
Prospectus Supplement to Prospectus dated February 1, 2001.
$200,000,000
SOUTHWEST GAS CORPORATION
% Notes due 2011
------------------------
Southwest Gas will pay interest on the Notes on February and August of
each year at the rate of % per annum, subject to adjustment in the event of a
decrease in the rating of our unsecured senior debt below investment grade. The
first such payment will be made on August , 2001. The Notes will be issued
only in denominations of $1,000 and integral multiples of $1,000.
Southwest Gas may at any time redeem all or a portion of the Notes at the
redemption prices set forth in this prospectus.
See "Risk Factors" beginning on page S-7 to read about factors you should
consider before buying the Notes.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Per Note Total
-------- -----
Initial public offering price............................... % $
Underwriting discount....................................... % $
Proceeds, before expenses, to Southwest Gas................. % $
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from February , 2001 and
must be paid by the purchaser if the Notes are delivered after February ,
2001.
------------------------
The underwriters expect to deliver the Notes in book-entry form only
through the facilities of The Depository Trust Company against payment in New
York, New York on February , 2001.
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
------------------------
Prospectus Supplement dated February , 2001.
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IMPORTANT NOTICE ABOUT THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of the Notes we are offering. The
second part, the base prospectus, gives more general information, some of which
may not apply to the Notes we are offering.
IF THE DESCRIPTION OF THE NOTES VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING BASE PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT.
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SUMMARY
The following information should be read together with the information
contained in the accompanying prospectus. In this prospectus supplement we refer
to the % Notes due 2011 as the "Notes." You should carefully read this
prospectus supplement and the accompanying prospectus, as well as the documents
they incorporate by reference, to understand fully the terms of the Notes and
other considerations that are important to you in making a decision about
whether to invest in the Notes. Unless we state otherwise or the context
otherwise requires, references appearing in this prospectus supplement to "we,"
"us," and "our" should be read to refer to Southwest Gas Corporation and its
subsidiaries.
SOUTHWEST GAS CORPORATION
Our business is comprised of two principal segments: natural gas operations
and construction services. We purchase, transport and distribute natural gas to
customers in portions of Arizona, Nevada and California. We are the largest
distributor in Arizona, selling and transporting natural gas in most of the
southern, central and northwestern regions of the state, including the Phoenix
and Tucson metropolitan areas. We are also the largest distributor and
transporter of natural gas in Nevada, serving the Las Vegas metropolitan area
and northern Nevada. In addition, we distribute and transport natural gas in
portions of California, including the Lake Tahoe area in northern California and
the high desert and mountain areas in San Bernardino County.
At December 31, 2000, we were serving 1,337,000 residential, commercial,
industrial and other customers, of which 57% are located in Arizona, 34% are in
Nevada and 9% are in California. During the twelve months ended September 30,
2000, we earned 56% of our operating margin in Arizona, 35% in Nevada and 9% in
California. During this same period, we earned 83% of our operating margin from
residential and small commercial customers, 3% from other sales customers and
14% from transportation customers.
Our wholly owned subsidiary, Northern Pipeline Construction Co., is a
full-service underground piping contractor which provides utility companies with
trenching and installation, replacement, and maintenance services for energy
distribution systems.
RECENT DEVELOPMENTS
During the second quarter of 2000, natural gas prices throughout the
country began to increase significantly. These increases escalated during the
fourth quarter. A year ago, our average, system-wide price for a decatherm (ten
therms) of natural gas was approximately $2.00. Prices recently averaged more
than $6.00 a decatherm. High natural gas prices are expected through at least
the first quarter of 2001.
Although we expect to recover our purchased gas costs from ratepayers
through purchased gas adjustment mechanisms, there is a lag between the time we
pay for gas purchases and the time when regulators allow us to place higher
rates in service and recover those gas costs. As a result, we utilize short-term
borrowings in order to temporarily finance unrecovered purchased gas costs. At
December 31, 2000, the outstanding short-term debt balance for our natural gas
operations segment was $131 million. We expect to incur additional short-term
debt during 2001 to finance purchased gas costs. We are allowed to accrue
interest on unrecovered gas costs, which is designed to offset the costs of
related incremental short-term debt.
In Nevada, we make annual filings to adjust rates for changes in gas costs.
We are also allowed to make out-of-cycle filings when conditions dictate. In
Arizona, we adjust gas cost recovery rates monthly, within pre-established
limits. In California, a monthly gas cost adjuster based on forecasted monthly
prices became effective on December 1, 2000. Monthly adjustments are designed to
provide
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a more timely recovery of gas costs. Purchased gas adjustment changes affect
cash flows but have no direct impact on profit margin.
In October and December 2000, the Public Utilities Commission of Nevada
approved purchased gas adjustment rate increase requests for, respectively,
$19.8 million and $55.3 million. These rate increases will allow us to recover
increased costs of natural gas which have already been incurred. In January
2001, we made an out-of-period purchased gas adjustment filing with the Nevada
commission to recover increased natural gas costs incurred during the fourth
quarter of 2000. This filing, requested to be effective in March 2001, would
result in a further annual increase of $87.2 million, if allowed in full.
THE OFFERING
Issuer..................... Southwest Gas Corporation
Amount of Notes Offered.... $200,000,000 in principal amount of % Notes
due 2011
Maturity................... February , 2011
Interest Rate.............. % per annum, accruing from February , 2001,
subject to adjustment in the event of a decrease in
the rating of our unsecured senior debt by Moody's
Investors Service, Inc. below Baa3, by Standard &
Poor's Ratings Services below BBB- or by Fitch,
Inc. below BBB-. For more information, see
"Description of Notes -- Interest Rate Adjustment
Based on Our Credit Rating" in this prospectus
supplement.
Interest Payment Dates..... February and August , beginning August , 2001
Ranking.................... The Notes will be unsecured general obligations of
ours and will rank on a parity with all of our
other unsubordinated, unsecured indebtedness. There
will be no limitations on the amount of
indebtedness which may rank on a parity with the
Notes or on the amount of indebtedness that may be
incurred by us.
Optional Redemption........ We may redeem all or a portion of the Notes at any
time at the redemption prices described in this
prospectus supplement plus accrued interest to the
date of redemption.
Covenants.................. We will be subject to covenants that restrict our
ability to issue debt for borrowed money secured by
a lien, subject to certain exceptions, and to enter
into certain sale and lease-back transactions as
described under the heading "Description of
Notes -- Covenants" in this prospectus supplement.
The notes will not contain any other financial or
similar restrictive covenants.
Use of Proceeds............ To finance capital expenditures relating to our
pipeline systems and facilities. These capital
expenditures were funded, in part, with short-term
debt which will be repaid with the net proceeds of
this offering.
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SELECTED FINANCIAL INFORMATION
The following selected financial information for each of the three years in
the period ended December 31, 1999 is derived from our 1999 Annual Report on
Form 10-K. The selected financial information for the twelve-month period ended
September 30, 2000 is derived from our third quarter 2000 Quarterly Report on
Form 10-Q. Our consolidated financial statements in the 1999 Annual Report on
Form 10-K have been audited by Arthur Andersen LLP, independent public
accountants. The selected financial information set forth below should be read
in conjunction with the detailed information, consolidated financial statements
and related notes and applicable management's discussion and analysis included
in the 1999 Annual Report on Form 10-K and our third quarter 2000 Quarterly
Report on Form 10-Q, which are incorporated herein by reference.
FOR THE TWELVE FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED -------------------------------------
SEPTEMBER 30, 2000 1999 1998 1997
------------------ ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT:
Operating revenues............ $ 955,671 $ 936,866 $ 917,309 $ 732,010
Operating expenses............ 840,805 805,654 763,139 629,749
---------- ---------- ---------- ----------
Operating income.............. 114,866 131,212 154,170 102,261
EBITDA(1)..................... 219,476 229,737 242,974 186,922
Net interest deductions....... 68,802 63,202 63,354 63,218
Net income.................... 34,617 39,310 47,537(2) 16,469(3)
Earnings per share............ 1.11 1.28 1.66 0.61
Diluted earnings per share.... 1.10 1.27 1.65 0.61
BALANCE SHEET (END OF PERIOD):
Total assets.................. $1,954,289 $1,923,442 $1,830,694 $1,769,059
Long-term debt................ 860,515 859,291 812,906 778,693
Redeemable preferred
securities of Southwest Gas
Capital I................... 60,000 60,000 60,000 60,000
Shareholders' equity.......... 502,885 505,425 476,400 385,979
RATIOS:
Debt to Total
Capitalization(4)........... 60% 60% 60% 64%
EBITDA to Interest(1)(5)...... 3.19x 3.63x 3.84x 2.96x
Earnings to Fixed
Charges(6).................. 1.48x 1.78x 2.08x 1.28x
NATURAL GAS SEGMENT DATA:
Operating margin.............. $ 455,887 $ 461,124 $ 469,748 $ 405,327
Construction expenditures and
property additions.......... $ 202,760 $ 207,773 $ 179,361 $ 164,528
Net gas plant (end of
period)..................... $1,656,891 $1,581,102 $1,459,362 $1,360,294
Number of customers (end of
period)..................... 1,310,000 1,274,000 1,209,000 1,151,000
- ---------------
(1) EBITDA represents operating income plus depreciation and amortization
expense. Although not a part of generally accepted accounting principles,
EBITDA is presented because we believe it is frequently used by securities
analysts and others in evaluating companies and their ability to service
debt.
(2) The increase in net income from 1997 was the result of record first quarter
earnings driven by cooler temperatures, rate relief and customer growth.
(3) Operating results for 1997 included the effects of several nonrecurring
events. The combined impact of these events was a $4.1 million, or $0.15 per
share, after-tax reduction to earnings.
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(4) Debt to Total Capitalization is equal to Long-term debt divided by the sum
of Long-term debt, Redeemable preferred securities of Southwest Gas Capital
I and Shareholders' equity.
(5) EBITDA to Interest is equal to EBITDA divided by Net interest deductions.
(6) The ratio of earnings to fixed charges is computed in accordance with the
rules and regulations of the Securities and Exchange Commission. Earnings
are defined as the sum of pretax income from continuing operations plus
fixed charges. Fixed charges consist of all interest expense including
capitalized interest, one-third of rent expense (which approximates the
interest component of such expense) and amortized debt costs. For more
details, see the section entitled "Ratios of Southwest's Earnings to Fixed
Charges" in the accompanying prospectus.
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RISK FACTORS
You should carefully consider the risks described below and the other
information in this prospectus before investing in the Notes.
OUR LIQUIDITY, AND, IN CERTAIN CIRCUMSTANCES, EARNINGS, COULD BE ADVERSELY
AFFECTED BY THE COST OF PURCHASING NATURAL GAS DURING PERIODS IN WHICH NATURAL
GAS PRICES ARE RISING SIGNIFICANTLY.
Rate schedules in each of our service territories contain purchased gas
adjustment clauses which permit us to file for rate adjustments to recover
increases in the cost of purchased gas. Increases in the cost of purchased gas
have no direct impact on our profit margins, but do affect cash flows and can
therefore impact the amount of our capital resources. Natural gas prices have
recently risen sharply. We have used short-term borrowings to temporarily
finance this increase in costs, and we expect to continue to do so during 2001.
We have recently filed, and expect to file in the future, requests for rate
increases to cover the increases in the costs of purchased gas we have
experienced. Due to the nature of the regulatory process, there is a risk of a
disallowance of full recovery of these costs during any period in which there
has been a substantial run-up of these costs. Any material disallowance of
purchased gas costs could have a material impact on cash flow and earnings.
SIGNIFICANT CUSTOMER GROWTH IN ARIZONA AND NEVADA COULD STRAIN OUR CAPITAL
RESOURCES AND IMPACT EARNINGS.
We continue to experience significant population and customer growth
throughout our service territories. During 2000 we added nearly 63,000
customers, a 5% growth rate. It was the seventh consecutive year in which
customer growth was at least 5%. This growth has required large amounts of
capital to finance the investment in new transmission and distribution plant.
For the twelve months ended September 30, 2000, our natural gas construction
expenditures totaled $203 million. Approximately 75% of these current-period
expenditures represented new construction, and the balance represented costs
associated with routine replacement of existing transmission, distribution and
general plant.
Cash flows from operating activities (net of dividends) have been
inadequate, and are expected to continue to be inadequate, to fund all necessary
capital expenditures. We have been funding this shortfall through the issuance
of additional debt and equity securities, and will continue to do so. Our
ability to issue additional securities is dependent upon, among other things,
conditions in the capital markets, regulatory authorizations and our level of
earnings.
Our ability to earn the imputed rates of return authorized by the Arizona
Corporation Commission and the Public Utilities Commission of Nevada is also
adversely affected by significant customer growth, because the rates we charge
our distribution customers in Arizona and Nevada are derived using rate base,
cost of service and cost of capital experienced in an historical test year, as
adjusted. This results in "regulatory lag" which delays our recovery of some of
the costs of capital improvements and operating costs from customers in Arizona
and Nevada.
IT IS UNCLEAR HOW NEW RESTRUCTURING INITIATIVES MAY IMPACT OUR BUSINESS.
Both the California Public Utilities Commission and the Public Utilities
Commission of Nevada have started to develop new rules for further restructuring
of the natural gas distribution industry to allow more competition. Recently,
the development of new rules has slowed. Similar initiatives may also begin in
Arizona. We cannot yet assess the impact of any rules on our business, because
we do not yet have sufficient information on what, if any, new rules will be
adopted. However, a possible result is that the costs and risks of restructuring
will be borne largely by our shareholders, while the "upside" potential of
restructuring may be limited by continued rate regulation.
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OUR EARNINGS ARE GREATLY AFFECTED BY VARIATIONS IN TEMPERATURE DURING THE WINTER
HEATING SEASON.
The demand for natural gas is seasonal and is greatly affected by
temperature. Variability in weather from normal temperatures can materially
impact results of operations. On cold days, use of gas by residential and
commercial customers may be as much as eight times greater than on warm days
because of the increased use of gas for space heating. Weather has been and will
continue to be one of the dominant factors in our financial performance.
SIGNIFICANT CLAIMS HAVE BEEN ASSERTED AGAINST US IN CONNECTION WITH THE FAILED
ACQUISITION OF US BY ONEOK, INC. AND THE REJECTION OF AN UNSOLICITED OFFER BY
SOUTHERN UNION COMPANY.
After we rejected the unsolicited offer by Southern Union Company to
acquire us, Southern Union filed a complaint that, as amended, alleges that we,
certain of our senior officers and others acted in violation of state and
federal criminal laws, including federal and Arizona racketeering statutes, in
connection with our acceptance of the ONEOK offer and the rejection of the
Southern Union offer. On December 15, 2000, the Arizona District Court granted
our motion to dismiss federal racketeering claims against us. Southern Union has
also alleged that the defendants (other than us and our Chairman of the Board)
fraudulently induced Southern Union to enter into a confidentiality and
standstill agreement, intentionally interfered with a business relationship
between us and Southern Union, and tortiously interfered with contractual
relations between us and Southern Union. Southern Union is seeking damages in an
amount not less than $750 million, subject to being trebled for alleged
violations of criminal laws, plus interest, and punitive damages. There is also
an ongoing joint federal, state and county criminal investigation in Phoenix
concerning activities surrounding the failed acquisition by ONEOK. We are
cooperating fully with this investigation.
Arthur Klein has filed a purported class action complaint on behalf of
himself and our shareholders, other than defendants and their affiliates and
families. The complaint, as amended, alleges that our directors breached their
duties of loyalty, due care, candor and good faith and fair dealing in
connection with the approval of the ONEOK offers and the rejection of the
Southern Union offer, and that there were misrepresentations and omissions in
our proxy statement relating to our proposed acquisition by ONEOK and the
rejection of the Southern Union offer. The amount of damages being sought is
unspecified.
We have filed a complaint against ONEOK and Southern Union. The lawsuit
seeks unspecified damages from ONEOK for breach of contract, breach of the
implied covenant of good faith and fair dealing, fraud in the inducement, and
fraud in connection with the proposed merger. The lawsuit against Southern Union
seeks unspecified damages for breach of contract, breach of the implied covenant
of good faith and fair dealing, and interference with a contract, all related to
Southern Union's attempts to block our proposed merger with ONEOK.
You may find additional information about these claims in the annual,
quarterly and current reports that we have filed with the Securities and
Exchange Commission.
USE OF PROCEEDS
We will use the net proceeds from the sale of the Notes to finance the
construction, completion, extension or improvement of our pipeline systems and
facilities located in and around the communities we serve. Those capital
expenditures were funded, in part, with short-term debt which will be repaid
with the net proceeds of this offering.
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CAPITAL EXPENDITURES AND FINANCING PROGRAMS
During the three-year period ended December 31, 1999, our natural gas
operations segment customer base has grown at an annual average rate of
approximately 5%.
We expect $300 million of long-term debt to mature in 2002, and we expect
to refinance this maturing indebtedness as it comes due. We currently estimate
that construction expenditures for our natural gas operations segment for the
three-year period ending December 31, 2002 will be approximately $630 million.
During the three-year period, cash flow from operating activities (net of
dividends) is estimated to fund approximately 60% of the natural gas operations
segment's total construction. The remaining requirements are expected to be
provided by external financing sources, including a portion of the proceeds from
this offering.
CAPITALIZATION
The capitalization of Southwest Gas Corporation and its consolidated
subsidiaries as of September 30, 2000, as adjusted to give effect to the
issuance of $25 million in medium-term notes in October 2000, and the issuance
of the Notes offered hereby, are as follows:
AS OF SEPTEMBER 30, 2000
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
Short-term debt, including current
maturities(1)................................... $ 106,635 $ 17,365
========== ==========
Long-term debt, less current maturities........... $ 860,515 $ 885,515
% Notes due 2011................................ -- 200,000
Redeemable preferred securities of Southwest Gas
Capital I....................................... 60,000 60,000
Stockholders' equity:
Common stock and additional paid in capital..... 482,893 482,893
Retained earnings............................... 19,992 19,992
---------- ----------
Total stockholders' equity................... 502,885 502,885
---------- ----------
Total capitalization.................... $1,423,400 $1,648,400
========== ==========
- ---------------
(1) At December 31, 2000, our short-term debt, including current maturities, was
$140 million, of which $8.9 million related to construction services.
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture, dated as of July 15, 1996,
between the Company and The Bank of New York, as successor to Harris Trust and
Savings Bank, as Trustee (the "Trustee"), as supplemented and amended (as so
supplemented and amended, the "Indenture"). The following summary sets forth
certain general terms of the Notes and is subject to the detailed provisions of
the Indenture. Capitalized terms that are used and not otherwise defined in this
summary shall have meanings assigned to them in the Indenture. Additional
information regarding the Notes is set forth in the accompanying prospectus
under the caption "Description of Debt Securities."
GENERAL
The Notes will be limited in principal amount to $200,000,000. The Notes
will bear interest from February , 2001, or from the most recent Interest
Payment Date to which interest has been paid at the rate of interest set forth
on the cover page of this prospectus supplement, subject to adjustment as
described under "-- Interest Rate Adjustment Based on Our Credit Rating" below.
Interest will be payable semiannually on February and August , commencing
August , 2001, to the persons in
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whose name the Notes are registered at the close of business on the or
next preceding such interest payment date. For so long as the Notes
are registered in the name of the Depository, or its nominee, we will pay the
principal and interest due on the Notes to the Depository for payment to its
Participants for subsequent disbursement to the beneficial owners. Interest will
be computed on the basis of a 360-day year of twelve 30-day months. The Notes
will mature on the dates shown on the cover page. The Notes are not redeemable
by the holders of the Notes prior to maturity.
The Notes will not contain provisions designed to require us to redeem the
Notes, reset the interest rate or take other actions in response to a change in
control, highly leveraged transaction, change in credit rating or other similar
occurrences involving us that may adversely affect the holders of the Notes.
INTEREST RATE ADJUSTMENT BASED ON OUR CREDIT RATING
Our current unsecured senior long-term debt ratings ("ratings") are
described in the table below:
RATING SERVICE RATING OUTLOOK
-------------- ------ --------
Moody's Investors Service, Inc. ("Moody's").............. Baa2 Stable
Standard & Poor's Ratings Services ("S&P")............... BBB- Negative
Fitch, Inc. ("Fitch").................................... BBB Stable
In the event of a downgrade in the rating below Baa3 by Moody's or BBB- by
S&P or Fitch, the interest rate on the Notes will be adjusted in accordance with
the table below. If Moody's, S&P or Fitch changes our rating subsequent to an
adjustment in the interest rate as a result of a previous rating change by
Moody's, S&P or Fitch, the interest rate on the notes will be re-adjusted in
accordance with the table below.
MOODY'S ADJUSTMENT S&P OR FITCH ADJUSTMENT
RATING AMOUNT RATING AMOUNT
------- ---------- ------------ ----------
Ba1 0.750% BB+ 0.750%
Ba2 1.000% BB 1.000%
Ba3 or lower 1.250% BB- or lower 1.250%
The adjusted interest rate per annum for the Notes will be %, plus the
sum of any Moody's adjustment amount plus the higher of either (a) any S&P
adjustment or (b) any Fitch adjustment amount set forth above.
Where a rating change is made by one of the relevant rating services during
any interest payment period, the amount of interest to be paid with respect to
such period shall be calculated at a rate per annum equal to the weighted
average of the interest rate in effect immediately prior to such change and the
rate in effect upon such new rating being given, calculated by multiplying each
such rate by the number of days such rate is in effect during each month of such
interest payment period, determining the sum of such products and dividing such
sum by the number of days in that interest payment period.
UNSECURED OBLIGATIONS
The Notes will be unsecured general obligations of ours and will rank on a
parity with all of our other unsubordinated, unsecured indebtedness. There will
be no limitations on the amount of indebtedness which may rank on a parity with
the Notes or on the amount of indebtedness that may be incurred, or capital
stock that may be issued, by us.
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OPTIONAL REDEMPTION
All or a portion of the Notes may be redeemed at our option at any time or
from time to time. The redemption price for the Notes to be redeemed on any
redemption date will be equal to the greater of the following amounts:
- 100% of the principal amount of the Notes being redeemed on the
redemption date; or
- the sum of the present values of the remaining scheduled payments of
principal and interest on the Notes being redeemed on that redemption
date (not including any portion of any payments of interest accrued to
the redemption date) discounted to the redemption date on a semiannual
basis at the Adjusted Treasury Rate (as defined below) plus basis
points, as determined by the Reference Treasury Dealer (as defined
below);
plus, in each case, accrued and unpaid interest thereon to the redemption date.
Notwithstanding the foregoing, installments of interest on Notes that are due
and payable on interest payment dates falling on or prior to a redemption date
will be payable on the interest payment date to the registered holders as of the
close of business on the relevant record date according to the Notes and the
Indenture. The redemption price will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
We will mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each registered holder of the Notes to be
redeemed. Once notice of redemption is mailed, the Notes called for redemption
will become due and payable on the redemption date and at the applicable
redemption price, plus accrued and unpaid interest to the redemption date. If we
elect to redeem all or a portion of the Notes, that redemption will not be
conditional upon receipt by the paying agent or the trustee of monies sufficient
to pay the redemption price. See "Description of Debt Securities -- Redemption"
in the accompanying prospectus.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such quotations, or (C) if only
one Reference Treasury Dealer Quotation is received, such quotation.
"Reference Treasury Dealer" means (A) Goldman, Sachs & Co., Banc of America
Securities LLC, Banc One Capital Markets, Inc., BNY Capital Markets, Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated (or their respective
affiliates which are Primary Treasury Dealers), and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), we
will substitute therefor another Primary Treasury Dealer; and (B) any other
Primary Treasury Dealer(s) selected by the Trustee after consultation with us.
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"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third business day preceding such redemption date.
COVENANTS
Restrictions on Liens. We will not issue, assume or guarantee any Debt
secured by any Lien upon any property or asset of ours (whether such property or
asset is now owned or hereafter acquired), without in any such case effectively
securing, prior to or concurrently with the issuance, assumption or guarantee of
any such Debt, the Notes (together with, if we so determine, any other
indebtedness of or guarantee by us ranking equally with the Notes and then
existing or thereafter created) equally and ratably with (or, at our option,
prior to) such Debt. The foregoing restrictions do not apply to or prevent the
creation of:
(i) Liens on any property acquired, constructed or improved by us after
August 1, 1996 that are created or assumed contemporaneously with, or
within 120 days after, such acquisition or completion of the construction
or improvement, or within six months thereafter pursuant to a firm
commitment for financing arranged with a lender or investor within such
120-day period, to secure or provide for the payment of all or any part of
the purchase price of such property or the cost of such construction or
improvement incurred after August 1, 1996, or, in addition to Liens
referred to in clauses (ii) and (iii) below, Liens on any property existing
at the time of acquisition thereof, provided that the Liens do not apply to
any property theretofore owned by us other than, in the case of any such
construction or improvement, any theretofore unimproved property on which
the property so constructed or the improvement is located;
(ii) existing Liens on any property or indebtedness of a Corporation
which is merged with or into or consolidated with us, provided that the
Liens do not apply to any property theretofore owned by us;
(iii) Liens in favor of the United States, any state or any foreign
country or any department, agency or instrumentality or political
subdivision of any such jurisdiction to secure partial, progress, advance
or other payment pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the
purchase price or cost of constructing or improving the property subject to
such Liens, including, without limitation, Liens to secure Debt of the
pollution control or industrial revenue bond type;
(iv) Liens on our current assets to secure loans to us which mature
within 12 months from the creation thereof and which are made in the
ordinary course of business;
(v) Liens on any of our property (including any natural gas, oil or
other mineral property) to secure all or part of the cost of exploration or
drilling for or development of oil or gas reserves or laying a pipeline or
to secure Debt incurred to provide funds for any such purpose;
(vi) any Lien existing on August 1, 1996;
(vii) Liens on moneys or U.S. Government Obligations deposited with the
Trustee pursuant to the provisions of the Indenture summarized under
"Description of Debt Securities -- Defeasance" in the accompanying
prospectus; and
(viii) Liens for the sole purpose of extending, renewing or replacing,
in whole or in part, Liens securing Debt of the type referred to in the
foregoing clauses (i) through (vii), inclusive, or this clause (viii),
provided, however, that the principal amount of Debt so secured at the time
of such extension, renewal or replacement may not be increased, and that
such extension, renewal or replacement is limited to all or part of the
property or indebtedness which secured the Lien so extended, renewed or
replaced (plus improvements on such property).
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Notwithstanding the foregoing, we may issue, assume or guarantee Debt
secured by a Lien which would otherwise be subject to the restrictions described
in the paragraph above, up to an aggregate amount which, together with all other
Indebtedness of ours (other than the Debt secured by Liens described in clauses
(i) through (viii) above) which would otherwise be subject to the foregoing
restrictions and the Value of all Sale and Lease-back Transactions existing at
that time (other than any Sale and Lease-back Transaction which, if it had been
a Lien, would have been permitted under clause (i) above and other than Sale and
Lease-back Transactions as to which application of amounts have been made in
accordance with clause (ii) under the heading "-- Restrictions on Sale and
Lease-back Transactions" below), does not at the time exceed 10% of Total
Capitalization.
Restrictions on Sale and Lease-back Transactions. We will not enter into
any Sale and Lease-back Transaction unless the proceeds from such sale are at
least equal to the fair value of the property being sold and leased-back and
either:
(i) we would be entitled under the provisions described under the
heading "-- Restrictions on Liens" above to incur Debt secured by a Lien on
such property without equally and ratably securing the Notes; or
(ii) we, within 120 days of the effective date of the Sale and
Lease-back Transaction (or in the case of clause (A) below, within six
months thereafter pursuant to a firm purchase commitment entered into
within such 120-day period), apply, or covenant that we will apply, an
amount not less than the fair value of such property to one or more of:
(A) the optional redemption of Securities issued under the
Indenture in accordance with the provisions thereof and the terms of
such Securities to be so redeemed or the purchase and retirement of
Securities as provided pursuant to the Indenture;
(B) the payment or other retirement of Funded Debt incurred or
assumed by us which is senior to or on parity with the Notes (other
than Funded Debt owned by us); or
(C) the purchase of other property of ours at not more than its
fair value (other than the property of ours involved in such sale).
Certain Definitions. The terms set forth below are defined in the Indenture
as follows:
"CAPITALIZED LEASE" means any lease of any our property (whether real,
personal or mixed) by us as lessee that would, in conformity with generally
accepted accounting principles, be required to be accounted for as a capital
lease on our balance sheet.
"CORPORATION" means a corporation, association, company, joint-stock
company or business trust.
"DEBT" means debt issued, assumed or guaranteed by us for money borrowed.
"FUNDED DEBT" means all Indebtedness of ours that by its terms or by the
terms of any instrument or agreement relating thereto matures more than one year
from, or is directly or indirectly renewable or extendable at our option to a
date more than one year from the date of creation thereof (including an option
of ours under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of one year or more), but excluding any
payments due under the terms thereof within 12 months of any date of
determination (including any deposit or payment required to be made under any
prepayment provision, sinking fund, purchase fund or similar provision).
"INDEBTEDNESS" means, as applied to any Person, Capitalized Leases, bonds,
notes, debentures and other securities representing obligations for borrowed
money created or assumed by such Person. All indebtedness guaranteed as to
payment of principal in any manner by such Person or in effect guaranteed by
such Person through a contingent agreement to purchase such indebtedness, and
all indebtedness secured by a Lien upon property owned by such Person and
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upon which such Person customarily pays interest, even though such Person has
not assumed or become liable for the payment of such indebtedness, shall for all
purposes hereof be deemed to be "Indebtedness" of such Person.
"LIEN" means any lien, mortgage, pledge, security interest, charge or other
encumbrance of any kind.
"PERSON" means any individual, Corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any Person
providing for the lease to us of any property of ours (except for temporary
leases for a term, including any renewal thereof, of not more than three years),
which property has been or is to be sold or transferred by us.
"TOTAL CAPITALIZATION" means, as at any time, the aggregate of (i) all
amounts outstanding on such date classified as our shareholders' equity on such
date, (ii) all amounts outstanding on such date classified as our preferred or
preference stock on such date and (iii) all amounts of our Funded Debt
outstanding on such date determined on an unconsolidated basis.
"U.S. GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligations held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt, in
respect of the U.S. Government Obligations, or from any amount received by the
custodian, in respect of the U.S. Government Obligations or the specific payment
of interest on or principal of the U.S. Government Obligations evidenced by such
depository receipt.
"VALUE" means, with respect to a Sale and Lease-back Transaction, as of any
particular time, the amount equal to the greater of: (i) the net proceeds from
the sale or transfer of the property leased pursuant to such Sale and Lease-back
Transaction; and (ii) the fair value, in the opinion of our board of directors,
of such property at the time of entering into such Sale and Lease-back
Transaction, in either case divided first by the number of full years of the
term of the lease and then multiplied by the number of full years of such term
remaining at the time of determination, without regard to any renewal or
extension options contained in the lease.
BOOK-ENTRY DELIVERY AND FORM
The Notes initially will be issued in book-entry form and represented by
one or more global notes. The global notes will be deposited with, or on behalf
of, The Depository Trust Company ("DTC"), New York, New York, as Depositary, and
registered in the name of Cede & Co., the nominee of DTC. Unless and until it is
exchanged for individual certificates evidencing Notes under the limited
circumstances described below, a global note may not be transferred except as a
whole by the Depositary to its nominee or by the nominee to the Depositary, or
by the Depositary or its nominee to a successor Depositary or to a nominee of
the successor Depositary.
DTC has advised us that it is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
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- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934.
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among its participants of securities transactions,
including transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, which eliminates the
need for physical movement of securities certificates. "Direct participants" in
DTC include securities brokers and dealers, including underwriters, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, which we
sometimes refer to as "indirect participants," that clear transactions through
or maintain a custodial relationship with a direct participant either directly
or indirectly. The rules applicable to DTC and its participants are on file with
the Securities and Exchange Commission.
Purchases of Notes within the DTC system must be made by or through direct
participants, which will receive a credit for those Notes on DTC's records. The
ownership interest of the actual purchaser of a Note, which we sometimes refer
to as the "beneficial owner," is in turn recorded on the direct and indirect
participants' records. Beneficial owners of Notes will not receive written
confirmation from DTC of their purchases. However, beneficial owners are
expected to receive written confirmations providing details of their
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which they purchased Notes. Transfers of
ownership interests in global notes are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership interests in
the global notes except under the limited circumstances described below.
To facilitate subsequent transfers, all global notes deposited with DTC
will be registered in the name of DTC's nominee, Cede & Co. The deposit of Notes
with DTC and their registration in the name of Cede & Co. will not change the
beneficial ownership of the Notes. DTC has no knowledge of the actual beneficial
owners of the Notes. DTC's records reflect only the identity of the direct
participants to whose accounts the Notes are credited, which may or may not be
the beneficial owners. The participants are responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any legal requirements in effect from time
to time.
Redemption notices will be sent to DTC or its nominee. If less than all of
the Notes are being redeemed, DTC will determine the amount of the interest of
each direct participant in the Notes to be redeemed in accordance with DTC's
procedures.
In any case where a vote may be required with respect to the Notes, neither
DTC nor Cede & Co. will give consents for or vote the global notes. Under its
usual procedures, DTC will mail an omnibus proxy to us as soon as possible after
the record date. The omnibus proxy assigns the consenting or voting rights of
Cede & Co. to those direct participants to whose accounts the Notes are credited
on the record date identified in a listing attached to the omnibus proxy.
Principal and interest payments on the Notes will be made to Cede & Co., as
nominee of DTC. DTC's practice is to credit direct participants' accounts on the
relevant payment date, unless DTC has reason to believe that it will not receive
payment on the payment date. Payments by direct and indirect participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the account of customers in
bearer form or registered in "street name." Those payments will be the
responsibility of participants and not of DTC or us,
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subject to any legal requirements in effect from time to time. Payment of
principal and interest to Cede & Co. is our responsibility, disbursement of
payments to direct participants is the responsibility of DTC, and disbursements
of payments to the beneficial owners is the responsibility of direct and
indirect participants.
Except under the limited circumstances described below, purchasers of Notes
will not be entitled to have Notes registered in their names and will not
receive physical delivery of Notes. Accordingly, each beneficial owner must rely
on the procedures of DTC and its participants to exercise any rights under the
Notes and the Indenture.
The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of securities in definitive form. Those laws
may impair the ability to transfer or pledge beneficial interests in Notes.
DTC is under no obligation to provide its services as Depositary for the
Notes and may discontinue providing its services at any time. Neither we nor the
Trustee will have any responsibility for the performance by DTC or its direct
participants or indirect participants under the rules and procedures governing
DTC.
As noted above, beneficial owners of Notes generally will not receive
certificates representing their ownership interests in the Notes. However, if:
- DTC notifies us that it is unwilling or unable to continue as a
Depositary for the global notes, or DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 at a time when it is
required to be registered, and a successor Depositary is not appointed
within 90 days of the notification to us or of our becoming aware of
DTC's ceasing to be so registered, as the case may be;
- we determine, in our sole discretion, not to have Notes represented by
one or more global notes; or
- an event of default under the Indenture has occurred and is continuing
with respect to the Notes;
we will prepare and deliver certificates for the Notes in exchange for
beneficial interests in the global notes. Any beneficial interest in a global
note that is exchangeable under the circumstances described in the preceding
sentence will be exchangeable for Notes in definitive certified form registered
in the names that the Depositary directs. We expect that these directions will
be based upon directions received by the Depositary from its participants with
respect to ownership of beneficial interests in the global notes.
We obtained the information in this section and elsewhere in this
prospectus supplement concerning DTC and DTC's book-entry system from sources
that we believe to be reliable, but we take no responsibility for the accuracy
of this information.
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UNDERWRITING
We and the underwriters for the offering named below have entered into an
underwriting agreement with respect to the Notes. Subject to certain conditions,
each underwriter has severally agreed to purchase the principal amount of Notes
indicated in the following table.
Principal Amount
Underwriters of Notes
------------ ----------------
Goldman, Sachs & Co. .......................................
Banc of America Securities LLC..............................
Banc One Capital Markets, Inc. .............................
BNY Capital Markets, Inc. ..................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
------------
Total..................................................... $200,000,000
============
Notes sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus
supplement. Any Notes sold by the underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to % of the
principal amount of Notes. Any such securities dealers may resell any Notes
purchased from the underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to % of the principal
amount of Notes. If all the Notes are not sold at the initial offering price,
the representatives may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading market.
We have been advised by the underwriters that they intend to make a market in
the Notes but are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
In connection with the offering of Notes, the underwriters may purchase and
sell Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
Notes than they are required to purchase in the offering of Notes. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Notes while the
offering of Notes is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased Notes sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
We estimate that our share of the total expenses of the offering of Notes,
excluding underwriting discounts and commissions, will be approximately
$ .
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
Some of the underwriters and their affiliates have performed certain
investment banking and advisory and general financing, trustee and banking
services for us from time to time for which they have received customary fees
and expenses. The underwriters and their affiliates may, from time to time,
engage in transactions with or perform services for us in the ordinary course of
their business.
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Affiliates of certain of the underwriters are lenders to us under a
revolving credit facility and will receive a portion of the amounts repaid under
one such credit facility from the proceeds of this offering. See "Use of
Proceeds." Because more than 10% of the net proceeds of this offering will be
paid to affiliates of members of the National Association of Securities Dealers,
Inc. (the "NASD") who are participating in this offering, this offering is being
conducted in compliance with Rule 2710(c)(8) of the Conduct Rules of the NASD.
LEGAL MATTERS
Certain legal matters in connection with the offering of the Notes will be
passed upon for us by Robert M. Johnson, Esq., our Assistant General Counsel,
who beneficially owned, either directly or indirectly, as of December 31, 2000,
5,864 shares of our common stock, and by O'Melveny & Myers LLP, Los Angeles,
California, and for the underwriters by Pillsbury Winthrop LLP.
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PROSPECTUS
$400,000,000
SOUTHWEST GAS CORPORATION
Debt Securities, Preferred Stock,
Depositary Shares and Common Stock
We may offer and sell the securities from time to time in one or more
offerings. This prospectus provides you with a general description of the
securities we may offer.
Each time we sell securities we will provide a supplement to this
prospectus that contains specific information about the offering and the terms
of the securities. The supplement may also add, update or change information
contained in this prospectus. You should carefully read this prospectus and any
supplement before you invest in any of our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 1, 2001.
20
TABLE OF CONTENTS
CAPTION PAGE
------- ----
About this Prospectus....................................... i
Forward-Looking Statements.................................. 1
Where You Can Find More Information......................... 1
Southwest Gas Corporation................................... 3
Use of Proceeds............................................. 3
Ratios of Southwest's Earnings to Fixed Charges............. 4
Description of Debt Securities.............................. 5
Description of Southwest's Common, Preferred, and Preference
Stock..................................................... 12
Description of Depositary Shares............................ 14
Anti-Takeover Matters....................................... 15
Plan of Distribution........................................ 16
Experts..................................................... 17
Legal Matters............................................... 17
ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with the United States Securities and Exchange Commission, or the "SEC". By
using a shelf registration statement, we may sell up to $400,000,000 offering
price of any combination of the securities described in this prospectus from
time to time and in one or more offerings. This prospectus only provides you
with a general description of the securities that we may offer. Each time we
sell securities, we will provide a supplement to this prospectus that contains
specific information about the terms of the securities. The supplement may also
add, update or change information contained in this prospectus. Before
purchasing any securities, you should carefully read both this prospectus and
any supplement, together with the additional information described under the
heading "Where You Can Find More Information".
You should rely only on the information contained or incorporated by
reference in this prospectus and in any supplement. We have not authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We will
not make an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this prospectus and the supplement to this prospectus is accurate as of the
dates on their covers. Our business, financial condition, results of operations
and prospects may have changed since those dates.
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FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the additional
information described under the heading "Where You Can Find More Information"
may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of our
management, based on information currently available to our management. When we
use words such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "should" or similar expressions, we are making forward-looking
statements. Forward-looking statements include the information concerning
possible or assumed future results of operations set forth under "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our 1999 Annual Report on Form 10-K and our 1999 Quarterly
Reports on Form 10-Q incorporated by reference into this prospectus.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Our future results and shareholder value
may differ materially from those expressed in these forward-looking statements.
Many of the factors that will determine these results and values are beyond our
ability to control or predict. These statements are necessarily based upon
various assumptions involving judgements with respect to the future including,
among others, our ability to achieve revenue growth, national, regional and
local economic, competitive and regulatory conditions and developments,
technological developments, capital market conditions, inflation rates, interest
rates, energy markets, weather conditions, business and regulatory or legal
decisions, the pace of deregulation of retail natural gas and electricity, the
timing and extent of changes in commodity prices for oil, natural gas and
electricity, the timing and amount of rate relief, changes in capital
requirements and funding, and resolution of the pending litigation, all of which
are difficult to predict and many of which are beyond our control. You are
cautioned not to put undue reliance on any forward-looking statements. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You should also consider any other factors contained in this prospectus or
in any accompanying supplement, including the information incorporated by
reference into this prospectus or into any accompanying supplement.
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
Southwest Gas Corporation (Southwest) files reports, proxy statements and
other information with the SEC. Information filed with the SEC by Southwest can
be inspected and copied at the Public Reference Room maintained by the SEC and
at the Regional Offices of the SEC as follows:
- --------------------------------------------------------------------------------------------
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room #1024 Suite #1300 500 W. Madison St., #1400
Washington, D.C. 20549 New York, NY 10048 Chicago, IL 60661-2511
- --------------------------------------------------------------------------------------------
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's Public Reference Room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, such as Southwest, who file electronically
with the SEC. The address of that site is http://www.sec.gov.
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Southwest's common stock is listed on the New York Stock Exchange (NYSE:
SWX) and the Pacific Stock Exchange (PSE: SWX), and reports, proxy statements
and other information concerning Southwest can also be inspected at the offices
of the New York Stock Exchange at 20 Broad Street, New York, New York 10005 and
at the offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104. In addition, reports, proxy statements and other information
concerning Southwest can be inspected at its offices at 5241 Spring Mountain
Road, Las Vegas, Nevada 89150.
This prospectus is part of a registration statement that we filed with the
SEC. The full registration statement may be obtained from the SEC or Southwest,
as indicated below. Forms of the indentures, and other documents establishing
the terms of the offered securities and the guarantees may be filed as exhibits
to the registration statement or in a current report on Form 8-K. Statements in
this prospectus about these documents are summaries. You should refer to the
actual documents for a more complete description of the relevant matters.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to "incorporate by reference" information
into this prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
and later information that we file with the SEC will automatically update and
supersede that information. This prospectus incorporates by reference the
documents set forth below that have been previously filed with the SEC. These
documents contain important information about Southwest.
- --------------------------------------------------------------------------------------------
SEC FILINGS PERIOD
- --------------------------------------------------------------------------------------------
Annual Report on Form 10-K Year Ended December 31, 1999
- --------------------------------------------------------------------------------------------
Quarterly Reports on Form 10-Q For the Quarters ended March 31, 2000, June
30, 2000 and September 30, 2000
- --------------------------------------------------------------------------------------------
Current Reports on Form 8-K Dated January 20, 2000, January 26, 2000,
February 8, 2000, February 22, 2000, April
27, 2000, August 3, 2000 and December 27,
2000.
- --------------------------------------------------------------------------------------------
We are also incorporating by reference all additional documents that we
file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, between the date of the initial
filing of the registration statement of which this prospectus is a part and the
effectiveness of the registration statement, as well as between the date of this
prospectus and the termination of the offering of securities described in this
prospectus.
Southwest will provide, without charge, to each person to whom a copy of
this prospectus has been delivered a copy of any and all of these filings. You
may request a copy of these filings by writing or telephoning us at:
Southwest Gas Corporation
5241 Spring Mountain Road
P.O. Box 98510
Las Vegas, Nevada 89193-8510
Attention: Corporate Secretary
Telephone: (702) 876-7237
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SOUTHWEST GAS CORPORATION
Southwest is a California corporation engaged in the business of
purchasing, transporting, and distributing natural gas in portions of Arizona,
Nevada and California. Our several service areas are geographically as well as
economically diverse. Southwest is the largest distributor in Arizona
distributing and transporting natural gas in most of southern, central and
northwestern Arizona. We are also the largest distributor and transporter of
natural gas in Nevada, and distribute and transport natural gas in portions of
California, including the Lake Tahoe area and the high desert and mountain areas
in San Bernardino County. Southwest also provides local gas distribution
companies with installation, replacement and maintenance services for
underground natural gas distribution systems, through Northern Pipeline
Construction Co., a wholly-owned subsidiary.
Southwest is subject to regulation by the Arizona Corporation Commission,
the Public Utilities Commission of Nevada, and the California Public Utilities
Commission (the "CPUC"). The CPUC regulates the issuance of all securities by
Southwest, with the exception of short-term borrowings. Certain of Southwest's
accounting practices, transmission facilities and rates are subject to
regulation by the Federal Energy Regulatory Commission.
Our administrative offices are located at 5241 Spring Mountain Road, P.O.
Box 98510, Las Vegas, Nevada 89193-8510, telephone number (702) 876-7237.
USE OF PROCEEDS
Unless stated otherwise in the applicable prospectus supplement, the
proceeds from the sale of offered securities will be used to retire indebtedness
and for general corporate purposes, including the acquisition of property for
the construction, completion, extension or improvement of pipeline systems and
facilities located in and around the communities Southwest serves.
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RATIOS OF SOUTHWEST'S EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of Southwest's earnings to fixed
charges for (a) the continuing operations of Southwest and (b) the continuing
operations of Southwest adjusted for interest allocated to discontinued
operations.
FOR THE TWELVE
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
2000 1999 1998 1997 1996 1995
-------------- ---- ---- ---- ---- ----
Ratios of earnings to fixed charges(1):
Continuing operations................... 1.48 1.78 2.08 1.28 1.15 1.06
Adjusted for interest allocated to
discontinued operations.............. 1.48 1.78 2.08 1.28 1.15 1.05
- -------------------------
(1) For purposes of computing the ratios of earnings to fixed charges, earnings
are defined as the sum of pretax income from continuing operations plus
fixed charges. Fixed charges consist of all interest expense including
capitalized interest, one-third of rent expense (which approximates the
interest component of such expense) and amortized debt costs.
The following table sets forth the ratios of Southwest's earnings to fixed
charges and preferred and preference stock dividends for (a) the continuing
operations of Southwest and (b) the continuing operations of Southwest adjusted
for interest allocated to discontinued operations.
FOR THE TWELVE
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
2000 1999 1998 1997 1996 1995
-------------- ---- ---- ---- ---- ----
Ratios of earnings to combined fixed
charges and preferred and preference
stock dividends(2):
Continuing operations................... 1.48 1.78 2.08 1.28 1.15 1.05
Adjusted for interest allocated to
discontinued operations.............. 1.48 1.78 2.08 1.28 1.15 1.04
- -------------------------
(2) See Note 1 above. Preferred and preference stock dividends have been
adjusted to represent the pretax earnings necessary to cover such dividend
requirements.
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DESCRIPTION OF DEBT SECURITIES
The following description sets forth the general terms and provisions of
the debt securities that Southwest may offer by this prospectus. The
indebtedness represented by the senior debt securities will rank equally with
all other unsecured and unsubordinated debt.
The indenture gives us broad authority to set the particular terms of each
series of debt securities, including the right to modify certain of the terms
contained in the indenture. The particular terms of a series of debt securities
and the extent, if any, to which the particular terms of the issue modify the
terms of the indenture will be described in the prospectus supplement relating
to the debt securities.
The indenture contains the full legal text of the matters described in this
section. Because this section is a summary, it does not describe every aspect of
the debt securities or the applicable indenture. This summary is subject to and
qualified in its entirety by reference to all the provisions of the indenture,
including definitions of terms used in the indenture. We also include references
in parentheses to certain sections of the indenture. Whenever we refer to
particular sections or defined terms of the indenture in this prospectus or in a
prospectus supplement, these sections or defined terms are incorporated by
reference herein or in the prospectus supplement. This summary also is subject
to and qualified by reference to the description of the particular terms of the
debt securities described in the applicable prospectus supplement or
supplements.
GENERAL
We may issue an unlimited amount of debt securities under the indenture in
one or more series. We need not issue all debt securities of one series at the
same time and, unless otherwise provided, we may reopen a series, without the
consent of the holders of the debt securities of that series, for issuances of
additional debt securities of that series. The debt securities of Southwest will
be unsecured obligations.
Prior to the issuance of each series of debt securities, the terms of the
particular securities will be specified in a supplemental indenture (including
any pricing supplement) and a board resolution or in one or more officer's
certificates pursuant to a supplemental indenture or a board resolution. We
refer you to the applicable prospectus supplement for a description of the
following terms of the series of debt securities:
(a) the title of the debt securities;
(b) any limit upon the principal amount of the debt securities;
(c) the date or dates on which principal will be payable or how to
determine the dates;
(d) the rate or rates or method of determination of interest; the date
from which interest will accrue; the dates on which interest will be
payable, which we refer to as the "interest payment dates;" and any record
dates for the interest payable on the interest payment dates;
(e) any obligation or option to redeem, purchase or repay debt
securities, or any option of the registered holder to require Southwest to
redeem or repurchase debt securities, and the terms and conditions upon
which the debt securities will be redeemed, purchased or repaid;
(f) the denominations in which the debt securities will be issuable
(if other than denominations of $1,000 and any integral multiple thereof);
(g) whether the debt securities are to be issued in whole or in part
in the form of one or more global debt securities and, if so, the identity
of the depositary for the global debt securities;
(h) whether the debt securities are to be issued in whole or in part
in bearer form and, if so, the terms and conditions for the payment of
interest;
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(i) the opportunity to convert or exchange debt securities to common
stock, preferred stock or other debt securities; and
(j) any other terms of the debt securities.
(See Section 301.)
PAYMENT OF DEBT SECURITIES
INTEREST
Unless indicated differently in a prospectus supplement, we will pay
interest on the debt security on each interest payment date by check mailed
and/or wire transferred to the person in whose name the debt security is
registered as of the close of business on the regular record date relating to
the interest payment date, except that interest payable at stated maturity, upon
redemption or otherwise, will be paid to the person to whom principal is paid.
However, if we default in paying interest on a debt security, we will pay
defaulted interest in either of the two following ways:
(a) We will first propose to the trustee a payment date for the
defaulted interest. Next, the trustee will choose a special record date for
determining which registered holders are entitled to the payment. The
special record date will be between 10 and 15 days before the payment date
we propose. Finally, we will pay the defaulted interest on the payment date
to the registered holder of the debt security as of the close of business
on the special record date.
(b) Alternatively, we can propose to the trustee any other lawful
manner of payment that is consistent with the requirement of any securities
exchange on which the debt securities are listed for trading. If the
trustee thinks the proposal is practicable, payment will be made as
proposed.
(See Section 307.)
PRINCIPAL
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any premium and interest on the debt securities at stated
maturity, upon redemption or otherwise, upon presentation of the debt securities
at the office of the trustee, as our paying agent. Any other paying agent
initially designated for the debt securities of a particular series will be
named in the applicable prospectus supplement.
In our discretion, we may change the place of payment on the debt
securities, and may remove any paying agent and may appoint one or more
additional paying agents. (See Section 1002.)
FORM; TRANSFERS; EXCHANGES
The debt securities will be issued in fully registered, bearer, coupon or
global form and in denominations that are even multiples of $1,000, unless
otherwise provided in a prospectus supplement.
You may exchange or transfer debt securities at the office of the trustee.
The trustee acts as our agent for registering debt securities in the names of
holders and transferring debt securities. We may appoint another agent or act as
our own agent for this purpose. The entity performing the role of maintaining
the list of registered holders is called the "security registrar." It will also
perform transfers.
In our discretion, we may change the place for registration of transfer of
the debt securities and may remove and/or appoint one or more additional
security registrars. (See Sections 305 and 1002.)
Except as otherwise provided in a prospectus supplement, there will be no
service charge for any transfer or exchange of the debt securities, but you may
be required to pay a sum sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange. We may block the
transfer or exchange of (a) debt securities during a period of 15 days prior to
giving any notice of
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redemption or (b) any debt security selected for redemption in whole or in part,
except the unredeemed portion of any debt security being redeemed in part. (See
Section 305.)
GLOBAL SECURITIES
The debt securities may be issued in the form of one or more global
securities that will be deposited with a depositary identified in the applicable
prospectus supplement. Under this arrangement, the depositary will hold the
certificate for the debt securities and establish a book-entry registration and
transfer system to cover the beneficial ownership of the debt securities. The
book entry registration and transfer system is designed to eliminate the need to
hold individual certificates representing the debt securities and ease the
transfer and exchanges of interests, without affecting the rights and interests
you may have as an owner of an interest in the debt securities. The specific
terms of the depositary arrangement with respect to any debt securities to be
issued in global form will be described in the applicable prospectus supplement.
REDEMPTION
We will set forth any terms for the redemption of debt securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except with respect to debt securities redeemable at the option
of the registered holder, debt securities will be redeemable upon notice by mail
between 30 and 60 days prior to the redemption date. If less than all of the
debt securities of any series or any part of a series are to be redeemed, the
trustee will select the debt securities to be redeemed. In the absence of any
provision for selection, the trustee will choose a method of random selection it
deems fair and appropriate. (See Sections 1102, 1103 and 1104.)
Debt securities will cease to bear interest on the redemption date. We will
pay the redemption price and any accrued interest once you surrender the debt
security for redemption. (See Section 1106.) If only part of a debt security is
redeemed, the trustee will deliver to you a new debt security of the same series
for the remaining portion without charge. (See Section 1107.)
EVENTS OF DEFAULT
An "event of default" occurs with respect to debt securities of any series
if:
(a) we do not pay any interest on any debt securities of the
applicable series within 30 days of the due date;
(b) we do not pay principal or premium on any debt securities of the
applicable series on its due date;
(c) we do not pay any sinking fund payments, when due, on any debt
securities of the applicable series;
(d) we remain in breach of a covenant or warranty (excluding covenants
and warranties solely applicable to a specific series) of the indenture for
60 days after we receive a written notice of default stating we are in
breach and requiring remedy of the breach; the notice must be sent by
either the trustee or registered holders of 25% of the principal amount of
debt securities of the applicable series;
(e) we do not pay any portion of the principal of any other debt,
including debt securities of any other series, with the principal amount
outstanding of at least $15,000,000, when due and payable, for ten business
days after we have received written notice of the default stating we are in
breach and requiring remedy of the breach; notice must be sent by either
the trustee or registered holders of 25% of the principal amount of debt
securities of the applicable series;
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(f) we file for bankruptcy or other specified events in bankruptcy,
insolvency, receivership or reorganization occur; or
(g) any other event of default specified in the prospectus supplement
occurs.
(See Section 501.)
No event of default with respect to a series of debt securities necessarily
constitutes an event of default with respect to the debt securities of any other
series issued under the indenture.
REMEDIES
ACCELERATION
If an event of default occurs and is continuing with respect to any series
of debt securities, then either the trustee or the registered holders of 25% in
principal amount of the outstanding debt securities of that series may declare
the principal amount of all of the debt securities of that series to be due and
payable immediately. (See Section 502.)
RESCISSION OF ACCELERATION
After the declaration of acceleration has been made and before the trustee
has obtained a judgment or decree for payment of the money due, the declaration
and its consequences will be rescinded and annulled, if:
(a) we pay or deposit with the trustee a sum sufficient to pay:
(1) all overdue interest;
(2) the principal of and any premium which have become due
otherwise than by the declaration of acceleration and overdue interest
on these amounts;
(3) interest on overdue interest to the extent lawful; and
(4) all amounts due to the trustee under the indenture; and
(b) all events of default, other than the nonpayment of the principal
which has become due solely by the declaration of acceleration, have been
cured or waived as provided in the indenture.
(See Section 502.)
For more information as to waiver of defaults, see "Waiver of Default and
of Compliance" below.
CONTROL BY REGISTERED HOLDERS; LIMITATIONS
Subject to the indenture, if an event of default with respect to the debt
securities of any one series occurs and is continuing, the registered holders of
a majority in the principal amount of the outstanding debt securities of that
series will have the right to:
(a) direct the time, method and place of conducting any proceeding for
any remedy available to the trustee; or
(b) exercise any trust or power conferred on the trustee with respect
to the debt securities of the series; provided that:
(i) the registered holders' directions will not conflict with any
law or the indenture; and
(ii) the registered holders' directions may not involve the trustee
in personal liability where the trustee believes indemnity is not
adequate.
The trustee may also take any other action it deems proper which is
consistent with the registered holders' direction. (See Sections 512 and 603.)
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In addition, the indenture provides that no registered holder of any debt
security will have any right to institute any proceeding, judicial or otherwise,
with respect to the indenture for the appointment of a receiver or for any other
remedy thereunder unless:
(a) that registered holder has previously given the trustee written
notice of a continuing event of default;
(b) the registered holders of 25% in aggregate principal amount of the
outstanding debt securities of all affected series, considered as one
class, have made written request to the trustee to institute proceedings in
respect of that event of default;
(c) the registered holders have offered the trustee reasonable
indemnity against costs and liabilities incurred in complying with the
request; and
(d) for 60 days after receipt of the notice, the trustee has failed to
institute a proceeding and no direction inconsistent with the request has
been given to the trustee during the 60-day period by the registered
holders of a majority in aggregate principal amount of outstanding debt
securities of the affected series.
Furthermore, no registered holder will be entitled to institute any action
if and to the extent that the action would disturb or prejudice the rights of
other registered holders. (See Section 507.)
However, each registered holder has an absolute and unconditional right to
receive payment when due and to bring a suit to enforce that right. (See Section
508.)
NOTICE OF DEFAULT
The trustee is required to give the registered holders of the debt
securities notice of any default under the indenture to the extent required by
the Trust Indenture Act, unless the default has been cured or waived; except
that in the case of an event of default of the character specified above in
clause (d) under "Events of Default," no notice shall be given to the registered
holders until at least 30 days after the occurrence thereof. (See Section 602.)
The Trust Indenture Act currently permits the trustee to withhold notices of
default (except for certain payment defaults) if the trustee in good faith
determines the withholding of the notice to be in the interest of the registered
holders.
We will furnish the trustee with an annual statement as to the compliance
by Southwest with the conditions and covenants in the indenture. (See Section
1004.)
WAIVER OF DEFAULT AND OF COMPLIANCE
The registered holders of a majority in aggregate principal amount of the
outstanding debt securities of any series may waive, on behalf of the registered
holders of all debt securities of the series, any past default under the
indenture, except a default in the payment of principal, premium or interest, or
with respect to compliance with certain provisions of the indenture that cannot
be amended without the consent of the registered holder of each outstanding debt
security. (See Section 513.)
Compliance with certain covenants in the indenture or otherwise provided
with respect to debt securities may be waived by the registered holders of a
majority in aggregate principal amount of the affected debt securities,
considered as one class. (See Section 513.)
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS AS AN ENTIRETY; NO FINANCIAL
COVENANTS
Subject to the provisions described in the next paragraph, Southwest will
preserve its corporate existence. (See Section 1005.)
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Southwest has agreed not to consolidate with or merge into any other
entity, or to convey, transfer or lease its properties and assets substantially
as an entirety to any entity, unless:
(a) the entity formed by the consolidation or into which Southwest is
merged, or the entity which acquires or which leases the property and
assets of Southwest substantially as an entirety, is an entity organized
and existing under the laws of the United States of America or any State
thereof or the District of Columbia, and expressly assumes, by supplemental
indenture, the due and punctual payment of the principal, premium and
interest on all the outstanding debt securities (or the debt securities
guarantees endorsed thereon, as the case may be) and the performance of all
of the covenants of Southwest as the case may be, under the indenture; and
(b) immediately after giving effect to the transactions, no event of
default, and no event which after notice or lapse of time or both would
become an event of default, will have occurred and be continuing.
(See Section 801.)
The indenture does not contain any financial or other similar restrictive
covenants. Any such covenants with respect to any particular series of debt
securities will be set forth in the applicable prospectus supplement.
MODIFICATION OF INDENTURE
WITHOUT REGISTERED HOLDER CONSENT
Without the consent of any registered holders of debt securities, we and
the applicable trustee may enter into one or more supplemental indentures for
any of the following purposes:
(a) to evidence the succession of another entity to Southwest; or
(b) to add one or more covenants of Southwest or other provisions for
the benefit of the registered holders of all or any series of debt
securities, or to surrender any right or power conferred upon Southwest; or
(c) to add any additional events of default for all or any series of
debt securities; or
(d) to change or eliminate any provision of the indenture or to add
any new provision to the indenture provided that such change, elimination
or addition does not affect any outstanding security; or
(e) to establish the form or terms of debt securities of any series as
permitted by the indenture; or
(f) to add to or change any of the provisions with respect to bearer
securities, provided that such action will not adversely affect the holders
of such securities; or
(g) to evidence and provide for the acceptance of appointment of a
successor trustee; or
(h) to cure any ambiguity, or inconsistency or to make any other
changes that do not adversely affect the interests of the registered
holders in any material respects.
(See Section 901.)
If the Trust Indenture Act is amended after the date of the indenture so as
to require changes to the indenture or the elimination of provisions which, at
the date of the indenture or at any time thereafter, were required by the Trust
Indenture Act to be contained in the indenture, the indenture will be deemed to
have been amended so as to conform to the amendment or to effect the changes or
elimination, and Southwest and the applicable trustee may, without the consent
of any registered holders, enter into one or more supplemental indentures to
effect or evidence the amendment. (See Section 107.)
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WITH REGISTERED HOLDER CONSENT
We and the trustee may, with some exceptions, amend or modify any indenture
with the consent of the registered holders of at least a majority in aggregate
principal amount of the debt securities of all series affected by the amendment
or modification. However, no amendment or modification may, without the consent
of the registered holder of each outstanding debt security directly affected
thereby:
(a) change the stated maturity of the principal or interest on any
debt security (other than pursuant to the terms thereof), or reduce the
principal amount, interest or premium payable or change the currency in
which any debt security is payable, impair the right to bring suit to
enforce any payment, or modify the provisions of the indenture with respect
to conversion or exchange in a manner adverse to the holders;
(b) reduce the percentages of registered holders whose consent is
required for any supplemental indenture or waiver; or
(c) modify certain of the provisions in the indenture relating to
supplemental indentures.
A supplemental indenture which changes or eliminates any provision of the
indenture expressly included solely for the benefit of registered holders of
debt securities of one or more particular series will be deemed not to affect
the rights under the indenture of the registered holders of debt securities of
any other series. (See Section 902.)
MISCELLANEOUS PROVISIONS
The indenture provides that certain debt securities, including those for
which payment or redemption money have been deposited or set aside in trust as
described under "Defeasance and Covenant Defeasance" below, will not be deemed
to be "outstanding" in determining whether the registered holders of the
requisite principal amount of the outstanding debt securities have given or
taken any demand, direction, consent or other action under the indenture as of
any date, or are present at a meeting of registered holders for quorum purposes.
(See Section 101.)
We will be entitled to set any day as a record date for the purpose of
determining the registered holders of outstanding debt securities of any series
entitled to give or take any demand, direction, consent or other action under
the indenture, in the manner and subject to the limitations provided in the
indenture. In certain circumstances, the trustee also will be entitled to set a
record date for action by registered holders. If a record date is set for any
action to be taken by registered holders of particular debt securities, the
action may be taken only by persons who are registered holders of the respective
debt securities on the record date. (See Section 104.)
DEFEASANCE AND COVENANT DEFEASANCE
The indenture provides, unless the terms of the particular series of debt
securities provide otherwise, that we may, upon satisfying several conditions,
cause ourselves to be:
(a) discharged from our obligations, with some exceptions, with
respect to any series of debt securities, which we refer to as "defeasance"
(See Section 1302); and
(b) released from our obligations under certain covenants with respect
to any series of debt securities, which we refer to as "covenant
defeasance". (See Section 1303.)
One condition we must satisfy is the irrevocable deposit with the trustee,
in trust, of money and/or government obligations which, through the scheduled
payment of principal and interest on those obligations, would provide sufficient
funds to pay the principal of and any premium and interest on those debt
securities on the maturity dates of the payment or upon redemption. (See Section
1304(1).)
The indenture permits defeasance with respect to any series of debt
securities even if a prior covenant defeasance has occurred with respect to the
debt securities of that series. Following a defeasance, payment of the debt
securities defeased may not be accelerated because of an event of default.
Following a
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covenant defeasance, payment of the debt securities may not be accelerated by
reference to the covenants described in the description of covenant defeasance
above. However, if such an acceleration were to occur, the realizable value at
the acceleration date of the money and government obligations in the defeasance
trust could be less than the principal and interest then due on the respective
debt securities, since the required deposit in the defeasance trust would be
based upon scheduled cash flows rather than market value, which would vary
depending upon interest rates and other factors.
RESIGNATION AND REMOVAL OF THE TRUSTEE; DEEMED RESIGNATION
The trustee may resign at any time by giving written notice to us.
The trustee may also be removed by act of the registered holders of a
majority in principal amount of the then outstanding debt securities of any
series.
No resignation or removal of the trustee and no appointment of a successor
trustee will become effective until the acceptance of appointment by a successor
trustee in accordance with the requirements of the indenture. (See Section 610.)
Under certain circumstances, we may appoint a successor trustee and if the
successor accepts, the trustee will be deemed to have resigned.
GOVERNING LAW
Each indenture and the related debt securities will be governed by and
construed in accordance with the laws of the State of New York. (See Section
112.)
DESCRIPTION OF SOUTHWEST'S
COMMON, PREFERRED AND PREFERENCE STOCK
The following description of Southwest's common stock, preferred stock, and
preference stock is only a summary and is qualified in its entirety by reference
to the articles of incorporation and bylaws of Southwest. Therefore, you should
read carefully the more detailed provisions of Southwest's Restated Articles of
Incorporation, as amended, Amended Bylaws, and Amended and Restated Rights
Agreement, dated February 9, 1999, between Southwest and The Bank of New York,
as rights agent, copies of which are incorporated by reference as exhibits to
the registration statement of which this prospectus is a part.
GENERAL
The authorized capital stock of Southwest consists of (1) 45,000,000 shares
of Southwest common stock, with a $1.00 par value, (2) 5,000,000 shares of
preferred stock, without par value, and (3) 2,000,000 shares of preference stock
with a $20.00 par value. As of September 30, 2000, there were issued and
outstanding 31,529,907 shares of Southwest common stock and no shares of
Southwest preferred stock. All preference stock is reserved for issuance under
the terms of Southwest's Amended and Restated Rights Agreement. No other classes
of capital stock are authorized under the Southwest Restated Articles of
Incorporation, as amended.
COMMON STOCK
The holders of Southwest common stock are entitled to receive such
dividends as the Southwest board of directors may from time to time declare,
subject to any rights of holders of outstanding shares of Southwest preferred
and preference stock. Except as otherwise provided by law, each holder of common
stock is entitled to one vote per share on each matter submitted to a vote of a
meeting of shareholders, subject to cumulative voting rights with respect to the
election of directors and any class or series voting rights of holders of
preferred and preference stock.
In the event of any liquidation, dissolution or winding up of Southwest,
whether voluntary or involuntary, the holders of shares of Southwest common
stock, subject to any rights of the holders of
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outstanding shares of Southwest preferred or preference stock, are entitled to
receive any remaining assets of Southwest after the discharge of its
liabilities.
Holders of Southwest common stock are not entitled to preemptive rights to
subscribe for or purchase any part of any new or additional issue of stock or
securities convertible into stock. Southwest common stock does not contain any
redemption provisions or conversion rights and is not liable to assessment or
further call.
Each outstanding share of Southwest common stock is accompanied by a right
to purchase one one-hundredth of a share of preference stock, with $20.00 par
value, of Southwest at a price of $45.00 per right, subject to certain
anti-dilution adjustments. The Southwest board of directors has reserved all of
the shares of such stock for issuance upon exercise of the rights, as more fully
discussed below under the heading "-- Shareholder Rights Plan."
Southwest is the registrar and transfer agent for its common stock.
PREFERRED STOCK
The Southwest board of directors is authorized, pursuant to the Southwest
articles of incorporation, to issue up to 5,000,000 shares of Southwest
preferred stock in one or more series and to fix and determine the number of
shares of preferred stock of any series, to determine the designation of any
such series, to increase or decrease the number of shares of any such series
subsequent to the issue of shares of that series, and to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
such series. Currently there are no shares of Southwest preferred stock
outstanding.
Prior to the issuance of shares of each series of preferred stock, the
board of directors is required to adopt resolutions and file a certificate of
determination with the Secretary of State of the State of California. The
certificate of determination will fix for each series the designation and number
of shares and the rights, preferences, privileges and restrictions of the shares
including, but not limited to, the following:
(a) the title and stated value of the preferred stock;
(b) voting rights, if any, of the preferred stock;
(c) any rights and terms of redemption (including sinking fund
provisions);
(d) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation applicable to the preferred stock;
(e) whether dividends are cumulative or non-cumulative, and if
cumulative, the date from which dividends on the preferred stock will
accumulate;
(f) the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon the liquidation, dissolution or winding up
of our affairs;
(g) the terms and conditions, if applicable, upon which the preferred
stock will be convertible into common stock or another series of preferred
stock, including the conversion price (or manner of calculation) and
conversion period;
(h) the provision for redemption, if applicable, of the preferred
stock;
(i) the provisions for a sinking fund, if any, for the preferred
stock;
(j) liquidation preferences;
(k) any limitations on the issuance of any class or series of
preferred stock ranking senior to or on a parity with the class or series
of preferred stock as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs; and
(l) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
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In addition to the terms listed above, we will set forth in a prospectus
supplement the following terms relating to the class or series of preferred
stock being offered:
(a) the number of shares of the preferred stock offered, the
liquidation preference per share and the offering price of the preferred
stock;
(b) the procedures for any auction and remarketing, if any, for the
preferred stock;
(c) any listing of the preferred stock on any securities exchange; and
(d) a discussion of any material and/or special United States federal
income tax considerations applicable to the preferred stock.
RANK
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up:
(a) senior to all classes or series of our common stock and to all of
our equity securities ranking junior to the preferred stock;
(b) on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity with the
preferred stock; and
(c) junior to all of our equity securities the terms of which
specifically provide that the equity securities rank senior to the
preferred stock.
Unless otherwise indicated in a prospectus supplement, Southwest will be
the transfer agent, dividend and redemption price disbursement agent, and
registrar for each series of preferred stock.
DESCRIPTION OF DEPOSITARY SHARES
The following description of depositary shares is only a summary and is
qualified by any prospectus supplement and deposit agreement and depositary
receipt used in connection with the issuance of each series of preferred stock
issued through the use of depositary shares. Therefore, you should read
carefully the more detailed description that would be contained in any
applicable prospectus supplement and form of deposit agreement and depositary
receipt, copies of which are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part.
Southwest may offer fractional shares of preferred stock by issuing
receipts for depositary shares. The shares of any series of preferred stock
represented by depositary shares will be deposited with a bank or trust company
and the holders will be issued a depositary receipt entitling them, in
proportion to the fraction of a share the receipt represents, to all the rights
and preferences of the preferred stock, as more fully described above under the
heading "Description of Southwest's Common, Preferred, and Preference
Stock -- Preferred Stock."
The bank or trust company that will be the depositary will function as the
intermediary between Southwest and the holders of the depositary receipts.
Dividends and other distributions will be provided to the depositary for
ultimate distribution to the holders. Redemption of the depositary shares and
voting the underlying preferred stock will also be coordinated through the
depositary. Holders will have the right to surrender their depositary receipts
to the depositary and be entitled to receive whole shares of preferred stock
that are represented by such receipts. Though the preferred stock will continue
to have all of the rights and preferences, there may be no market opportunity to
trade such stock and once withdrawn from the depositary, it may not be
redeposited.
Southwest will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangement. Southwest will
also pay charges of the depositary in connection with the initial deposit of the
preferred stock and the initial issuance of the depositary receipts, any
redemption of the preferred stock and any withdrawal of preferred stock by the
holder of the depositary
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shares. Holders will pay other transfer and other taxes and governmental charges
and such other charges specifically provided in the deposit agreement for their
individual accounts.
ANTI-TAKEOVER MATTERS
SHAREHOLDER RIGHTS PLAN
On March 5, 1996, the Southwest board of directors adopted a shareholders
rights plan providing the right to purchase one one-hundredth of a share of
preference stock. The description and terms of the rights are set forth in the
Amended and Restated Rights Agreement, dated as of February 9, 1999, by and
between Southwest and The Bank of New York (successor to Harris Trust Company),
as rights agent. The purchase rights have an anti-takeover effect that is
intended to discourage coercive or unfair takeover tactics and to encourage any
potential acquirer to negotiate a fair price to all Southwest shareholders. The
purchase rights may cause substantial dilution to any party that may attempt to
acquire Southwest on terms not approved by the Southwest board of directors.
However, the purchase rights are structured in a way so as not to interfere with
any negotiated merger or other business combination. The rights will expire on
April 15, 2006. Until a right is exercised, the holder of the right will have no
rights as a shareholder of Southwest beyond those rights afforded to existing
shareholders, including the right to vote or to receive dividends.
The rights are designed to assure that all of Southwest's shareholders
receive fair and equal treatment in the event of any proposed takeover of
Southwest and to guard against partial tender offers, open market accumulations
and other abusive tactics that may be deployed to gain control of Southwest
without a control premium paid to all shareholders. Any time prior to the first
date that a person or group has become an "acquiring person" as defined in the
rights agreement, the rights should not interfere with any merger or other
business combination as long as it is approved by the Southwest board of
directors.
OTHER ANTI-TAKEOVER PROVISIONS
The Southwest Restated Articles of Incorporation, as amended and Amended
Bylaws contain provisions that may have the effect of discouraging persons from
acquiring large blocks of Southwest stock or delaying or preventing a change in
control of Southwest. The material provisions which may have such an effect are:
(a) provisions requiring a super-majority vote by shareholders of
common stock in order to approve certain types of business combinations;
(b) a provision permitting the Southwest board of directors to make,
amend or repeal the Southwest bylaws;
(c) authorization for the Southwest board of directors to issue
preferred stock in series and to fix rights and preferences of the series
(including, among other things, whether, and to what extent, the shares of
any series will have voting rights and the extent of the preferences of the
shares of any series with respect to dividends and other matters);
(d) advance notice procedures with respect to nominations of directors
or proposals other than those adopted or recommended by the Southwest board
of directors; and
(e) provisions permitting amendment of certain of these provisions
only by an affirmative vote of the holders of at least 65 percent of the
outstanding shares of Southwest common stock entitled to vote.
Some acquisitions of Southwest's outstanding voting shares would also
require approval of the SEC under the Public Utility Holding Company Act of 1935
and of various state regulatory authorities.
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PLAN OF DISTRIBUTION
We may sell the securities described in this prospectus from time to time
in one or more transactions:
(a) to purchasers directly;
(b) to underwriters for public offering and sale by them;
(c) through agents;
(d) through dealers; or
(e) through a combination of any of the foregoing methods of sale.
We may distribute the securities from time to time in one or more
transactions at:
(a) a fixed price or prices, which may be changed;
(b) market prices prevailing at the time of sale;
(c) prices related to such prevailing market prices; or
(d) negotiated prices.
DIRECT SALES
We may sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any resale of the securities. A prospectus supplement will
describe the terms of any sale of securities we are offering hereunder.
TO UNDERWRITERS
The applicable prospectus supplement will name any underwriter involved in
a sale of securities. Underwriters may offer and sell securities at a fixed
price or prices, which may be changed, or from time to time at market prices or
at negotiated prices. Underwriters may be deemed to have received compensation
from us from sales of securities in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of securities for
whom they may act as agent.
Underwriters may sell securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.
Unless otherwise provided in a prospectus supplement, the obligations of
any underwriters to purchase securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all the securities
if any are purchased.
THROUGH AGENTS AND DEALERS
We will name any agent involved in a sale of securities, as well as any
commissions payable by us to such agent, in a prospectus supplement. Unless we
indicate differently in the prospectus supplement, any such agent will be acting
on a reasonable efforts basis for the period of its appointment.
If we utilize a dealer in the sale of the securities being offered pursuant
to their prospectus supplement, we will sell the securities to the dealer, as
principal. The dealer may then resell the securities to the public at varying
prices to be determined by the dealer at the time of resale.
DELAYED DELIVERY CONTRACTS
If we so specify in the applicable prospectus supplement, we will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase the securities pursuant to contracts providing for payment and delivery
on future dates. Such contracts will be subject to only those conditions set
forth in the applicable prospectus supplement.
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The underwriters, dealers and agents will not be responsible for the
validity of performance of the contracts. We will set forth in the prospectus
supplement relating to the contracts the price to be paid for the securities,
the commissions payable for solicitation of the contracts and the date in the
future for delivery of the securities.
GENERAL INFORMATION
Underwriters, dealers and agents participating in a sale of the securities
may be deemed to be underwriters as defined in the Securities Act, and any
discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, and to reimburse them for
certain expenses.
Underwriters or agents and their associates may be customers of, engage in
transactions with or perform services for us or our affiliates in the ordinary
course of business.
Unless we indicate differently in a prospectus supplement, we will not list
the securities, other than common stock, on any securities exchange. The
securities will be a new issue of securities with no established trading market.
Any underwriters that purchase securities for public offering and sale may make
a market in such securities, but such underwriters will not be obligated to do
so and may discontinue any market making at any time without notice. We make no
assurance as to the liquidity of or the trading markets for any securities.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report included in the Annual Report on Form
10-K for the year ended December 31, 1999, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing in giving
said report.
LEGAL MATTERS
The validity of the Securities will be passed upon for Southwest by
O'Melveny & Myers LLP, Los Angeles, California.
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the Notes offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
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Summary................................... S-3
Risk Factors.............................. S-7
Use of Proceeds........................... S-8
Capital Expenditures and Financing
Programs................................ S-9
Capitalization............................ S-9
Description of Notes...................... S-9
Underwriting.............................. S-17
Legal Matters............................. S-18
Prospectus
About This Prospectus..................... i
Forward-Looking Statements................ 1
Where You Can Find More Information....... 1
Southwest Gas Corporation................. 3
Use Of Proceeds........................... 3
Ratios Of Southwest's Earnings To Fixed
Charges................................. 4
Description Of Debt Securities............ 5
Description Of Southwest's Common,
Preferred And Preference Stock.......... 12
Description Of Depositary Shares.......... 14
Anti-Takeover Matters..................... 15
Plan Of Distribution...................... 16
Experts................................... 17
Legal Matters............................. 17
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$200,000,000
SOUTHWEST GAS CORPORATION
% Notes due 2011
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[SOUTHWEST GAS LOGO]
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GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
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