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Filed Pursuant to Rule 424(b)(4)
Registration No. 333-34483
PROSPECTUS
AGL CAPITAL TRUST
OFFER TO EXCHANGE ITS SERIES B 8.17% CAPITAL SECURITIES (LIQUIDATION AMOUNT
$1,000 PER EXCHANGE CAPITAL SECURITY) WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING
SERIES A 8.17% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER ORIGINAL CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
AGL RESOURCES INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON OCTOBER 21,1997, UNLESS EXTENDED.
AGL Capital Trust, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby offers, upon the terms and subject to
the conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to 75,000 of its Series B 8.17% Capital Securities, Liquidation Amount $1,000
per security (the "Exchange Capital Securities"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement (the "Registration Statement") of which this Prospectus
constitutes a part, for a like number of its outstanding Series A 8.17% Capital
Securities, Liquidation Amount $1,000 per security (the "Original Capital
Securities"), of which 75,000 are issued and outstanding. Pursuant to the
Exchange Offer, AGL Resources Inc., a Georgia corporation ("AGL Resources"), is
also offering to exchange (i) its guarantee of payments of cash distributions
and payments on liquidation of the Trust or redemption of the Original Capital
Securities (the "Original Guarantee") for a like guarantee in respect of the
Exchange Capital Securities (the "Exchange Guarantee") and (ii) $75,000,000
aggregate principal amount of its Series A 8.17% Junior Subordinated Deferrable
Interest Debentures due June 1, 2037 (the "Original Junior Subordinated
Debentures") for a like aggregate principal amount of its Series B 8.17% Junior
Subordinated Deferrable Interest Debentures due June 1, 2037 (the "Exchange
Junior Subordinated Debentures"), which Exchange Guarantee and Exchange Junior
Subordinated Debentures also have been registered under the Securities Act. The
Original Capital Securities, the Original Guarantee and the Original Junior
Subordinated Debentures are collectively referred to herein as the "Original
Securities" and the Exchange Capital Securities, the Exchange Guarantee and the
Exchange Junior Subordinated Debentures are collectively referred to herein as
the "Exchange Securities."
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Original Securities, except that (i) the Exchange
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer applicable to the Original
Securities, (ii) the Exchange Capital Securities will not contain the $100,000
minimum Liquidation Amount transfer restriction, (iii) the Exchange Capital
Securities will not provide for any increase in the Distribution Rate (as
defined herein) thereon, and (iv) the Exchange Junior Subordinated Debentures
will not provide for any increase in the interest rate thereon. See "Description
of Exchange Securities" and "Description of Original Securities." The Exchange
Capital Securities are being offered for exchange in order to satisfy certain
obligations of AGL Resources and the Trust under the Registration Rights
Agreement dated as of June 11, 1997 (the "Registration Rights Agreement"), among
AGL Resources, the Trust, and the Initial Purchasers (as defined herein). In the
event that the Exchange Offer is consummated, any Original Capital Securities
which remain outstanding after consummation of the Exchange Offer and the
Exchange Capital Securities issued in the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Declaration of Trust (as defined herein).
(continued on the following page)
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Original Capital Securities on September 17, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 15 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL CAPITAL SECURITIES
IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 16, 1997.
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The Exchange Capital Securities and the Original Capital Securities
(collectively, the "Capital Securities") represent beneficial interests in the
assets of the Trust. AGL Resources is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
The Bank of New York is the Property Trustee (the "Property Trustee") of the
Trust. The Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in the Junior Subordinated Debentures (as defined
herein). The Junior Subordinated Debentures will mature on June 1, 2037 (the
"Stated Maturity Date"). The Capital Securities will have a preference over the
Common Securities under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption, or otherwise. See "Description
of Exchange Securities--Description of Exchange Capital
Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
June 11, 1997, as amended and supplemented from time to time, between AGL
Resources and The Bank of New York, as trustee (the "Indenture Trustee"),
relating to the Junior Subordinated Debentures, (ii) the "Declaration of Trust"
means the Amended and Restated Declaration of Trust relating to the Trust among
AGL Resources, as Sponsor, The Bank of New York, as Property Trustee, The Bank
of New York (Delaware), an affiliate of the Property Trustee, as Delaware
Trustee (the "Delaware Trustee"), and the Administrative Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Trustees"),
(iii) the "Guarantee" means the Capital Securities Guarantee Agreement relating
to the Capital Securities between AGL Resources and The Bank of New York, as
trustee (the "Guarantee Trustee"), and (iv) the "Common Guarantee" means the
Common Securities Guarantee Agreement relating to the Common Securities between
AGL Resources and The Bank of New York, as trustee. In addition, as the context
may require, (i) "Junior Subordinated Debentures" includes the Original Junior
Subordinated Debentures and the Exchange Junior Subordinated Debentures, and
(ii) "Guarantee" includes the Original Guarantee and the Exchange Guarantee.
The Junior Subordinated Debentures are unsecured obligations of AGL
Resources and are subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) of AGL Resources, as described herein. Holders
of the Capital Securities and the Common Securities are entitled to receive
cumulative cash distributions arising from the payment of interest on the Junior
Subordinated Debentures ("Distribution"), accruing from the date of original
issuance and payable semi-annually in arrears on June 1 and December 1 of each
year (each, a "Distribution Date"), commencing on December 1, 1997, at the
annual rate of 8.17% of the Liquidation Amount of $1,000 per Trust Security (the
"Distribution Rate").
The Distribution Rate and the Distribution Dates for the Capital
Securities correspond to the interest rate and interest and other payment dates
on the Junior Subordinated Debentures, which constitute substantially all of the
assets of the Trust. As a result, if principal or interest is not paid on the
Junior Subordinated Debentures, no amounts will be paid on the Capital
Securities. SO LONG AS NO DEBENTURE EVENT OF DEFAULT (AS DEFINED HEREIN) HAS
OCCURRED AND IS CONTINUING, AGL RESOURCES WILL HAVE THE RIGHT TO DEFER PAYMENTS
OF INTEREST ON THE JUNIOR SUBORDINATED DEBENTURES AT ANY TIME AND FROM TIME TO
TIME FOR A PERIOD NOT EXCEEDING 10 CONSECUTIVE SEMI-ANNUAL PERIODS WITH RESPECT
TO EACH DEFERRAL PERIOD (EACH, AN "EXTENSION PERIOD"), PROVIDED THAT NO
EXTENSION PERIOD MAY EXTEND BEYOND THE STATED MATURITY DATE. Upon the
termination of any such Extension Period and the payment of all amounts then
due, AGL Resources may elect to begin a new Extension Period, subject to the
requirements set forth herein. Subject to the above, there is no limitation on
the number of times AGL Resources may elect to begin an Extension Period. If and
for so long as interest payments on the Junior Subordinated Debentures are so
deferred, Distributions on the Trust Securities will also be deferred and AGL
Resources will not be permitted, subject to certain exceptions described herein,
to declare or pay any dividend or distribution on AGL Resources' capital stock
or make any guarantee payments with respect to the foregoing, or make any
payment on any debt securities of AGL Resources that rank pari passu with or
junior to the Junior Subordinated Debentures. During an Extension Period,
interest on the Junior Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Trust Securities are entitled
will continue to accumulate) at the Distribution Rate, compounded semi-annually,
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and holders of Capital Securities will be required to accrue income in the form
of original issue discount ("OID") in their gross income for United States
federal income tax purposes prior to the receipt of the cash attributable to
such income. See "Description of Exchange Junior Subordinated Debentures--Option
to Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
AGL Resources has, through the Guarantee, the Common Guarantee, the
Declaration of Trust, the Junior Subordinated Debentures and the Indenture,
taken together, fully and unconditionally guaranteed, subject to certain
subordination provisions, all of the Trust's obligations under the Trust
Securities. See "Relationship Among the Exchange Capital Securities, the
Exchange Junior Subordinated Debentures and the Exchange Guarantee--Full and
Unconditional Guarantee." The Guarantee and the Common Guarantee will guarantee
payments of Distributions and payments on liquidation or redemption of the Trust
Securities, but in each case only to the extent that the Trust has funds on hand
legally and immediately available therefor and has failed to make such payments,
as described herein. See "Description of Exchange Securities" and "Description
of Exchange Guarantee." If AGL Resources fails to make a required payment on the
Junior Subordinated Debentures, the Trust will not have sufficient funds to pay
such Distributions. The Guarantee and the Common Guarantee will not cover any
such payment when the Trust does not have sufficient funds legally available
therefor. In such event, the remedy of a holder of Capital Securities is to
enforce the Junior Subordinated Debentures. See "Description of Exchange Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Capital
Securities." The obligations of AGL Resources under the Guarantee, the Common
Guarantee and the Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to all of its other liabilities.
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures at a redemption price
equal to the principal amount of, plus accrued and unpaid interest on, the
Junior Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole
but not in part, at any time prior to June 1, 2007, contemporaneously with the
optional prepayment of the Junior Subordinated Debentures, upon the occurrence
and continuation of a Tax Event (as defined herein) or an Investment Company Act
Event (as defined herein) at a redemption price equal to the Special Event
Prepayment Price (as defined herein) (the "Special Event Redemption Price"), and
(iii) in whole or in part, on or after June 1, 2007, contemporaneously with the
optional prepayment by AGL Resources of the Junior Subordinated Debentures, at a
redemption price equal to the Optional Prepayment Price (as defined herein) (the
"Optional Redemption Price"). Any of the Maturity Redemption Price, the Special
Event Redemption Price and the Optional Redemption Price may be referred to
herein as the "Redemption Price." See "Description of Exchange Capital
Securities--Redemption."
The Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of AGL Resources (i) in whole or in part, on
or after June 1, 2007, at a prepayment price (the "Optional Prepayment Price")
equal to 104.085% of the principal amount thereof on June 1, 2007, declining
ratably on each June 1 thereafter to 100% on or after June 1, 2017, plus accrued
and unpaid interest thereon to the date of prepayment, or (ii) at any time prior
to June 1, 2007, and within 90 days of a Tax Event or an Investment Company Act
Event (each a "Special Event"), in whole but not in part, upon the occurrence
and continuation of a Special Event at a prepayment price (the "Special Event
Prepayment Price") equal to the greater of (a) 100% of the principal amount of
the Junior Subordinated Debenture to be redeemed or (b) the sum, as determined
by a Quotation Agent (as defined herein), of the present values of the principal
amount and premium payable with respect to an optional redemption of such Junior
Subordinated Debentures on June 1, 2007, together with scheduled payments of
interest on the Junior Subordinated Debentures accruing from the prepayment date
to and including June 1, 2007 discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate (as defined herein) plus, in each case, accrued and
unpaid interest thereon to the date of prepayment. Either of the Optional
Prepayment Price or the Special Event Prepayment Price may be referred to herein
as the "Prepayment Price." See "Description of Exchange Junior Subordinated
Debentures--Optional Prepayment" and "--Special Event Prepayment."
AGL Resources will have the right at any time to terminate the Trust
and cause a Like Amount of the Junior Subordinated Debentures to be distributed
to the holders of the Trust Securities in liquidation of the Trust, subject to
AGL Resources having received an opinion of counsel to the effect that such
distribution will not be a taxable event to
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holders of Capital Securities. Unless the Junior Subordinated Debentures are
distributed to the holders of the Trust Securities, in the event of a
liquidation of the Trust as described herein, after satisfaction of liabilities
to creditors of the Trust as required by applicable law, the holders of the
Trust Securities generally will be entitled to receive a Liquidation Amount of
$1,000 per Trust Security plus accumulated and unpaid Distributions thereon to
the date of payment. See "Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debentures."
The Trust is making the Exchange Offer of the Exchange Capital
Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the "Commission")
as set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither AGL Resources nor the Trust has sought its own
interpretive letter and there can be no assurance that the staff of the Division
of Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, AGL Resources and the Trust believe that Exchange Capital
Securities issued pursuant to this Exchange Offer in exchange for Original
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Capital Securities are acquired in
the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any Person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Capital Securities. However, any holder of Original Capital
Securities who is an "affiliate" of AGL Resources or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing Exchange
Capital Securities, or any broker-dealer who purchased Original Capital
Securities from the Trust to resell pursuant to Rule 144A under the Securities
Act ("Rule 144A") or any other available exemption under the Securities Act, (a)
will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Original Capital Securities in the Exchange Offer, and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Original Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Original Capital
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Original Capital Securities for Exchange
Capital Securities, then such broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of AGL
Resources or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any Person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities,
and (iv) if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. In addition, AGL Resources
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to AGL Resources
and the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Original
Capital Securities for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, AGL Resources
and the Trust believe that broker-dealers who acquired Original Capital
Securities for their own accounts, as a result of market-making activities or
other trading activities ("Participating Broker-Dealers"), may fulfill their
prospectus
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delivery requirements with respect to the Exchange Capital Securities received
upon exchange of such Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial sale of the
Original Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Capital Securities. Each broker-dealer that receives
Exchange Capital Securities for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivery of a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Trust and AGL Resources have agreed that, ending on the close of
business on the 180th day following the Expiration Date (as defined herein), or,
if earlier, when all such Exchange Capital Securities have been disposed of by
such broker-dealer, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution." However,
a Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Capital Securities received in exchange for Original
Capital Securities pursuant to the Exchange Offer must notify AGL Resources or
the Trust, or cause AGL Resources or the Trust to be notified, on or prior to
the Expiration Date (as defined herein), that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent (as
defined herein) at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." Any Participating Broker-Dealer who is an "affiliate" of
AGL Resources or the Trust may not rely on such interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. See "The Exchange
Offer--Resales of Exchange Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders
Original Capital Securities pursuant to the Exchange Offer will be deemed to
have agreed, by execution of the Letter of Transmittal, that upon receipt of
notice from AGL Resources or the Trust of the occurrence of any event or the
discovery of any fact which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus until AGL Resources or the Trust has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer, or AGL Resources or the Trust has given notice that
the sale of the Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be. If AGL Resources or the Trust gives such notice to suspend the sale
of the Exchange Capital Securities (or the Exchange Guarantee or the Exchange
Junior Subordinated Debentures, as applicable), it shall extend the 180-day
period referred to above during which Participating Broker-Dealers are entitled
to use this Prospectus in connection with the resale of Exchange Capital
Securities by the number of days during the period from and including the date
of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the Exchange Capital Securities or to
and including the date on which AGL Resources or the Trust has given notice that
the sale of Exchange Capital Securities (or the Exchange Guarantee or the
Exchange Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Original Capital Securities. The Exchange
Capital Securities will be a new issue of securities for which there currently
is no market. Although Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co. and Salomon Brothers Inc, the initial purchasers of the
Original Capital Securities (the "Initial Purchasers"), have informed AGL
Resources and the Trust that they each currently intend to make a market in the
Exchange Capital Securities, they are not obligated to do so, and any such
market making may be discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of any market for the
Exchange Capital Securities. AGL
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Resources and the Trust currently do not intend to apply for listing of the
Exchange Capital Securities on any securities exchange or for quotation through
the NASD Automated Quotation System. See "Risk Factors--Absence of Public
Market."
Any Original Capital Securities not tendered and accepted in the
Exchange Offer will remain outstanding and will be entitled to all the same
rights and will be subject to the same limitations applicable thereto under the
Declaration of Trust (except for those rights which terminate upon consummation
of the Exchange Offer). Following consummation of the Exchange Offer, the
holders of Original Capital Securities will continue to be subject to all of the
existing restrictions upon transfer thereof and neither AGL Resources nor the
Trust will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act of
the Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to
5:00 p.m., New York City time, on October 21, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by AGL Resources or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Original Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum number
of Original Capital Securities being tendered for exchange. However, the
Exchange Offer is subject to certain events and conditions which may be waived
by AGL Resources or the Trust and to the terms and provisions of the
Registration Rights Agreement. Original Capital Securities may be tendered in
whole or in part having an aggregate Liquidation Amount of not less than
$100,000 (100 Capital Securities) or any integral multiple of $1,000 Liquidation
Amount (one Capital Security) in excess thereof. AGL Resources has agreed to pay
all expenses of the Exchange Offer. See "The Exchange Offer--Fees and Expenses."
Distributions on each Exchange Capital Security and interest on each Exchange
Junior Subordinated Debenture will accrue from the last date on which a
Distribution or interest was paid on the Original Capital Security or Original
Junior Subordinated Debenture tendered in exchange therefor or, if no
Distribution or interest has been paid on such Original Capital Security or
Original Junior Subordinated Debenture, from the date of original issuance of
the Original Capital Security or Original Junior Subordinated Debenture tendered
in exchange therefor. See "The Exchange Offer--Distributions on Exchange Capital
Securities."
Neither AGL Resources nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
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AVAILABLE INFORMATION
AGL Resources is subject to the informational requirements of the
Exchange Act, and in accordance therewith files periodic reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected, without charge, and copies
may be obtained at prescribed rates, at the Commission's public reference
facility at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, Suite 1300,
New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants, including AGL Resources, at
http://www.sec.gov. In addition, reports and other material concerning AGL
Resources may be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, on which Exchange the Common Stock of
AGL Resources is listed.
No separate financial statements of the Trust have been included
herein. AGL Resources and the Trust do not consider that such financial
statements would be material to holders of the Exchange Capital Securities
because the Trust is a special purpose entity, has no operating history or
independent operations, and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Junior Subordinated
Debentures, issuing the Trust Securities, and engaging in other activities as
are necessary, advisable, or incidental thereto. See "AGL Capital Trust,"
"Description of the Exchange Capital Securities," "Description of the Exchange
Junior Subordinated Debentures," and "Description of the Exchange Guarantee." In
addition, AGL Resources does not expect that the Trust will file reports, proxy
statements and other information under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by AGL Resources with the
Commission pursuant to the Exchange Act and are incorporated herein by reference
and made a part of this Prospectus:
(a) AGL Resources' Annual Report on Form 10-K for the fiscal year ended
September 30, 1996; and
(b) AGL Resources' Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1996, March 31, 1997, and June 30, 1997.
All documents filed by AGL Resources with the Commission pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the Exchange Offer shall be
deemed to be incorporated herein by reference and made a part of this Prospectus
from the respective dates of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented, or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
AGL RESOURCES WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE). SUCH REQUESTS SHOULD BE DIRECTED TO: OFFICE OF THE CORPORATE
SECRETARY, AGL RESOURCES INC., 303 PEACHTREE STREET, N.E., ATLANTA, GEORGIA
30308, TELEPHONE: (404) 584-3794.
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<PAGE> 8
SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information contained elsewhere in
this Prospectus or incorporated herein by reference.
AGL RESOURCES INC.
AGL Resources is a Georgia corporation incorporated on November 27,
1995, for the primary purpose of becoming the holding company for Atlanta Gas
Light Company ("AGLC"), a natural gas distribution utility, and its
subsidiaries. AGL Resources has its principal executive offices at 303 Peachtree
Street, N.E., Atlanta, Georgia 30308. References to the "AGL Companies" include
AGL Resources, AGLC, AGLC's wholly owned natural gas utility subsidiary,
Chattanooga Gas Company ("Chattanooga Gas"), and AGL Resources' nonregulated
subsidiaries: AGL Energy Services, Inc.; AGL Investments, Inc.; AGL Resources
Service Company; and The Energy Spring, Inc. AGL Energy Services, Inc. has one
nonregulated subsidiary, Georgia Gas Company. AGL Investments, Inc. has seven
nonregulated subsidiaries: AGL Propane, Inc.; Georgia Energy Company; AGL Energy
Wise Services, Inc.; AGL Consumer Services, Inc.; AGL Gas Marketing, Inc.; AGL
Power Services, Inc.; and Trustees Investments, Inc.
AGL Resources' principal business is the distribution of natural gas to
customers in central, northwest, northeast, and southeast Georgia and the
Chattanooga, Tennessee area through its natural gas distribution subsidiary,
AGLC. AGLC's major service area is the ten county metropolitan Atlanta area.
AGLC's other principal service areas in Georgia are the Athens, Augusta,
Brunswick, Macon, Rome, Savannah, and Valdosta areas. In addition to AGLC's
service areas in Georgia, natural gas service is supplied by Chattanooga Gas in
Chattanooga and Cleveland, Tennessee, and surrounding portions of Hamilton
County and Bradley County, Tennessee. All of AGLC's and Chattanooga Gas' natural
gas service area is certificated by the Georgia Public Service Commission and
the Tennessee Regulatory Authority, formerly the Tennessee Public Service
Commission.
AGL CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) a Declaration of Trust executed by AGL Resources, as Sponsor,
and The Bank of New York (Delaware), as Delaware Trustee, and thereafter amended
and restated in the form of the Declaration of Trust to add the other Trustees
and governing language for the Trust and (ii) the filing of a Certificate of
Trust with the Delaware Secretary of State on June 6, 1997. The Trust's business
and affairs are conducted by the following Trustees: The Bank of New York, as
the Property Trustee, The Bank of New York (Delaware), as the Delaware Trustee,
and three individual Administrative Trustees who are employees or officers of or
affiliated with AGL Resources. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by AGL Resources, and (iii) except as otherwise limited by the
Declaration of Trust engaging in only those other activities necessary,
advisable, or incidental thereto. Accordingly, the Junior Subordinated
Debentures are the sole assets of the Trust, and payments under the Junior
Subordinated Debentures are the sole revenue of the Trust.
THE EXCHANGE OFFER
The Exchange Offer........ Up to 75,000 Exchange Capital Securities are being
offered in exchange for a like number of Original
Capital Securities. Original Capital Securities may
be tendered for exchange in whole or in part in a
Liquidation Amount of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 (one
Original Capital Security) in excess thereof. AGL
Resources and the Trust are making the Exchange Offer
in order to satisfy their obligations under the
Registration Rights Agreement relating to the
Original Capital Securities. For a description of the
procedures for tendering Original Capital Securities,
see "The Exchange Offer--Procedures for Tendering
Original Capital Securities."
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<PAGE> 9
Expiration Date........................ 5:00 p.m., New York City time, on
October 21, 1997, unless the
Exchange Offer is extended by AGL
Resources or the Trust (in which
case the Expiration Date will be the
latest date and time to which the
Exchange Offer is extended). See
"The Exchange Offer--Terms of the
Exchange Offer."
Conditions to the Exchange Offer...... The Exchange Offer is subject to
certain conditions, which may be
waived by AGL Resources and the
Trust in their sole discretion. The
Exchange Offer is not conditioned
upon any minimum number of Original
Capital Securities being tendered.
See "The Exchange Offer--Conditions
to the Exchange Offer."
AGL Resources and the Trust reserve
the right in their sole and absolute
discretion, subject to applicable
law, at any time and from time to
time, (i) to delay the acceptance of
the Original Capital Securities for
exchange, (ii) to terminate the
Exchange Offer if certain specified
conditions have not been satisfied,
(iii) to extend the Expiration Date
of the Exchange Offer and retain all
Original Capital Securities tendered
pursuant to the Exchange Offer,
subject, however, to the right of
holders of Original Capital
Securities to withdraw their
tendered Original Capital
Securities, or (iv) to waive any
condition or otherwise amend the
terms of the Exchange Offer in any
respect. See "The Exchange
Offer--Terms of the Exchange Offer."
Withdrawal Rights...................... Tenders of Original Capital
Securities may be withdrawn at any
time on or prior to the Expiration
Date by delivering a written notice
of such withdrawal to the Exchange
Agent in conformity with certain
procedures set forth below under
"The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering
Original Capital
Securities............................ Tendering holders of Original
Capital Securities must complete and
sign a Letter of Transmittal in
accordance with the instructions
contained therein and forward the
same by mail, facsimile, or hand
delivery, together with any other
required documents, to the Exchange
Agent, either with the Original
Capital Securities to be tendered or
in compliance with the specified
procedures for guaranteed delivery
of Original Capital Securities.
Certain brokers, dealers, commercial
banks, trust companies, and other
nominees may also effect tenders by
book-entry transfer. Holders of
Original Capital Securities
registered in the name of a broker,
dealer, commercial bank, trust
company, or other nominee are urged
to contact such Person promptly if
they wish to tender Original Capital
Securities pursuant to the Exchange
Offer. See "The Exchange
Offer--Procedures for Tendering
Original Capital Securities."
Letters of Transmittal and
certificates representing Original
Capital Securities should not be
sent to AGL Resources or the Trust.
Such documents should only be sent
to the Exchange Agent at the address
set forth in the Letter of
Transmittal.
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<PAGE> 10
Resales of Exchange Capital
Securities.................... AGL Resources and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation Finance
of the Commission as set forth in certain
interpretive letters addressed to third parties
in other transactions. However, neither AGL
Resources nor the Trust has sought its own
interpretive letter and there can be no
assurance that the staff of the Division of
Corporation Finance of the Commission would make
a similar determination with respect to the
Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance of the Commission, and
subject to the two immediately following
sentences, AGL Resources and the Trust believe
that Exchange Capital Securities issued pursuant
to this Exchange Offer in exchange for Original
Capital Securities may be offered for resale,
resold, and otherwise transferred by a holder
thereof (other than a holder who is a
broker-dealer) without further compliance with
the registration and prospectus delivery
requirements of the Securities Act, provided
that such Exchange Capital Securities are
acquired in the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any Person to participate, in
a distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities. However, any holder of Original
Capital Securities who is an "affiliate" of AGL
Resources or the Trust or who intends to
participate in the Exchange Offer for the
purpose of distributing the Exchange Capital
Securities, or any broker-dealer who purchased
the Original Capital Securities from the Trust
to resell pursuant to Rule 144A or any other
available exemption under the Securities Act,
(a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth
in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such
Original Capital Securities in the Exchange
Offer, and (c) must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Original Capital
Securities unless such sale is made pursuant to
an exemption from such requirements. In
addition, as described below, if any
broker-dealer holds Original Capital Securities
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Original Capital Securities for
Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resales of such Exchange
Capital Securities.
Each holder of Original Capital Securities who
wishes to exchange Original Capital Securities
for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it
is not an "affiliate" of AGL Resources or the
Trust, (ii) any Exchange Capital Securities to
be received by it are being acquired in the
ordinary course of its business, (iii) it has no
arrangement or understanding with any Person to
participate in a distribution (within the
meaning of the Securities Act) of such Exchange
Capital Securities, and (iv) if such holder is
not a broker-dealer, such holder is not engaged
in, and does not intend to engage in, a
distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities. Each broker-dealer that receives
Exchange Capital Securities
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<PAGE> 11
for its own account in exchange for Original
Capital Securities, where such Original Capital
Securities were acquired by such broker-dealer
as a result of market-making activities or other
trading activities, must acknowledge that it
will deliver a prospectus in connection with any
resale of such Exchange Capital Securities. See
"Plan of Distribution". The Letter of
Transmittal states that, by so acknowledging and
by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on the position taken by
the staff of the Division of Corporation Finance
of the Commission in the interpretive letters
referred to above, AGL Resources and the Trust
believe that Participating Broker-Dealers who
acquired Original Capital Securities for their
own accounts as a result of market-making
activities or other trading activities may
fulfill their prospectus delivery requirements
with respect to the Exchange Capital Securities
received upon exchange of such Original Capital
Securities (other than Original Capital
Securities which represent an unsold allotment
from the initial sale of the Original Capital
Securities) with a prospectus meeting the
requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
distribution with respect to the resale of such
Exchange Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of Exchange Capital Securities received
in exchange for Original Capital Securities
where such Original Capital Securities were
acquired by such Participating Broker-Dealer for
its own account as a result of market-making or
other trading activities. Subject to certain
provisions set forth in the Registration Rights
Agreement and to the limitations described below
under "The Exchange Offer--Resales of Exchange
Capital Securities," AGL Resources and the Trust
have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of such Exchange Capital
Securities for a period ending 180 days after
the Expiration Date (subject to extension under
certain limited circumstances) or, if earlier,
when all such Exchange Capital Securities have
been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any
Participating Broker-Dealer who is an
"affiliate" of AGL Resources or the Trust may
not rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See "The
Exchange Offer--Resales of Exchange Capital
Securities."
Exchange Agent............... The exchange agent with respect to the
Exchange Offer is The Bank of New York (the
"Exchange Agent"). The addresses and telephone
and facsimile numbers of the Exchange Agent are
set forth in "The Exchange Offer--Exchange
Agent" and in the Letter of Transmittal.
Use of Proceeds............ Neither AGL Resources nor the Trust will
receive any cash proceeds from the issuance of
the Exchange Capital Securities offered hereby.
See "Use of Proceeds."
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<PAGE> 12
Certain United States
Federal Income Tax
Consequences; ERISA
Considerations........................ Holders of Original Capital
Securities should review the
information set forth under "Certain
United States Federal Income Tax
Consequences" and "ERISA
Considerations" prior to tendering
Original Capital Securities in
the Exchange Offer.
THE EXCHANGE CAPITAL SECURITIES
Securities Offered..................... Up to 75,000 of the Trust's Exchange
Capital Securities which have been
registered under the Securities Act
(Liquidation Amount $1,000 per
Exchange Capital Security). The
Exchange Capital Securities will be
issued, and the Original Capital
Securities were issued, under the
Declaration of Trust. The Exchange
Capital Securities and any Original
Capital Securities which remain
outstanding after consummation of
the Exchange Offer will vote
together as a single class for
purposes of determining whether
holders of the requisite percentage
in outstanding Liquidation Amount
thereof have taken certain actions
or exercised certain rights under
the Declaration of Trust. See
"Description of Exchange Capital
Securities--Voting Rights; Amendment
of the Declaration of Trust." The
terms of the Exchange Capital
Securities are identical in all
material respects to the terms of
the Original Capital Securities,
except that the Exchange Capital
Securities have been registered
under the Securities Act and will
not be subject to certain
restrictions on transfer applicable
to the Original Capital Securities
and will not provide for any
increase in the Distribution Rate
thereon. See "The Exchange
Offer--Purpose of the Exchange
Offer" and "Description of Exchange
Capital Securities."
Maturity Date.......................... June 1, 2037. The Exchange Capital
Securities are mandatorily
redeemable upon earlier redemption
of the Exchange Junior Subordinated
Debentures.
Distribution Dates..................... June 1 and December 1 of each year,
commencing December 1, 1997.
Extension Periods...................... So long as no Debenture Event of
Default has occurred and is
continuing, Distributions on
Exchange Capital Securities will be
deferred for the duration of any
Extension Period elected by AGL
Resources with respect to the
payment of interest on the Exchange
Junior Subordinated Debentures. No
Extension Period will exceed 10
consecutive semi-annual periods or
extend beyond the Stated Maturity
Date. If interest payments are so
deferred, AGL Resources will not be
permitted, subject to certain
exceptions described herein, to
declare or pay any dividend or
distribution on any of its capital
stock or make any guarantee payments
with respect to the foregoing, or
make any payment on any debt
securities that rank pari passu with
or junior to the Junior Subordinated
Debentures. See "Description of
Exchange Junior Subordinated
Debentures--Option to Extend
Interest Payment Date" and "Certain
Federal Income Tax
Consequences--Interest Income and
Original Issue Discount."
Ranking................................ The Exchange Capital Securities will
rank pari passu, and payments
thereon will be made pro rata, with
the Original Capital Securities and
the
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<PAGE> 13
Common Securities except as described under
"Description of Exchange Capital
Securities--Subordination of Common Securities."
The Exchange Junior Subordinated Debentures will
rank pari passu with the Original Junior
Subordinated Debentures and all other junior
subordinated debentures to be issued by AGL
Resources ("Other Debentures"), which will be
issued and sold (if at all) to other trusts to
be established by AGL Resources (if any), in
each case similar to the Trust ("Other Trusts"),
and will be unsecured and subordinate and junior
in right of payment to all Senior Indebtedness
to the extent and in the manner set forth in the
Indenture. See "Description of Exchange Junior
Subordinated Debentures." The Exchange Guarantee
will rank pari passu with the Original Guarantee
and all other guarantees (if any) to be issued
by AGL Resources with respect to capital or
preferred securities (if any) issued by Other
Trusts ("Other Guarantees") and will constitute
an unsecured obligation of AGL Resources and
will rank subordinate and junior in right of
payment to all Senior Indebtedness to the extent
and in the manner set forth in the Exchange
Guarantee. See "Description of Exchange
Guarantee."
Redemption................ The Trust Securities will be subject to
mandatory redemption in a Like Amount, (i) in
whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated
Debentures, (ii) in whole but not in part, at
any time prior to June 1, 2007,
contemporaneously with the optional prepayment
of the Junior Subordinated Debentures by AGL
Resources upon the occurrence and continuation
of a Tax Event or an Investment Company Act
Event and (iii) in whole or in part, on or after
June 1, 2007, contemporaneously with the
optional prepayment by AGL Resources of the
Junior Subordinated Debentures, in each case at
the applicable Redemption Price. See
"Description of Exchange Securities--Description
of Exchange Capital Securities--Redemption."
Guarantee.................... AGL Resources has, through the Exchange
Guarantee, the Indenture, the Exchange Junior
Subordinated Debentures and the Declaration of
Trust, fully and unconditionally guaranteed,
subject to certain subordination provisions, all
of the Trust's obligations with respect to the
Exchange Capital Securities. The payment of
Distributions on the Exchange Capital Securities
is guaranteed by AGL Resources under the
Exchange Guarantee, but only to the extent that
the Trust has funds legally and immediately
available therefor. If AGL Resources fails to
make required payments on the Exchange Junior
Subordinated Debentures, the Trust will not have
sufficient funds to pay such Distributions, and
the Exchange Guarantee does not cover the
payment of Distributions when the Trust does not
have sufficient funds legally available
therefor. In such event, the remedy of a holder
of Exchange Capital Securities is to enforce the
Exchange Junior Subordinated Debentures in
accordance with applicable law. See "Description
of the Exchange Junior Subordinated Debentures."
AGL Resources' obligations under the Exchange
Guarantee are subordinate and junior in right of
payment to all of its other liabilities and will
rank pari passu with the most senior preferred
stock of AGL Resources which may be issued. See
"Description of the Exchange Guarantee."
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<PAGE> 14
Distribution of Junior Subordinated
Debentures............................. AGL Resources will have the right at
any time to terminate the Trust and
cause a Like Amount of the Exchange
Junior Subordinated Debentures to be
distributed to the holders of the
Exchange Capital Securities in
liquidation of the Trust, subject to
AGL Resources having received an
opinion of counsel to the effect
that such distribution will not be a
taxable event to holders of Capital
Securities. Unless the Exchange
Junior Subordinated Debentures are
distributed to the holders of the
Exchange Capital Securities, in the
event of a liquidation of the Trust
as described herein, after
satisfaction of liabilities to
creditors of the Trust as required
by applicable law, the holders of
the Exchange Capital Securities
generally will be entitled to
receive a Liquidation Amount of
$1,000 per Capital Security plus
accumulated Distributions thereon to
the date of payment. See
"Description of Exchange Capital
Securities--Liquidation of the Trust
and Distribution of Junior
Subordinated Debentures."
Transfer Restrictions.................. The Exchange Capital Securities will
be issued, and may be transferred,
only in minimum denominations of not
less than $1,000 (one Exchange
Capital Security). See "Description
of Exchange Capital Securities--
Restrictions on Transfer." Any such
transfer of Exchange Capital
Securities in denominations of less
than $1,000 shall be deemed to be
void and of no legal effect
whatsoever.
Absence of Market for the
Capital Securities.................... The Exchange Capital Securities will
be a new issue of securities for
which there currently is no market.
Although the Initial Purchasers have
informed the Trust and AGL Resources
that they each currently intend to
make a market in the Capital
Securities, the Initial Purchasers
are not obligated to do so, and any
such market making may be
discontinued at any time without
notice. Accordingly, there can be no
assurance as to the development or
liquidity of any market for the
Capital Securities. The Trust and
AGL Resources do not intend to apply
for listing of the Capital
Securities on any securities
exchange or for quotation through
the NASD Automated Quotation System.
See "Plan of Distribution."
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<PAGE> 15
RISK FACTORS
Prospective investors should carefully review the following information
in addition to the information contained elsewhere in this Prospectus. This
Prospectus contains certain forward-looking statements and information relating
to AGL Resources that are based on the beliefs of management of AGL Resources as
well as assumptions made by and information currently available to management.
The words "anticipate," "believe," "estimate," "expect," "intends," and similar
expressions as they relate to AGL Resources or AGL Resources' management, are
intended to identify forward-looking statements. Such statements reflect the
current views of AGL Resources with respect to future events and are subject to
certain risks, uncertainties, and assumptions, including the risk factors
described in this Prospectus. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated or expected. AGL Resources does not intend to update these
forward-looking statements.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES; HOLDING COMPANY STRUCTURE
The obligations of AGL Resources under the Guarantee issued by it for
the benefit of the holders of Capital Securities, as well as under the Junior
Subordinated Debentures, will be unsecured and rank subordinate and junior in
right of payment to all Senior Indebtedness. In addition, in the case of a
bankruptcy or insolvency proceeding, AGL Resources' obligations under the
Guarantee will also rank subordinate and junior in right of payment to all
liabilities (other than Other Guarantees) of AGL Resources. At June 30, 1997,
AGL Resources had no Senior Indebtedness outstanding. Because AGL Resources is a
holding company, the right of AGL Resources to participate in any distribution
of assets of any subsidiary upon such subsidiary's liquidation or reorganization
or otherwise (and thus the ability of holders of the Capital Securities to
benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary, except to the extent that AGL Resources may itself
be recognized as a creditor of that subsidiary. At June 30, 1997, the
subsidiaries of AGL Resources had total liabilities (excluding liabilities owed
to AGL Resources) of approximately $319.8 million. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of AGL Resources' subsidiaries. None of the Indenture, the
Guarantee or the Declaration of Trust places any limitation on the amount of
secured or unsecured debt, including Senior Indebtedness, that may be incurred
by AGL Resources or by any subsidiary. The principal sources of AGL Resources'
income are dividends and fees from its subsidiaries. Subject to the preferential
rights of the holders of the preferred stock of AGLC (and AGLC Junior Stock as
defined below (if any) ranking as to dividends ahead of the common stock of
AGLC) to receive full cumulative dividends, both past and current, and the
restrictions set forth below, AGL Resources, as the holder of all of the
outstanding shares of the common stock of AGLC, is entitled to receive such
dividends as may be declared by the Board of Directors of AGLC out of funds
legally available therefor. AGLC's Articles of Incorporation impose restrictions
on the payment of dividends (except a dividend in common stock of AGLC or in any
class of stock ranking junior to the preferred stock of AGLC as to dividends or
assets (the "AGLC Junior Stock")) unless AGLC attains certain earnings levels or
maintains certain capitalization ratios. Under the most restrictive of these
provisions, all of AGLC's retained earnings were free of such restrictions and
available for the payment of dividends at June 30, 1997. Retained earnings of
AGLC at June 30, 1997 were $86.0 million. See "Description of Exchange
Guarantee--Status of the Exchange Guarantee" and "Description of Exchange Junior
Subordinated Debentures--General" and "--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities
is solely dependent upon AGL Resources making payments on the Junior
Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX AND MARKET CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, AGL Resources will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity Date. As a consequence of any such deferral,
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<PAGE> 16
semi-annual Distributions on the Capital Securities by the Trust will be
deferred (and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at the
rate of 8.17% per annum, compounded semi-annually), from the relevant payment
date for such Distributions during any such Extension Period.
Prior to the termination of any such Extension Period, AGL Resources
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid on the Junior
Subordinated Debentures (together with interest thereon at the annual rate of
8.17%, compounded semi-annually, to the extent permitted by applicable law), AGL
Resources may elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that AGL Resources
may elect to begin an Extension Period. See "Description of Exchange Capital
Securities--Distributions" and "Description of Exchange Junior Subordinated
Debentures--Option to Extend Interest Payment Date."
AGL Resources has no current intention to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. Should, however, AGL
Resources exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Trust Securities will be required to
accrue income(as OID) in respect of the deferred stated interest allocable to
its Trust Securities for United States federal income tax purposes, which will
be allocated but not distributed to holders of Trust Securities. As a result,
each such holder of Capital Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash related to such income from the Trust if the holder disposes of
the Capital Securities prior to the record date for the payment of Distributions
thereafter. See "Certain Federal Income Tax Consequences-- Interest Income and
Original Issue Discount" and "--Sales of Capital Securities."
Should AGL Resources elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Capital
Securities. In addition, merely as a result of the existence of AGL Resources'
right to defer payments of interest on the Junior Subordinated Debentures, the
market price of the Capital Securities may be more volatile than the market
prices of other securities that are not subject to such deferrals.
SPECIAL EVENT REDEMPTION; POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL
SECURITIES
Upon the occurrence and continuation of a Tax Event or an Investment
Company Act Event (each as defined under "Description of Exchange Junior
Subordinated Debentures--Special Event Prepayment"), AGL Resources will have the
right to prepay the Junior Subordinated Debentures in whole (but not in part) at
the Special Event Prepayment Price prior to June 1, 2007 and within 90 days
following the occurrence of such Tax Event or Investment Company Act Event and
therefore cause a mandatory redemption of the Trust Securities at the Special
Event Redemption Price.
See "Description of Exchange Capital Securities--Redemption."
On March 19, 1996, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after December
7, 1995 (the "1996 Proposed Legislation") if such debt obligations have (i) a
weighted average maturity in excess of 40 years, or (ii) a maximum term in
excess of 20 years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. Neither the 1996 Proposed Legislation nor similar
legislation was enacted during the 104th Congress. On February 6, 1997,
President Clinton proposed in the administration's fiscal year 1998 budget
certain new tax changes (the "1997 Proposed Legislation") that would, among
other things, generally deny corporate issuers a deduction for interest or OID
in respect of certain debt obligations if such debt obligations have a maximum
term in excess of 15 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On August 5, 1997, President Clinton
signed the Taxpayer Relief Act of 1997, which enacted into law certain
provisions of the 1997 Proposed Legislation. The Taxpayer Relief Act of 1997
does not contain any provision that would affect AGL Resources' ability to
deduct interest payable on the Junior Subordinated Debentures.
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<PAGE> 17
However, there can be no assurance that other legislation enacted after the
date hereof will not adversely affect the ability of AGL Resources to deduct
the interest payable on the Junior Subordinated Debentures. There can be no
assurance, therefore, that a Tax Event will not occur. A Tax Event would permit
AGL Resources to cause a redemption of the Capital Securities before June 1,
2007.
TAX AND MARKET RISKS OF REDEMPTION OR EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR
SUBORDINATED DEBENTURES
AGL Resources has the right at any time to dissolve, wind-up, or
terminate the Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in exchange therefor in
liquidation of the Trust. AGL Resources will have the right, in certain
circumstances, to redeem the Junior Subordinated Debentures, in whole or in
part, in lieu of a distribution of the Junior Subordinated Debentures by the
Trust, in which event the Trust will redeem the Trust Securities on a pro rata
basis to the same extent as the Junior Subordinated Debentures are redeemed by
AGL Resources.
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Capital Securities. If, however, the Trust is
characterized as an association taxable as a corporation at the time of the
dissolution of the Trust, the distribution of the Junior Subordinated Debentures
may constitute a taxable event to holders of Capital Securities. Moreover, upon
the occurrence of a Tax Event, a dissolution of the Trust in which holders of
the Capital Securities receive cash may be a taxable event to such holders. See
"Certain Federal Income Tax Consequences--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for Capital
Securities or Junior Subordinated Debentures distributed to the holders of
Capital Securities if a termination of the Trust were to occur. Accordingly, the
Capital Securities or the Junior Subordinated Debentures may trade at a discount
from the price that the investor paid to purchase the Capital Securities.
Because holders of Capital Securities may receive Junior Subordinated Debentures
in liquidation of the Trust and because Distributions are otherwise limited to
payments on the Junior Subordinated Debentures, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of Exchange Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Bank of New York will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The Bank of
New York will also act as Property Trustee under the Declaration of Trust and as
Indenture Trustee under the Indenture. The Bank of New York (Delaware) will act
as Delaware Trustee under the Declaration of Trust. The Guarantee will guarantee
to the holders of the Capital Securities the following payments, to the extent
not paid by the Trust: (i) any accumulated and unpaid Distributions required to
be paid on the Capital Securities, to the extent that the Trust has funds on
hand legally and immediately available therefor, (ii) the applicable Redemption
Price with respect to any Capital Securities called for redemption, to the
extent that the Trust has funds on hand legally and immediately available
therefor, and (iii) upon a voluntary or involuntary termination and liquidation
of the Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Capital Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Trust has funds on hand legally and immediately
available therefor and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Capital Securities upon a termination and
liquidation of the Trust (collectively, the "Guarantee Payments"). If an event
of default under the Guarantee has occurred and is continuing, no Guarantee
Payments under the Common Securities Guarantee may be made until the holders of
the Capital Securities shall be paid the Guarantee Payments in full. The holders
of a majority in Liquidation Amount of the Capital Securities will have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust power conferred upon the Guarantee Trustee. Any
holder of the Capital Securities may institute a legal proceeding directly
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<PAGE> 18
against AGL Resources to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other Person or entity. If AGL Resources defaults on its obligation to pay
amounts payable under the Junior Subordinated Debentures, the Trust will not
have sufficient funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such event, holders
of the Capital Securities will not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of AGL Resources to pay principal of (or premium, if any) or interest on
the Junior Subordinated Debentures on the payment date on which such payment is
due and payable, then a holder of Capital Securities may institute a legal
proceeding directly against AGL Resources for enforcement of payment to such
holder of the principal of (or premium, if any) or interest on such Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Capital Securities of such holder (a "Direct Action").
Notwithstanding any payments made to a holder of Capital Securities by AGL
Resources in connection with a Direct Action, AGL Resources shall remain
obligated to pay the principal of (and premium, if any) and interest on the
Junior Subordinated Debentures, and AGL Resources shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on the
Capital Securities to the extent of any payments made by AGL Resources to such
holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or to assert directly any
other rights in respect of the Junior Subordinated Debentures. See "Description
of Exchange Junior Subordinated Debentures--Enforcement of Certain Rights by
Holders of Capital Securities," "Description of Exchange Junior Subordinated
Debentures--Debenture Events of Default," and "Description of Exchange
Guarantee." The Declaration of Trust provides that each holder of Capital
Securities by acceptance thereof agrees to the provisions of the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally have limited voting rights
relating only to the modification of the Capital Securities, the termination or
liquidation of the Trust, and the exercise of the Trust's rights as holder of
Junior Subordinated Debentures. Holders of Capital Securities are not entitled
to vote to appoint, remove, or replace the Property Trustee or the Delaware
Trustee, and such voting rights are vested exclusively in the holder of the
Common Securities except upon the occurrence of certain events described herein.
Holders of Capital Securities are not entitled to appoint, remove or replace
Administrative Trustees as such right is vested exclusively in the holder(s) of
the Common Securities. See "Description of Exchange Capital Securities--Voting
Rights; Amendment of the Declaration of Trust" and "--Removal of Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL CAPITAL SECURITIES
The Original Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold, or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions.
Original Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Original Capital Securities which remain outstanding will not be entitled to any
rights to have such Original Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement (subject to
certain limited exceptions). AGL Resources and the Trust do not intend to
register under the Securities Act any Original Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable). To the extent that Original Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Original Capital Securities could be adversely affected.
The Exchange Capital Securities and any Original Capital Securities
that remain outstanding after consummation of the Exchange Offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain
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<PAGE> 19
rights under the Declaration of Trust. See "Description of Exchange Capital
Securities--Voting Rights; Amendment of the Declaration of Trust."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
November 8, 1997 and declared effective by December 28, 1997, the Distribution
Rate borne by the Original Capital Securities will increase by 0.25% per annum
until such registration statement has been filed or declared effective, as the
case may be. Upon consummation of the Exchange Offer, holders of Original
Capital Securities will not be entitled to any increase in the Distribution Rate
thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Description of Original
Securities."
ABSENCE OF PUBLIC MARKET
The Original Capital Securities were issued to, and AGL Resources
believes such securities are currently owned by, a relatively small number of
beneficial owners. The Original Capital Securities have not been registered
under the Securities Act and will be subject to transfer restrictions (including
a limitation on transfer to only blocks having a Liquidation Amount of not less
than $100,000 (100 Capital Securities)) if they are not exchanged for the
Exchange Capital Securities. Although the Exchange Capital Securities may be
resold or otherwise transferred by the holders (who are not affiliates of AGL
Resources or the Trust) without compliance with the registration requirements
under the Securities Act, there is no existing market for the Exchange Capital
Securities and there can be no assurance as to the liquidity of any markets that
may develop for the Exchange Capital Securities, the ability of the holders to
sell their Exchange Capital Securities or at what price holders of the Exchange
Capital Securities will be able to sell their Exchange Capital Securities.
Future trading prices of the Exchange Capital Securities will depend on many
factors including, among other things, prevailing interest rates, AGL Resources'
operating results, and the market for similar securities. Depending on these and
other factors, the Exchange Capital Securities may trade at a discount. The
Initial Purchasers have informed the Trust and AGL Resources that the Initial
Purchasers intend to make a market in the Capital Securities. However, the
Initial Purchasers are not obligated to do so and any such market making
activity may be terminated at any time without notice to the holders of the
Capital Securities. If an active public market does not develop, the market
price and liquidity of the Exchange Capital Securities may be adversely
affected. In addition, such market making activity will be subject to the limits
of the Securities Act and may be limited during the pendency of the Exchange
Offer Registration Statement (as defined herein).
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Capital Securities in exchange for Original
Capital Securities pursuant to the Exchange Offer will be made only after a
timely receipt by the Exchange Agent of such Original Capital Securities, a
properly completed and duly executed Letter of Transmittal and all other
required documents. Therefore, holders of the Original Capital Securities
desiring to tender such Original Capital Securities in exchange for Exchange
Capital Securities should allow sufficient time to ensure timely delivery.
Neither AGL Resources nor the Trust is under any duty to give notification of
defects or irregularities with respect to the tenders of Original Capital
Securities for exchange.
AGL RESOURCES INC.
GENERAL
AGL Resources is a Georgia corporation incorporated on November 27,
1995, for the primary purpose of becoming the holding company for AGLC, a
natural gas distribution utility, and its subsidiaries including AGLC's wholly
owned natural gas utility subsidiary, Chattanooga Gas, and AGL Resources'
nonregulated subsidiaries: AGL Energy Services, Inc.; AGL Investments, Inc.; AGL
Resources Service Company; and The Energy Spring, Inc. AGL Energy Services, Inc.
has one nonregulated subsidiary, Georgia Gas Company. AGL Investments, Inc. has
seven nonregulated subsidiaries: AGL Propane, Inc.; Georgia Energy Company; AGL
Energy Wise Services, Inc.; AGL
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<PAGE> 20
Consumer Services, Inc.; AGL Gas Marketing, Inc.; AGL Power Services, Inc.; and
Trustees Investments, Inc. Unless noted specifically or otherwise required by
the context, references to AGLC include the operations and activities of AGLC
and Chattanooga Gas.
AGL Resources' principal business is the distribution of natural gas to
customers in central, northwest, northeast and southeast Georgia and the
Chattanooga, Tennessee area through its natural gas distribution subsidiary,
AGLC. AGLC's major service area is the ten county metropolitan Atlanta area.
Metropolitan Atlanta has an estimated population of three million, constituting
approximately 40% of the total population of Georgia. Approximately 66% of
AGLC's customers are located in the Atlanta metropolitan area. These customers
consume 45% of the natural gas sold and transported and provide approximately
61% of the gas revenues of AGLC. AGLC's other principal service areas in Georgia
are the Athens, Augusta, Brunswick, Macon, Rome, Savannah and Valdosta areas.
During the twelve months ended June 30, 1997, AGLC supplied natural gas service
to an average of approximately 1.4 million customers in Georgia including 497
centrally metered customers serving 48,835 apartment units. AGLC provides
natural gas service in 235 cities and surrounding areas in Georgia. In addition
to AGLC's service areas in Georgia, natural gas service was supplied by
Chattanooga Gas to an average of approximately 53,200 customers in Chattanooga
and Cleveland, Tennessee, and surrounding portions of Hamilton County and
Bradley County, Tennessee during the twelve months ended June 30, 1997. All of
AGLC's natural gas service area is certificated by the Georgia Public Service
Commission ("Georgia Commission") and the Tennessee Regulatory Authority
("TRA"), formerly the Tennessee Public Service Commission.
During the twelve months ended June 30, 1997, AGLC added approximately
33,700 customers, based on 12- month average calculations, representing an
increase over the prior year of approximately 2.4%. Substantially all of this
growth was in the residential and small commercial service categories.
AGL Resources engages in nonregulated business activities through its
wholly owned subsidiaries, AGL Energy Services, Inc., a gas supply services
company; AGL Investments, Inc., a subsidiary established to develop and manage
certain nonregulated businesses; The Energy Spring, Inc., a retail energy
marketing company; and their subsidiaries.
The principal executive offices of AGL Resources are located at 303
Peachtree Street, N.E., Atlanta, Georgia 30308, and the telephone number is
(404) 584-9470.
AGL Resources' primary business of gas distribution through AGLC is
highly seasonal in nature and heavily dependent on weather because of the
substantial use of gas for heating purposes. However, the Georgia Commission and
the TRA have authorized the implementation of weather normalization adjustment
riders, which are designed to offset the impact that either unusually cold or
unusually warm weather has on operating margin, earnings and cash flow and are
designed to stabilize operating margin and earnings at the levels which would
occur with normal weather.
RECENT DEVELOPMENTS
The 1997 session of the Georgia General Assembly passed legislation
which provides a legal framework for comprehensive deregulation of many aspects
of the natural gas business in Georgia. Senate Bill 215, the Natural Gas
Competition and Deregulation Act, which became law on April 14, 1997, if
implemented by AGLC with respect to its system, would result in the application
of an alternative form of regulation, such as performance based regulation, to
AGLC. Pursuant to a separate election, AGLC, as an electing distribution
company, could choose to exit the merchant function and fully unbundle its
system.
Senate Bill 215 provides for a transition period leading to a condition
of effective competition in the natural gas markets. An electing distribution
company would unbundle all services to its natural gas customers, assign firm
delivery capacity to certificated marketers selling the gas commodity, and
create a secondary transportation market for interruptible transportation
capacity. Marketers, including unregulated affiliates of AGLC, would compete to
sell natural gas to all customers at market-based prices. AGLC would continue to
provide intrastate transportation of the gas to end
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<PAGE> 21
users through its existing system, subject to continued rate regulation by the
Georgia Commission. In addition, the Georgia Commission would continue to
regulate safety, access and quality of service pursuant to an alternative form
of regulation.
The law provides for marketer standards and rules of business practice
to ensure that the benefits of a competitive natural gas market are available to
all customers on the AGLC system. It imposes an obligation to serve on marketers
with a corresponding universal service fund which can also facilitate the
extension of AGLC facilities in order to serve the public interest.
In order to implement the new law, the Georgia Commission must
undertake and complete several rulemakings by December 31, 1997. As the process
of considering and adopting these rules progresses, the extent of and schedule
for actions under the legislation by AGLC will evolve further.
Currently, in accordance with Statement of Financial Accounting
Standard No. 71, "Accounting for the Effects of Certain types of Regulation,"
("SFAS 71"), AGLC has recorded regulatory assets and liabilities which represent
regulator-approved deferrals resulting from the ratemaking process. Recently,
the staff of the Commission has questioned the continued applicability of SFAS
71 to portions of the business of three California utilities, as a result of
legislation recently enacted in California. The Emerging Issues Task Force
("EITF") held discussions of this issue at its July 1997 meeting. The EITF
concluded that once legislation is passed to deregulate a segment of a utility
and that legislation includes sufficient detail for the enterprise to determine
how the transition plan will affect that segment, SFAS 71 should be discontinued
for that segment of the utility. The State of Georgia has enacted legislation
(Senate Bill 215) which allows deregulation of the merchant function and
unbundling of certain ancillary services of local gas distribution companies.
Each local gas company within the state may elect to be subject to Senate Bill
215 or continue to be regulated in the traditional manner. Under either
scenario, the rates to transport natural gas through the intrastate pipe system
of the local gas distribution company will be regulated by the Georgia
Commission. Since the activities associated with AGLC's SFAS 71 regulatory
assets and liabilities continue to be regulated, AGLC has concluded that the
continued application of SFAS 71 remains appropriate.
USE OF PROCEEDS
Neither AGL Resources nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities and the Exchange Guarantee
offered hereby. In consideration for issuing the Exchange Capital Securities in
exchange for the Original Capital Securities as described in this Prospectus,
the Trust will receive Original Capital Securities in like Liquidation Amount.
The Original Capital Securities surrendered in exchange for the Exchange Capital
Securities will be retired and canceled.
The gross proceeds to the Trust from the offering of the Original
Capital Securities, $75,000,000, were invested by the Trust in the Original
Junior Subordinated Debentures. AGL Resources used approximately $36 million of
the net proceeds from the sale of the Original Junior Subordinated Debentures to
reduce short-term debt and intends to use the balance for general corporate
purposes, which may include, but not be limited to, investments in and advances
to AGL Resources' subsidiaries and the redemption of AGLC's outstanding
preferred securities. The precise amount and timing of the application of such
net proceeds used for such corporate purposes will depend on the funding
requirements and the availability of other funds to AGL Resources and its
subsidiaries. Pending such application, AGL Resources has invested the balance
of the net proceeds in short-term interest bearing securities.
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<PAGE> 22
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary below should be read in connection with the financial
information included in AGL Resources' 1996 Annual Report on Form 10-K and the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. Unaudited
data for the twelve months ended June 30, 1997 reflects, in the opinion of
management of AGL Resources, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data.
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
(DOLLARS IN MILLIONS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED SEPTEMBER 30,
ENDED JUNE 30, -------------------------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Operating Revenues ..................... $1,267.3 $1,220.2 $ 1,063.0 $ 1,199.9
Operating Margin (1).................... 518.0 499.9 491.2 463.1
Dividends on Preferred Stock of
Majority Owned Subsidiaries .......... 4.8 4.4 4.4 4.5
Net Income ............................. 77.9 75.6 26.4 58.7
Earnings Per Share of Common Stock...... 1.40 1.37 0.50 1.17
Ratio of Earnings to Fixed Charges (2).. 3.02 3.08 1.75 2.66
BALANCE SHEET DATA (PERIOD END):
Total Assets ........................... $1,876.5 $1,824.7 $ 1,674.6 $ 1,642.9
Long-Term Obligations, including
current portion (3) .................. 640.3 610.3 610.3 625.3
OPERATING DATA:
Gas Sold and Transported (Therms in
millions):
Sold ................................. 1,812.7 2,153.2 1,896.8 1,906.8
Transported .......................... 934.9 738.7 722.8 697.4
-------- -------- --------- ---------
Total................................. 2,747.6 2,891.9 2,619.6 2,604.2
======== ======== ========= =========
Total Utility Customers (Average, in
thousands)............................ 1,418.6 1,394.5 1,353.0 1,315.7
</TABLE>
- ---------
(1) Operating revenues less cost of gas.
(2) The ratio of earnings to fixed charges in fiscal 1993 and 1992 was 2.49 and
2.54, respectively. The ratio of earnings to fixed charges was computed by
dividing the sum of income before income taxes plus fixed charges, by fixed
charges. Fixed charges consist of interest expense, amortization of debt
discount and deferred financing costs, capitalized interest, the estimated
interest component of rentals charged to income and preferred stock
dividends of majority owned subsidiaries, increased to an amount
representing the pre-tax earnings which would be required to cover such
preferred stock dividend requirements.
(3) On August 15, 1997, AGLC redeemed $14.3 million of its outstanding
preferred stock.
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<PAGE> 23
AGL CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) the Declaration of Trust executed by AGL Resources, as Sponsor,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, and the Administrative Trustees named therein, and (ii) the
filing of a Certificate of Trust with the Delaware Secretary of State on June 6,
1997. The Trust exists for the exclusive purposes of (i) issuing and selling the
Trust Securities, (ii) using the proceeds from the sale of Trust Securities to
acquire the Junior Subordinated Debentures, and (iii) except as otherwise
limited by the Declaration of Trust engaging in only those other activities
necessary, advisable, or incidental thereto. Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Trust, and payments under
the Junior Subordinated Debentures will be the sole revenues of the Trust. All
of the Common Securities are owned by AGL Resources.
The Common Securities rank pari passu, and payments will be made
thereon pro rata, with the Capital Securities, except that upon the occurrence
and continuance of an event of default under the Declaration of Trust, the
rights of AGL Resources as holder of the Common Securities to payments in
respect of Distributions and payments upon liquidation, redemption or otherwise
will be subordinated to the rights of the holders of the Capital Securities. See
"Description of Exchange Capital Securities--Subordination of Common
Securities." AGL Resources has acquired Common Securities in a Liquidation
Amount equal to 3% of the total capital of the Trust. The Trust has a term of 40
years, but may terminate earlier as provided in the Declaration of Trust. The
Trust's business and affairs are conducted by the Trustees, each appointed by
AGL Resources as holder of the Common Securities.
The Trustees for the Trust are The Bank of New York, as the Property
Trustee, The Bank of New York (Delaware), as the Delaware Trustee, and three
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with AGL Resources (collectively, the "Trustees"). The
Bank of New York, as Property Trustee, acts as sole debenture trustee under the
Declaration of Trust. The Bank of New York acts as debenture trustee under the
Guarantee and the Indenture. See "Description of Exchange Guarantee" and
"Description of Exchange Junior Subordinated Debentures." The holder of the
Common Securities of the Trust or, if an Event of Default under the Declaration
of Trust has occurred and is continuing, the holders of a majority in
Liquidation Amount of the Capital Securities, will be entitled to appoint,
remove, or replace the Property Trustee and/or the Delaware Trustee. In no event
will the holders of the Capital Securities have the right to vote to appoint,
remove, or replace the Administrative Trustees; such voting rights will be
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Trustee are governed by the Declaration of Trust and the
Delaware Business Trust Act. AGL Resources has and will continue to pay all
fees, expenses, debts, and obligations (other than the Trust Securities) related
to the Trust and the Exchange Offer, subject to limitations contained herein,
and has and will continue to pay, directly or indirectly, all ongoing costs,
expenses, and liabilities of the Trust. The principal executive office of the
Trust is c/o AGL Resources Inc., 303 Peachtree Street, N.E., Atlanta, Georgia
30308.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original Capital Securities, AGL
Resources and the Trust entered into the Registration Rights Agreement with the
Initial Purchasers, pursuant to which AGL Resources and the Trust agreed to file
and to use their reasonable efforts to cause to become effective with the
Commission a registration statement with respect to the exchange of the Original
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Original Capital Securities. A copy of the
Registration Rights Agreement has been filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of AGL Resources and the Trust under the Registration Rights Agreement. The form
and terms of the Exchange Capital Securities are the same as the form and terms
of the Original Capital Securities except that the Exchange Capital Securities
have been registered under the
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<PAGE> 24
Securities Act and will not be subject to certain restrictions on transfer
applicable to the Original Capital Securities, and will not provide for any
increase in the Distribution Rate thereon. In that regard, the Original Capital
Securities provide, among other things, that, if a registration statement
relating to the Exchange Offer has not been filed by November 8, 1997 and
declared effective by December 28, 1997, then commencing on the day after either
such date, as liquidation damages, additional interest (the "Additional
Interest") shall accrue on the principal amount of the Original Junior
Subordinated Debentures, and corresponding additional distributions (the
"Additional Distributions") shall accumulate on the Liquidation Amount of the
Trust Securities, each at a rate of 0.25% per annum until such registration
statement is filed or declared effective, as the case may be. Upon consummation
of the Exchange Offer, holders of Original Capital Securities will not be
entitled to any increase in the Distribution Rate thereon or any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to Exchange
Original Capital Securities" and "Description of Exchange Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Original Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction. AGL
Resources and the Trust have taken action in some, but not all, states and
other jurisdictions to comply with the securities or blue sky laws of such
states and jurisdictions. A list of states and other jurisdictions for which
AGL Resources and the Trust have taken action to comply is available upon
request by contacting AGL Resources Inc., 303 Peachtree Street, N.E., Atlanta,
Georgia 30308; Attention Pamela J. Anthony. AGL Resources' telephone number at
such address is (404) 584-9470.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any Person in whose name the Original Capital
Securities are registered on the books of the Trust or any other Person who has
obtained a properly completed bond power from the registered holder, or any
Person whose Original Capital Securities are held of record by The Depository
Trust Company ("DTC") who desires to deliver such Original Capital Securities by
book-entry transfer at DTC.
Pursuant to the Exchange Offer, AGL Resources will exchange as soon as
practicable after the date hereof, the Original Guarantee for the Exchange
Guarantee and the Original Junior Subordinated Debentures, in an amount
corresponding to the Original Capital Securities accepted for exchange, for a
like aggregate principal amount of the Exchange Junior Subordinated Debentures.
The Exchange Guarantee and Exchange Junior Subordinated Debentures have been
registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to 75,000 Exchange Capital Securities for a like number of Original
Capital Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described below. The Trust
will issue, promptly after the Expiration Date, up to 75,000 of Exchange Capital
Securities in exchange for a like number of outstanding Original Capital
Securities tendered and accepted in connection with the Exchange Offer. Holders
may tender their Original Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital Security) in excess
thereof; provided that if any holder tenders in part Original Capital
Securities, the Liquidation Amount of the untendered Original Capital Securities
must not be less than $100,000 (100 Original Capital Securities).
The Exchange Offer is not conditioned upon any minimum number of
Original Capital Securities being tendered. As of the date of this Prospectus,
75,000 Original Capital Securities are outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Capital
Securities which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Declaration of Trust, but will not be entitled to any
further registration rights under the Registration Rights Agreement, except
under limited circumstances. See "Risk Factors--Consequences of a Failure to
Exchange Original Capital Securities" and "Description of Exchange Capital
Securities."
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If any tendered Original Capital Securities are not accepted for
exchange because of an invalid tender or the occurrence of certain other events
set forth herein or otherwise, certificates for any such unaccepted Original
Capital Securities will be returned, without expense, to the tendering holder
thereof promptly after the Expiration Date.
Holders who tender Original Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Original Capital Securities in connection with the
Exchange Offer. AGL Resources will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "--Fees and Expenses."
NEITHER AGL RESOURCES, THE BOARD OF DIRECTORS OF AGL RESOURCES NOR ANY
TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
ORIGINAL CAPITAL SECURITIES MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER
PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL
CAPITAL SECURITIES TO TENDER BASED ON SUCH HOLDERS' OWN FINANCIAL POSITIONS AND
REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
October 21, 1997, unless the Exchange Offer is extended by AGL Resources or the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
AGL Resources and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) if the Trust
determines, in its sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have occurred
or exist or have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Original Capital Securities tendered pursuant to
the Exchange Offer, subject, however, to the right of holders of Original
Capital Securities to withdraw their tendered Original Capital Securities as
described under "--Withdrawal Rights," and (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer in any respect. If the Exchange
Offer is amended in a manner determined by AGL Resources and the Trust to
constitute a material change, or if AGL Resources and the Trust waive a material
condition of the Exchange Offer, AGL Resources and the Trust will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the holders of the Original Capital Securities, and AGL Resources
and the Trust will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which AGL Resources and the Trust may choose to make any public
announcement and subject to applicable law, AGL Resources and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, Exchange Capital
Securities for Original Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
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In all cases, delivery of Exchange Capital Securities in exchange for
Original Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) Original Capital Securities or a book-entry confirmation of a book-entry
transfer of Original Capital Securities into the Exchange Agent's account at
DTC, (ii) the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, and (iii) any other
documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Original Capital Securities into the Exchange Agent's
account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Original
Capital Securities validly tendered and not withdrawn as, if, and when the Trust
gives oral or written notice to the Exchange Agent of the Trust's acceptance of
such Original Capital Securities for exchange pursuant to the Exchange Offer.
The Exchange Agent will act as agent for the Trust for the purpose of receiving
tenders of Original Capital Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving
Original Capital Securities, Letters of Transmittal and related documents and
transmitting Exchange Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Original Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before or
after the Trust's acceptance for exchange of Original Capital Securities) or the
Trust extends the Exchange Offer or is unable to accept for exchange or exchange
Original Capital Securities tendered pursuant to the Exchange Offer, then,
without prejudice to the Trust's rights set forth herein, the Exchange Agent
may, nevertheless, on behalf of the Trust and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Original Capital Securities and such Original
Capital Securities may not be withdrawn except to the extent tendering holders
are entitled to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Original Capital
Securities will warrant and agree in the Letter of Transmittal that it has full
power and authority to tender, exchange, sell, assign, and transfer Original
Capital Securities, that the Trust will acquire good, marketable and
unencumbered title to the tendered Original Capital Securities, free and clear
of all liens, restrictions, charges, and encumbrances, and the Original Capital
Securities tendered for exchange are not subject to any adverse claims or
proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Trust or the Exchange
Agent to be necessary or desirable to complete the exchange, sale, assignment,
and transfer of the Original Capital Securities tendered pursuant to the
Exchange Offer.
PROCEDURES FOR TENDERING ORIGINAL CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Original Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"--Exchange Agent," and either (i) tendered Original Capital Securities must be
received by the Exchange Agent, or (ii) such Original Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation must be received by the Exchange Agent, in each case
on or prior to the Expiration Date, or (iii) the guaranteed delivery procedures
set forth below must be complied with.
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Original Capital Securities delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND
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DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Original Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Original Capital Securities by causing DTC
to transfer such Original Capital Securities into the Exchange Agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of Original Capital Securities may be effected through book-entry
transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other required documents, must in any case be
delivered to and received by the Exchange Agent at its address set forth under
"--Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Original Capital Securities
need not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Original Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Original Capital Securities must be duly
endorsed or accompanied by a properly executed bond power, with the endorsement
or signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer, or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association, or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instructions 1 and 2 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Original Capital
Securities pursuant to the Exchange Offer and the certificates for such Original
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Original Capital Securities may nevertheless be tendered, provided
that all of the following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible
Institution;
(b) properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the Expiration
Date; and
(c) the certificates (or a book-entry confirmation)
representing all tendered Original Capital Securities, in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
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Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Original Capital Securities tendered and
accepted for exchange pursuant to the Exchange Offer will in all cases be made
only after timely receipt by the Exchange Agent of Original Capital Securities,
or of a book-entry confirmation with respect to such Original Capital
Securities, and a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of Exchange Capital Securities might not be made to all tendering holders at the
same time, and will depend upon when Original Capital Securities, book-entry
confirmations with respect to Original Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Original Capital Securities
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt), and acceptance for exchange
of any tendered Original Capital Securities will be determined by AGL Resources
and the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. AGL Resources and the Trust reserve the absolute right,
in their sole and absolute discretion, to reject any and all tenders determined
by them not to be in proper form or the acceptance of which, or exchange for,
may, in the opinion of counsel to AGL Resources and the Trust, be unlawful. AGL
Resources and the Trust also reserve the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer as set forth under
"--Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Original Capital Securities of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The interpretation by AGL Resources and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Original Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither AGL Resources,
the Trust, any affiliates or assigns of AGL Resources or the Trust, the Exchange
Agent, nor any other Person shall be under any duty to give any notification of
any irregularities in tenders or incur any liability for failure to give any
such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other Person acting in a fiduciary or representative capacity,
such Person should so indicate when signing, and unless waived by AGL Resources
and the Trust, proper evidence satisfactory to AGL Resources and the Trust, in
their sole discretion, of such Person's authority to so act must be submitted.
A beneficial owner of Original Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company, or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Exchange Capital
Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither AGL
Resources nor the Trust sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, AGL
Resources and the Trust believe that Exchange Capital Securities issued pursuant
to this Exchange Offer in exchange for Original Capital Securities may be
offered for resale, resold, and otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without further compliance with the
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registration and prospectus delivery requirements of the Securities Act,
provided that such Exchange Capital Securities are acquired in the ordinary
course of such holder's business and that such holder is not participating, and
has no arrangement or understanding with any Person to participate, in a
distribution (within the meaning of the Securities Act) of such Exchange Capital
Securities. However, any holder of Original Capital Securities who is an
"affiliate" of AGL Resources or the Trust or who intends to participate in the
Exchange Offer for the purpose of distributing Exchange Capital Securities, or
any broker-dealer who purchased Original Capital Securities from the Trust to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Original Capital Securities in the Exchange Offer, and (c) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Original
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, if any broker-dealer holds
Original Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Original Capital
Securities for Exchange Capital Securities, then such broker-dealer must deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resales of such Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of AGL
Resources or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any Person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities,
and (iv) if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. In addition, AGL Resources
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to AGL Resources
and the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives Exchange Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the Original Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, AGL Resources and the Trust believe that Participating
Broker-Dealers who acquired Original Capital Securities for their own accounts
as a result of market-making activities or other trading activities may fulfill
their prospectus delivery requirements with respect to the Exchange Capital
Securities received upon exchange of such Original Capital Securities (other
than Original Capital Securities which represent an unsold allotment from the
initial sale of the Original Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such Exchange Capital Securities. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period referred to below in
connection with resales of Exchange Capital Securities received in exchange for
Original Capital Securities where such Original Capital Securities were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, AGL Resources and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such Exchange Capital Securities for a period ending 180 days after the
Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such Exchange Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities received
in exchange for Original Capital Securities pursuant to the Exchange Offer must
notify AGL Resources or the Trust, or cause AGL Resources or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent
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at one of the addresses set forth herein under "--Exchange Agent." Any
Participating Broker-Dealer who is an "affiliate" of AGL Resources or the Trust
may not rely on such interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders
Original Capital Securities pursuant to the Exchange Offer will be deemed to
have agreed, by execution of the Letter of Transmittal, that upon receipt of
notice from AGL Resources or the Trust of the occurrence of any event or the
discovery of (i) any fact which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or (ii) any fact
which causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in light
of the circumstances under which they were made, not misleading, or (iii) of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) pursuant to this Prospectus until AGL
Resources or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer, or AGL Resources or
the Trust has given notice that the sale of the Exchange Capital Securities (or
the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If AGL Resources or the Trust
gives such notice to suspend the sale of the Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable), it shall extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the Exchange
Capital Securities or to and including the date on which AGL Resources or the
Trust has given notice that the sale of Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic,
telex, or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth under
"--Exchange Agent" on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Original Capital
Securities to be withdrawn, the aggregate principal amount of Original Capital
Securities to be withdrawn, and (if certificates for such Original Capital
Securities have been tendered) the name of the registered holder of the Original
Capital Securities as set forth on the Original Capital Securities, if different
from that of the person who tendered such Original Capital Securities. If
Original Capital Securities have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Original Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Original Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Original Capital Securities tendered for the account of an Eligible
Institution. If Original Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering
Original Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Original
Capital Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex, or facsimile
transmission. Withdrawals of tenders of Original Capital Securities may not be
rescinded. Original Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described above under "--Procedures for Tendering Original Capital
Securities."
All questions as to the validity, form, and eligibility (including time
of receipt) of such withdrawal notices will be determined by AGL Resources and
the Trust, in their sole discretion, whose determination shall be final and
binding
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on all parties. Neither AGL Resources, the Trust, any affiliates or assigns of
AGL Resources or the Trust, the Exchange Agent, nor any other person shall be
under any duty to give any notification of any irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification. Any
Original Capital Securities which have been tendered but which are withdrawn
will be returned to the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON EXCHANGE CAPITAL SECURITIES
Distributions on each Exchange Capital Security will accrue from the
last date on which a Distribution was paid on the Original Capital Security
tendered in exchange therefor, or, if no Distribution has been paid on such
Original Capital Security, from the date of original issuance of the Original
Capital Securities (the "Issue Date"). Holders of Original Capital Securities
whose Original Capital Securities are accepted for exchange will not receive
Distributions on such Original Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Original Capital
Securities from the last date upon which a Distribution was paid on the Original
Capital Securities, or, if no Distribution has been paid on such Original
Capital Security, from the Issue Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, AGL Resources and the Trust will not be
required to accept for exchange, or to exchange, any Original Capital Securities
for any Exchange Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions have occurred or exists or have not
been satisfied:
(a) there shall occur a change in the current interpretation
by the staff of the Commission which permits the Exchange Capital Securities
issued pursuant to the Exchange Offer in exchange for Original Capital
Securities to be offered for resale, resold, and otherwise transferred by
holders thereof (other than broker-dealers and any such holder which is an
"affiliate" of AGL Resources or the Trust within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holders' business and
such holders have no arrangement or understanding with any person to participate
in the distribution of such Exchange Capital Securities; or
(b) any law, statute, rule, or regulation shall have been
adopted or enacted which, in the judgment of AGL Resources or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange Offer;
or
(c) a stop order shall have been issued by the Commission or
any state securities authority suspending the effectiveness of the Registration
Statement, or proceedings shall have been initiated or, to the knowledge of AGL
Resources or the Trust, threatened for that purpose, or any governmental
approval has not been obtained, which approval AGL Resources or the Trust shall,
in its sole discretion, deem necessary for the consummation of the Exchange
Offer as contemplated hereby; or
(d) AGL Resources shall receive an opinion of counsel
experienced in such matters to the effect that as a result of any amendment to,
or change (including any announced prospective change) in, the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced or made effective on or after the Issue
Date, there is more than an insubstantial risk that (a) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to all or part of the income received or accrued on the
Junior Subordinated Debentures, (b) interest payable by AGL Resources on the
Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion will not be, deductible by AGL Resources, in whole or in part, for
United
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States federal income tax purposes, or (c) the Trust is, or will be within 90
days of the date of such opinion, subject or more than a de minimis amount of
other taxes, duties or other governmental charges.
If AGL Resources or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any such condition or otherwise amend
the terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, AGL Resources or the Trust
will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Capital Securities and will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window, Ground Level
New York, New York 10286
Attention: Enrique Lopez - 7 East
Reorganization Section
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street - 7 East
New York, New York 10286
Attention: Enrique Lopez
Reorganization Section
Confirm By Telephone:
(212) 815-2742
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 815-6339
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
AGL Resources has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. AGL Resources will also pay
brokerage houses and other custodians, nominees, and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Original Capital Securities,
and in handling or tendering for their customers.
Holders who tender their Original Capital Securities for exchange will
not be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Original Capital
Securities tendered, or if a transfer tax is imposed
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for any reason other than the exchange of Original Capital Securities in
connection with the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
Neither AGL Resources nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF EXCHANGE SECURITIES
The terms of the Original Securities are identical in all material
respects to the Exchange Securities, except that (i) the Original Securities
have not been registered under the Securities Act, are subject to certain
restrictions on transfer and are entitled to certain rights under the
Registration Rights Agreement (which rights will terminate upon consummation of
the Exchange Offer, except under limited circumstances), (ii) the Exchange
Capital Securities will not contain the $100,000 minimum Liquidation Amount
transfer restriction and certain other restrictions on transfer applicable to
Original Capital Securities, (iii) the Exchange Capital Securities will not
provide for any increase in the Distribution Rate thereon, and (iv) the Exchange
Junior Subordinated Debentures will not provide for any increase in the interest
rate thereon. The Original Securities provide that, in the event that a
registration statement relating to the Exchange Offer has not been filed by
November 8, 1997 and been declared effective by December 28, 1997, or, in
certain limited circumstances, in the event a shelf registration statement (the
"Shelf Registration Statement") with respect to the resale of the Original
Capital Securities is not declared effective by the time required by the
Registration Rights Agreement, then liquidated damages will accrue at the rate
of 0.25% per annum on the principal amount of the Original Junior Subordinated
Debentures and Distributions will accrue at the rate of 0.25% per annum on the
Liquidation Amount of the Original Capital Securities, for the period from the
occurrence of such event until such time as such registration statement has been
filed or declared effective, as the case may be. The Exchange Securities are
not, and upon consummation of the Exchange Offer the Original Securities will
not be, entitled to any such additional interest or Distributions. Accordingly,
holders of Original Capital Securities should review the information set forth
under "Risk Factors--Consequences of a Failure to Exchange Original Capital
Securities" and "Description of Exchange Capital Securities."
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
The Exchange Capital Securities will represent preferred undivided
beneficial interests in the assets of the Trust, and the holders thereof will be
entitled to a preference over the Common Securities in certain circumstances
with respect to Distributions and amounts payable on redemption of the Trust
Securities or liquidation of the Trust. See "--Subordination of Common
Securities." The Declaration of Trust has been qualified by the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). This summary of certain
provisions of the Capital Securities, the Common Securities and the Declaration
of Trust does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Declaration of Trust,
including the definitions therein of certain terms.
GENERAL
The Exchange Capital Securities will be limited to $75,000,000
aggregate Liquidation Amount at any one time outstanding, less the aggregate
Liquidation Amount of any Original Capital Securities that are not properly
tendered for exchange in the Exchange Offer. The Exchange Capital Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Junior Subordinated Debentures will be held by
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Exchange Guarantee will not guarantee payment of Distributions
or amounts payable on redemption of the Exchange Capital Securities or
liquidation of the Trust when the Trust does not have funds on hand legally
available for such payments. See "Description of Exchange Guarantee."
DISTRIBUTIONS
Distributions on the Exchange Capital Securities will be cumulative,
will accumulate from the last date on which a Distribution was paid on the
Original Capital Security tendered in exchange therefor, or if no Distribution
has been paid on such Original Capital Security, from the Issue Date (June 11,
1997), and will be payable semi-annually in arrears on June 1 and December 1 of
each year, at the annual Distribution Rate of 8.17% of the Liquidation Amount to
the holders of record of the Exchange Capital Securities on the May 15 or
November 15 immediately preceding such date. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve
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30-day months. In the event that any Distribution Date on which Distributions
are payable on the Exchange Capital Securities is not a Business Day (as defined
below), payment of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect to any such delay), in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, AGL Resources will have the right under the Indenture to defer the
payment of interest on the Exchange Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity Date. Upon any such election, semi-annual
Distributions on the Exchange Capital Securities will be deferred by the Trust
during any such Extension Period. Distributions to which holders of the Exchange
Capital Securities are entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 8.17% thereof,
compounded semi-annually from the relevant Distribution Date. The term
"Distributions," as used herein, shall include any such additional
Distributions.
Prior to the termination of any such Extension Period, AGL Resources
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, and subject to the
foregoing limitations, AGL Resources may elect to begin a new Extension Period.
AGL Resources must give the Property Trustee, the Administrative Trustees, and
the Indenture Trustee notice of its election of any such Extension Period at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Exchange Capital Securities would have been payable except for the
election to begin such Extension Period or (ii) the date the Administrative
Trustees are required to give notice to any securities exchange or quotation
system or to holders of such Exchange Capital Securities of the record date or
the date such Distributions are payable but in any event not less than five
Business Days prior to such record date. There is no limitation on the number of
times that AGL Resources may elect to begin an Extension Period. See
"Description of Exchange Junior Subordinated Debentures--Option to Extend
Interest Payment Date" and "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount."
During any such Extension Period, AGL Resources may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of AGL Resources' capital stock (which
includes common and preferred stock) or (ii) make any payment of principal of or
premium, if any, or interest on or repay, repurchase or redeem any debt
securities of AGL Resources (including Other Debentures) that rank pari passu
with or junior in right of payment to the Exchange Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
AGL Resources of the debt securities of any subsidiary of AGL Resources
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Exchange Junior Subordinated Debentures (other than
(a) dividends or distributions in shares of, or options, warrants, or rights to
subscribe for or purchase shares of, common stock of AGL Resources, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) the purchase of fractional shares resulting
from a reclassification of AGL Resources' capital stock, (e) the exchange or
conversion of one class, or series of AGL Resources' capital stock for another
class or series of AGL Resources' capital stock, and (f) the purchase of
fractional interests in shares of AGL Resources' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged).
Although AGL Resources may in the future exercise its option to defer
payments of interest on the Exchange Junior Subordinated Debentures, AGL
Resources has no such current intention.
The revenue of the Trust available for distribution to holders of the
Exchange Capital Securities will be limited to payments under the Junior
Subordinated Debentures in which the Trust has invested the proceeds from the
issuance
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and sale of the Trust Securities. See "Description of Exchange Junior
Subordinated Debentures--General." If AGL Resources does not make interest
payments on the Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Capital Securities, including
the Exchange Capital Securities. The payment of Distributions (if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions) will be guaranteed by AGL Resources on a limited basis as set
forth herein under "Description of Exchange Guarantee."
REDEMPTION
Upon the repayment on the Stated Maturity Date or prepayment prior to
the Stated Maturity Date of the Junior Subordinated Debentures, the proceeds
from such repayment or prepayment shall be applied by the Property Trustee to
redeem a Like Amount (as defined below) of the Trust Securities, upon not less
than 30 nor more than 60 days notice of a date of redemption (the "Redemption
Date"), at the applicable Redemption Price, which shall be equal to (i) in the
case of the repayment of the Junior Subordinated Debentures on the Stated
Maturity Date, the Maturity Redemption Price (equal to the principal of, and
accrued interest on, the Junior Subordinated Debentures), (ii) in the case of
the optional prepayment of the Junior Subordinated Debentures prior to June 1,
2007 upon the occurrence and continuation of a Tax Event or an Investment
Company Act Event, the Special Event Redemption Price (equal to the Special
Event Prepayment Price in respect of the Junior Subordinated Debentures) and
(iii) in the case of the optional prepayment of the Junior Subordinated
Debentures on or after June 1, 2007, the Optional Redemption Price (equal to the
Optional Prepayment Price in respect of the Junior Subordinated Debentures). See
"Description of Exchange Junior Subordinated Debentures--Optional Prepayment"
and "--Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be paid in accordance with their
terms and (ii) with respect to a distribution of Junior Subordinated Debentures
upon the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
REDEMPTION PROCEDURES
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Junior Subordinated Debentures. Any redemption of Capital
Securities shall be made and the applicable Redemption Price shall be payable on
the Redemption Date only to the extent that the Trust has funds legally
available for the payment of such applicable Redemption Price.
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the Capital Securities
held by DTC or its nominees, the Property Trustee will deposit irrevocably with
DTC funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the Capital
Securities held in certificated form, the Property Trustee, to the extent funds
are legally available, will irrevocably deposit with the paying agent for the
Capital Securities funds sufficient to pay the applicable Redemption Price and
will give such paying agent irrevocable instructions and authority to pay the
applicable Redemption Price to the holders thereof upon surrender of their
certificates evidencing the Capital Securities. See "--Payment and Paying
Agency." Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Capital Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the Capital Securities will
cease, except the right of the holders of the Capital Securities to receive the
applicable Redemption Price, but without interest on such Redemption Price, and
the Capital Securities will cease to be outstanding. In the event that any
Redemption Date of Capital Securities is not a Business Day, then the applicable
Redemption Price payable on such date will be paid on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the applicable Redemption Price is improperly withheld
or refused and not paid either by the Trust or by AGL Resources pursuant to
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the Exchange Guarantee as described under "Description of Exchange Guarantee,"
Distributions on Capital Securities will continue to accumulate at the then
applicable rate, from the Redemption Date originally established by the Trust to
the date such applicable Redemption Price is actually paid, in which case the
actual payment date will be the Redemption Date for purposes of calculating the
applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), AGL Resources or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Capital Securities
at its registered address. Unless AGL Resources defaults in payment of the
applicable Prepayment Price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date, Distributions will cease to accrue
on the Exchange Capital Securities called for redemption.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
AGL Resources will have the right at any time to terminate the Trust
and cause the Exchange Junior Subordinated Debentures to be distributed to the
holders of the Exchange Capital Securities in liquidation of the Trust. Such
right is subject to AGL Resources having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Exchange
Capital Securities.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of AGL Resources; (ii)
the distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if AGL Resources, as Sponsor, has given written
direction to the Property Trustee to terminate the Trust (which direction is
optional and, except as described above, wholly within the discretion of AGL
Resources, as Sponsor); (iii) redemption of all of the Trust Securities as
described under "--Redemption"; (iv) expiration of the term of the Trust; or (v)
the entry of an order for the dissolution of the Trust by a court of competent
jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Trustees as soon as practicable
after the receipt of any required regulatory approval by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to the holders of the Trust Securities a Like Amount of the Junior
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practicable, in which event such holders will be entitled to
receive out of the assets of the Trust legally available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the aggregate of the Liquidation Amount
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Trust Securities shall be paid
on a pro rata basis, except that if a Debenture Event of Default has occurred
and is continuing, the Capital Securities shall have a priority over the Common
Securities. See "--Subordination of Common Securities."
After the liquidation date is fixed for any distribution of Exchange
Junior Subordinated Debentures to holders of the Exchange Capital Securities,
(i) the Exchange Capital Securities will no longer be deemed to be outstanding,
(ii) each registered global certificate, if any, representing Exchange Capital
Securities and held by DTC or its nominee will receive a registered global
certificate or certificates representing the Exchange Junior Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing Exchange Capital Securities not held by DTC or its nominee will be
deemed to represent Exchange Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of such Exchange Capital Securities, and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Exchange Capital Securities until such certificates
are presented to the Administrative Trustees or their agent for cancellation,
whereupon AGL Resources will issue to such holder, and the Indenture Trustee
will authenticate, a certificate representing such Exchange Junior Subordinated
Debentures.
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Under current United States federal income tax law and interpretations
and assuming, as expected, that the Trust is treated as a grantor trust, a
distribution of the Exchange Junior Subordinated Debentures should not be a
taxable event to holders of the Exchange Capital Securities. Should there be a
change in law, a change in legal interpretation, a Tax Event or other
circumstances, however, the distribution could be a taxable event to holders of
the Exchange Capital Securities. See "Certain Federal Income Tax
Consequences--Receipt of Junior Subordinated Debentures or Cash Upon Liquidation
of the Trust." If AGL Resources elects neither to redeem the Exchange Junior
Subordinated Debentures prior to maturity nor to liquidate the Trust and
distribute the Exchange Junior Subordinated Debentures to holders of the
Exchange Capital Securities, the Exchange Capital Securities will remain
outstanding until the repayment of the Exchange Junior Subordinated Debentures.
There can be no assurance as to the market prices for the Exchange
Capital Securities or the Exchange Junior Subordinated Debentures that may be
distributed in exchange for the Exchange Capital Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Exchange Capital
Securities that an investor may receive in this Exchange Offer, or the Exchange
Junior Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Original Capital Securities exchanged for Exchange Capital
Securities.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of the Trust Securities; provided, however, that if on
any Distribution Date or Redemption Date a Debenture Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or applicable
Redemption Price of, any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of the Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Capital Securities for all
Distribution periods terminating on or prior thereto, or in the case of payment
of the applicable Redemption Price the full amount of such Redemption Price,
shall have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Capital Securities then due and
payable.
In the case of any Debenture Event of Default, AGL Resources as holder
of the Common Securities will be deemed to have waived any right to act with
respect to such Debenture Event of Default until the effect of such Debenture
Event of Default shall have been cured, waived, or otherwise eliminated. Until
any such Debenture Event of Default has been so cured, waived, or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
the Capital Securities and not on behalf of AGL Resources as holder of the
Common Securities, and only the holders of the Capital Securities will have the
right to direct the Property Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
An "Event of Default" under the Declaration of Trust is deemed to occur
upon the occurrence of: (a) a Debenture Event of Default, (b) default by the
Trust or the Property Trustee in the payment of any Distribution when it becomes
due and payable, and continuation of such default for a period of 30 days; (c)
default by the Trust or the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or (d) default in
the performance, or breach, in any material respect, of any other covenant or
warranty of the Trustees in the Declaration of Trust, and continuation of such
default or breach for a period of 60 days after notice to the defaulting Trustee
or Trustees. See "Description of Exchange Junior Subordinated
Debentures--Debenture Events of Default."
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and AGL Resources, as Sponsor, unless such Event of
Default shall have been cured or waived. AGL Resources, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a
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certificate as to whether or not they are in compliance with all the conditions
and covenants applicable to them under the Declaration of Trust.
If a Debenture Event of Default has occurred and is continuing, the
Exchange Capital Securities shall have a preference over the Common Securities
as described under "--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" and "--Subordination of Common Securities."
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove, or replace the Administrative Trustees, which
voting rights are vested exclusively in AGL Resources as the holder of the
Common Securities. No resignation or removal of a Property Trustee or a Delaware
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration of Trust.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee or the Delaware Trustee
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or consolidation to which
such Delaware or Property Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Delaware or Property Trustee, shall be the successor of such Delaware Trustee or
Property Trustee under the Declaration of Trust, provided such corporation shall
be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS, OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer, or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other person or
entity (collectively, where appropriate, a "Person"), except as described below.
The Trust may, at the request of AGL Resources, as Sponsor, with the consent of
the Administrative Trustees but without the consent of the holders of the
Capital Securities, merge with or into, consolidate, amalgamate, or be replaced
by or convey, transfer, or lease its properties and assets as an entirety or
substantially as an entirety to, a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Securities rank in priority with
respect to distributions and payments upon liquidation, redemption, and
otherwise, (ii) AGL Resources expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee with
respect to the Junior Subordinated Debentures, (iii) in the case of substitutes
for the Capital Securities, the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange, quotation system, or other organization on which
the Capital Securities are then listed or quoted, if any, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer, or lease does
not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation, replacement, conveyance, transfer, or
lease does not adversely affect the rights, preferences, and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose identical to that of
the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer, or lease, AGL Resources has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer,
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer, or lease,
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neither the Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and (viii) AGL Resources or any permitted successor
or assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer, or lease its properties and
assets as an entirety or substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer, or lease would cause the Trust or the successor entity not to be
classified as a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION OF TRUST
Except as provided below and under "--Mergers, Consolidations,
Amalgamations, or Replacements of the Trust" and "Description of Exchange
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Declaration of Trust, the holders of the Exchange Capital Securities will have
no voting rights.
The Declaration of Trust may be amended from time to time by the
Delaware Trustee or the Property Trustee, if affected by such amendment, or by
the Administrative Trustees, without the consent of the holders of the Exchange
Capital Securities (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration of Trust that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Declaration of Trust, which shall not be inconsistent with the
other provisions of the Declaration of Trust, or (ii) to modify, eliminate or
add to any provisions of the Declaration of Trust to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that such action shall not adversely affect in any material respect the
interests of the holders of the Trust Securities, and any amendments of the
Trust shall become effective when notice thereof is given to the holders of the
Trust Securities. The Declaration of Trust may be amended by the Administrative
Trustees and AGL Resources (i) with the consent of holders representing a
majority (based upon Liquidation Amount) of the outstanding Trust Securities,
and (ii) upon receipt by the Administrative Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Administrative Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an "investment company" under the
Investment Company Act, provided that, without the consent of each holder of
Trust Securities, the Declaration of Trust may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date. The Exchange Capital Securities and any Original
Capital Securities which remain outstanding after consummation of the Exchange
Offer will vote together as a single class for purposes of determining whether
holders of the requisite percentage in outstanding Liquidation Amount thereof
have taken certain actions or exercised certain rights under the Declaration of
Trust.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Administrative Trustees shall not (i) direct the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or executing any trust or power conferred on such Property Trustee with
respect to the Junior Subordinated Debentures, (ii) waive certain past defaults
under the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Junior Subordinated
Debentures, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Administrative Trustees shall not
revoke
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any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Administrative Trustees shall obtain an
opinion of counsel experienced in such matters to the effect that the Trust will
not be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at
a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the
Declaration of Trust.
No vote or consent of the holders of Capital Securities will be
required for the Trust to redeem and cancel the Capital Securities in accordance
with the Declaration of Trust.
Notwithstanding that holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by AGL Resources, the Administrative Trustees
or any affiliate of AGL Resources or any Administrative Trustees, shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The Exchange Capital Securities initially will be represented by one or
more Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for DTC, in New York, New York,
and registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Exchange Capital Securities in certificated
form except in the limited circumstances described below. See "--Exchange of
Book-Entry Capital Securities for Certificated Capital Securities".
DEPOSITARY PROCEDURES
DTC has advised the Trust and AGL Resources that DTC is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations, and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers, and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and AGL Resources that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial
Purchasers with portions of the Liquidation Amount of the Global Capital
Securities and (ii) ownership of such interests in the Global Capital Securities
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Capital Securities).
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Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are Participants, or indirectly through
organizations which are Participants. All interests in a Global Capital Security
may be subject to the procedures and requirements of DTC. The laws of some
states require that certain Persons take physical delivery in certificated form
of securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Capital Security to such Persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a Person
having beneficial interests in a Global Capital Security to pledge such
interests to Persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Capital Securities, see "--Exchange
of Book-Entry Capital Securities for Certificated Capital Securities" and
"--Exchange of Certificated Capital Securities for Book-Entry Capital
Securities".
Except as described below, owners of interests in the Global Capital
Securities will not have Exchange Capital Securities registered in their name,
will not receive physical delivery of Exchange Capital Securities in
certificated form and will not be considered the registered owners or holders
thereof under the Declaration of Trust for any purpose.
Payments in respect of the Global Capital Security registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Declaration of Trust. Under the
terms of the Declaration of Trust, the Property Trustee will treat the Persons
in whose names the Exchange Capital Securities, including the Global Capital
Securities, are registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever. Consequently,
neither the Property Trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interests in the Global Capital Securities, or
for maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Capital Securities or (ii) any other matter
relating to the actions and practices of DTC or any of its Participants or
Indirect Participants. DTC has advised the Trust and AGL Resources that its
current practice, upon receipt of any payment in respect of securities such as
the Exchange Capital Securities, is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Exchange
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or AGL Resources. Neither the Trust or AGL Resources nor the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Exchange Capital Securities, and the
Trust or AGL Resources and the Property Trustee may conclusively rely on and
will be protected in relying on instructions from DTC or its nominee for all
purposes.
Secondary market trading activity in interests in the Global Capital
Securities will settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Trust and AGL Resources that it will take any
action permitted to be taken by a holder of Exchange Capital Securities only at
the direction of one or more Participants to whose account with DTC interests in
the Global Capital Securities are credited and only in respect of such portion
of the Liquidation Amount of the Exchange Capital Securities as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Declaration of Trust, DTC reserves the right to
exchange the Global Capital Securities for legended Exchange Capital Securities
in certificated form and to distribute such Capital Securities to its
Participants.
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The information in this section concerning DTC and its book-entry
systems has been obtained from sources that the Trust and AGL Resources believe
to be reliable, but neither the Trust nor AGL Resources takes responsibility for
the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interest in the Global Capital Securities among participants in
DTC, they are under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trust or AGL Resources nor the Property Trustee will have any responsibility for
the performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A Global Capital Security is exchangeable for Exchange Capital
Securities in registered certificated form if (i) DTC notifies the Trust that it
is unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or has ceased to be a clearing agency registered under the Exchange Act, (ii)
AGL Resources in its sole discretion elects to cause the issuance of the
Exchange Capital Securities in certificated form, or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Declaration of
Trust. In addition, beneficial interests in a Global Capital Security may be
exchanged for certificated Exchange Capital Securities upon transfer of such
beneficial interests to institutional accredited investors upon request but only
upon at least 20 days prior written notice given to the Property Trustee by or
on behalf of DTC in accordance with customary procedures. In all cases,
certificated Exchange Capital Securities delivered in exchange for any Global
Capital Security or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depositary (in accordance with its customary procedures).
EXCHANGE OF CERTIFICATED CAPITAL SECURITIES FOR BOOK-ENTRY CAPITAL SECURITIES
Other Capital Securities, which will be issued in certificated form,
may not be exchanged for beneficial interests in any Global Capital Security
unless such exchange occurs in connection with a transfer of such Other Capital
Securities and the transferor first delivers to the Property Trustee a written
certificate (in the form provided in the Declaration of Trust) to the effect
that such transfer will comply with the appropriate transfer restrictions
applicable to such Capital Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Exchange Capital Securities held in global
form shall be made to the Depositary, which shall credit the relevant accounts
at the Depositary on the applicable Distribution Dates or in respect of the
Exchange Capital Securities that are not held by the Depositary, such payments
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the register. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and AGL
Resources. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days written notice to the Property Trustee and AGL Resources. In the event that
the Property Trustee shall no longer be the Paying Agent, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company
acceptable to the Administrative Trustees and AGL Resources) to act as Paying
Agent.
RESTRICTIONS ON TRANSFER
The Exchange Capital Securities will be issued, and may be transferred
only, in blocks having a Liquidation Amount of not less than $1,000 (one
Exchange Capital Security) and multiples of $1,000 in excess thereof. Any
transfer, sale or other disposition of Exchange Capital Securities in blocks
having a Liquidation Amount of less than $1,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on
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such Exchange Capital Securities, and such transferee shall be deemed to have no
interest whatsoever in such Exchange Capital Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Exchange Capital Securities.
Registration of transfers of the Exchange Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Exchange Capital Securities after they have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Declaration of Trust and, after such Event of
Default, must exercise the same degree of care and skill as a prudent Person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration of Trust at the request of any holder of
Trust Securities unless it is offered reasonable indemnity against the costs,
expenses, and liabilities that might be incurred thereby. If no Event of Default
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration of Trust or is unsure of the application of any provision of the
Declaration of Trust, and the matter is not one on which holders of the Trust
Securities are entitled under the Declaration of Trust to vote, then the
Property Trustee shall take such action as is directed by AGL Resources and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence, or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of AGL Resources for
United States federal income tax purposes. In this connection, AGL Resources and
the Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Trust or the Declaration of
Trust, that AGL Resources and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages, or
pledge any of its assets.
GOVERNING LAW
The Declaration of Trust will be governed by and construed in
accordance with the laws of the State of Delaware.
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DESCRIPTION OF EXCHANGE JUNIOR SUBORDINATED DEBENTURES
The Original Junior Subordinated Debentures were issued and the
Exchange Junior Subordinated Debentures will be issued under the Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
AGL Resources and the Indenture Trustee. The Indenture has been qualified under
the Trust Indenture Act. This summary of certain terms and provisions of the
Exchange Junior Subordinated Debentures and the Indenture does not purport to be
complete, and where reference is made to particular provisions of the Indenture,
such provisions, including the definitions of certain terms, some of which are
not otherwise defined herein, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Original Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by AGL
Resources for the Common Securities, in the Original Junior Subordinated
Debentures issued by AGL Resources. Like the Original Junior Subordinated
Debentures, the Exchange Junior Subordinated Debentures will bear interest at
the annual rate of 8.17% of the principal amount thereof. Interest on the
Exchange Junior Subordinated Debentures will accumulate from the last day on
which interest was paid on the Original Junior Subordinated Debentures exchanged
for the Exchange Junior Subordinated Debentures, or, if no interest has been
paid, from the Issue Date (June 11, 1997), and will be payable semi-annually in
arrears on June 1 and December 1 of each year (each, an "Interest Payment
Date"), to the Person in whose name each Exchange Junior Subordinated Debenture
is registered, subject to certain exceptions, at the close of business on the
May 15 or November 15 immediately preceding the relevant payment date. It is
anticipated that, until the liquidation, if any, of the Trust, each Exchange
Junior Subordinated Debenture will be held in the name of the Property Trustee
in trust for the benefit of the holders of the Trust Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Exchange Junior Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of 8.17% thereof,
compounded semi-annually. The term "interest", as used herein, shall include
semi-annual interest payments, interest on semi-annual interest payments not
paid on the applicable Interest Payment Date and Additional Sums (as defined
herein), as applicable.
The Exchange Junior Subordinated Debentures will be issued in
denominations of $1,000 and integral multiples thereof. The Exchange Junior
Subordinated Debentures will mature on June 1, 2037 (the "Stated Maturity
Date").
The Exchange Junior Subordinated Debentures will rank pari passu with
the Original Junior Subordinated Debentures and all Other Debentures and will be
unsecured and subordinate and junior in right of payment to the extent and in
the manner set forth in the Indenture to all Senior Indebtedness. See
"--Subordination." AGL Resources is a holding company almost all of the
operating assets of which are owned by its subsidiaries. AGL Resources relies
primarily on dividends from such subsidiaries to meet its obligations. AGL
Resources is a legal entity separate and distinct from its subsidiaries. The
principal sources of AGL Resources' income are dividends and fees from its
subsidiaries. Subject to the preferential rights of the holders of the preferred
stock of AGLC (and AGLC Junior Stock as defined below (if any) ranking as to
dividends ahead of the common stock of AGLC) to receive full cumulative
dividends, both past and current, and the restrictions set forth below, AGL
Resources, as the holder of all of the outstanding shares of the common stock of
AGLC, is entitled to receive such dividends as may be declared by the board of
directors of AGLC out of funds legally available therefor. AGLC's Articles of
Incorporation impose restrictions on the payment of dividends (except a dividend
in common stock of AGLC or in any class of stock ranking junior to the preferred
stock of AGLC as to dividends or assets (the "AGLC Junior Stock")) unless AGLC
attains certain earnings levels or maintains certain capitalization ratios.
Under the most restrictive of these provisions, all of AGLC's retained
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earnings were free of such restrictions and available for the payment of
dividends at June 30, 1997. Retained earnings of AGLC at June 30, 1997 were
$86.0 million.
Because AGL Resources is a holding company, the right of AGL Resources
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of the subsidiary, except to the extent AGL Resources may
itself be recognized as a creditor of that subsidiary. Accordingly, the Exchange
Junior Subordinated Debentures will be effectively subordinated to all existing
and future liabilities of AGL Resources' subsidiaries, and holders of Exchange
Junior Subordinated Debentures should look only to the assets of AGL Resources
for payments on the Exchange Junior Subordinated Debentures. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of AGL
Resources, including Senior Indebtedness. See "--Subordination."
The Indenture does not contain provisions that afford holders of the
Exchange Junior Subordinated Debentures protection in the event of a highly
leveraged transaction or other similar transactions involving AGL Resources that
may adversely affect such holders.
FORM, REGISTRATION AND TRANSFER
If the Exchange Junior Subordinated Debentures are distributed to the
holders of the Trust Securities, the Exchange Junior Subordinated Debentures may
be represented by one or more global certificates registered in the name of Cede
& Co. as the nominee of DTC. The depositary arrangements for such Exchange
Junior Subordinated Debentures are expected to be substantially similar to those
in effect for the Exchange Capital Securities. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Exchange Capital Securities--Form, Denomination, Book-Entry Procedures and
Transfer."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on
Exchange Junior Subordinated Debentures will be made at the office of the
Indenture Trustee in The City of New York or at the office of such Paying Agent
or Paying Agents as AGL Resources may designate from time to time, except that
at the option of AGL Resources payment of any interest may be made except in the
case of Exchange Junior Subordinated Debentures in global form, (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the register for Exchange Junior Subordinated Debentures or (ii) by
transfer to an account maintained by the Person entitled thereto as specified in
such register, provided that proper transfer instructions have been received by
the relevant Record Date. Payment of any interest on any Exchange Junior
Subordinated Debenture will be made to the Person in whose name such Exchange
Junior Subordinated Debenture is registered at the close of business on the
Record Date for such interest, except in the case of defaulted interest. AGL
Resources may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however AGL Resources will at all times be
required to maintain a Paying Agent in each Place of Payment for the Exchange
Junior Subordinated Debentures.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by AGL Resources in trust, for the payment of the principal of (and
premium, if any) or interest on any Exchange Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of AGL Resources, be
repaid to AGL Resources and the holder of such Exchange Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to AGL
Resources for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is
continuing, AGL Resources will have the right under the Indenture at any time
during the term of the Exchange Junior Subordinated Debentures to defer the
payment
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of interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity Date. At the end
of such Extension Period, AGL Resources must pay all interest then accrued and
unpaid (together with interest thereon at the annual rate of 8.17%, compounded
semi-annually, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Exchange Junior
Subordinated Debentures (and holders of the Trust Securities while Trust
Securities are outstanding) will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash
attributable to such income. See "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
During any such Extension Period, AGL Resources may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of AGL Resources' capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase, or redeem any debt
securities of AGL Resources (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Exchange Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
AGL Resources of the debt securities of any subsidiary of AGL Resources
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Exchange Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options, warrants, or
rights to subscribe for or purchase shares of, common stock of AGL Resources,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) the purchase of fractional shares resulting
from a reclassification of AGL Resources' capital stock, (e) the exchange or
conversion of one class or series of AGL Resources' capital stock for another
class or series of AGL Resources' capital stock, and (f) the purchase of
fractional interests in shares of AGL Resources' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged).
Prior to the termination of any such Extension Period, AGL Resources
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, AGL Resources may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. AGL Resources must give the Property Trustee,
the Administrative Trustees and the Indenture Trustee notice of its election of
any Extension Period (or an extension thereof) at least five Business Days prior
to the earlier of (i) the date the Distributions on the Trust Securities would
have been payable except for the election to begin or extend such Extension
Period or (ii) the date the Administrative Trustees are required to give notice
to any securities exchange or other quotation system or to holders of Capital
Securities on the record date or the date such Distributions are payable, but in
any event not less than five Business Days prior to such record date. The
Indenture Trustee shall give notice of AGL Resources' election to begin or
extend a new Extension Period to the holders of the Capital Securities. There is
no limitation on the number of times that AGL Resources may elect to begin an
Extension Period.
OPTIONAL PREPAYMENT
The Exchange Junior Subordinated Debentures will be prepayable, in
whole or in part, at the option of AGL Resources on or after June 1, 2007 (the
"Initial Optional Prepayment Date"), at a prepayment price (the "Optional
Prepayment Price") equal to the percentage of the outstanding principal amount
of the Exchange Junior Subordinated Debentures specified below, plus, in each
case, accrued interest thereon to the date of prepayment if redeemed during the
12-month period beginning June 1 of the years indicated below:
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<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2007....................................................... 104.085%
2008....................................................... 103.677%
2009....................................................... 103.268%
2010....................................................... 102.860%
2011....................................................... 102.451%
2012....................................................... 102.043%
2013....................................................... 101.634%
2014....................................................... 101.226%
2015....................................................... 100.817%
2016....................................................... 100.409%
2017 and thereafter........................................ 100.000%
</TABLE>
SPECIAL EVENT PREPAYMENT
If a Tax Event or an Investment Company Act Event (each a "Special
Event") shall occur and be continuing, AGL Resources may, at its option, prepay
the Exchange Junior Subordinated Debentures in whole (but not in part) and
thereby cause the mandatory redemption of the Exchange Capital Securities in
whole (but not in part) at any time prior to June 1, 2007 and within 90 days of
the occurrence of such Special Event, at a prepayment price (the "Special Event
Prepayment Price") equal to the greater of (i) 100% of the principal amount of
such Exchange Junior Subordinated Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of the principal amount and premium
payable with respect to an optional redemption of Exchange Junior Subordinated
Debentures on June 1, 2007, together with scheduled payments of interest on the
Exchange Junior Subordinated Debentures accruing from the prepayment date to and
including June 1, 2007 discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, accrued interest thereon to the date of
prepayment.
A "Tax Event" means the receipt by AGL Resources and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced or made effective on or after the
Issue Date, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to all or part of the income received or accrued
on the Junior Subordinated Debentures or the Exchange Debentures, (ii) interest
payable by AGL Resources on the Junior Subordinated Debentures or the Exchange
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by AGL Resources, in whole or in part, for United States federal
income tax purposes, or (iii) the Trust is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
An "Investment Company Act Event" means the receipt by AGL Resources
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change becomes effective on or after the Issue Date.
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve
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and which established yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity date corresponding to the Initial Optional
Prepayment Date (if no maturity date is within three months before or after the
Initial Optional Prepayment Date, yields for the first two published maturities
most closely corresponding to the Initial Optional Prepayment Date shall be
interpolated and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the nearest
month) or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual 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 prepayment date plus, in either case (A) 1.05% if such
prepayment date occurs on or prior to June 15, 1997 through and including June
1, 1998 and (B) .50% if such prepayment date occurs after June 1, 1998.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to the
Initial Optional Prepayment Date that would be utilized at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity date corresponding to the Initial
Optional Prepayment Date. If no United States Treasury security has a maturity
date which is within three months before or after the Initial Optional
Prepayment Date, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the calculation
of the Adjusted Treasury Rate pursuant to clause (ii) of the definition thereof
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month.
"Quotation Agent" means the Reference Treasury Dealer appointed by AGL
Resources. "Reference Treasury Dealer" means: (i) Merrill Lynch Government
Securities, Inc. and its respective successors; provided, however, that if the
foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), AGL Resources shall substitute
therefor another Primary Treasury Dealer; and (ii) any other Primary Treasury
Dealer selected by AGL Resources.
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Indenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Indenture 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 Indenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Exchange Junior
Subordinated Debentures to be prepaid at its registered address. Unless AGL
Resources defaults in payment of the prepayment price, on and after the
prepayment date interest ceases to accrue on such Exchange Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, AGL Resources will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
"Additional Sums" means the additional amounts as may be necessary in order that
the amount of Distributions then due and payable by the Trust on the outstanding
Capital Securities and Common Securities shall not be reduced as a
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result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event.
Neither AGL Resources nor the Trust will be responsible for nor will
AGL Resources or the Trust be required to compensate holders of or investors in
the Exchange Capital Securities (or Exchange Junior Subordinated Debentures that
may be distributed by the Trust) for any withholding taxes that are imposed on
interest payments on the Exchange Junior Subordinated Debentures or on
Distributions with respect to the Exchange Capital Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
AGL Resources will also covenant that it will not, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of AGL Resources' capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of AGL Resources (including Other Debentures) that rank pari passu
with or junior in right of payment to the Exchange Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
AGL Resources of the debt securities of any subsidiary of AGL Resources
(including under Other Guarantees) if such guarantee ranks pari passu or junior
in right of payment to the Exchange Junior Subordinated Debentures (other than
(a) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, common stock of AGL Resources, (b) any
declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) the purchase of fractional shares resulting
from a reclassification of AGL Resources' capital stock, (e) the exchange or
conversion of one class or series of AGL Resources' capital stock for another
class or series of AGL Resources' s capital stock and (f) the purchase of
fractional interests in shares of AGL Resources' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), if at such time (1) there shall have occurred and be
continuing an Event of Default, (2) there shall have occurred and be continuing
a Debenture Event of Default, (3) there shall have occurred and be continuing a
payment default under the Declaration of Trust or the Indenture, (4) if such
Exchange Junior Subordinated Debentures are held by the Trust, AGL Resources
shall be in default with respect to its payment of any obligations under the
Exchange Guarantee, or (5) AGL Resources shall have given notice of its election
of an Extension Period as provided in the Indenture and shall not have rescinded
such notice, and such Extension Period, or any extension thereof, shall have
commenced.
MODIFICATION OF INDENTURE
From time to time AGL Resources and the Indenture Trustee may, without
the consent of the holders of Exchange Junior Subordinated Debentures, amend,
waive or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of
Exchange Junior Subordinated Debentures) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting AGL Resources and the Indenture Trustee, with the
consent of the holders of a majority in principal amount of Exchange Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Exchange Junior Subordinated Debentures; provided, that
no such modification may, without the consent of the holders of each outstanding
Exchange Junior Subordinated Debenture so affected, (i) extend the Stated
Maturity, or reduce the principal amount of the Exchange Junior Subordinated
Debentures or reduce the rate or extend the time of payment of interest thereon,
or reduce any amount payable on redemption, or impair or affect the right of any
holder of Exchange Junior Subordinated Debentures to institute suit for payment
or (ii) reduce the percentage of principal amount of Exchange Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event
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of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures or any Other Debentures, when due (subject to
the deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the
Junior Subordinated Debentures or any Other Debentures when due whether
at maturity, upon redemption, by declaration of acceleration of
maturity or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants or warranties contained in the Indenture for 90
days after written notice to AGL Resources from the Indenture Trustee
or the holders of at least 25% in aggregate outstanding principal
amount of Junior Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or
reorganization of AGL Resources.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured,
waived or otherwise remedied and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Indenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) on or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest (and premium, if any) and principal due otherwise than
by acceleration has been deposited with the Indenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Debenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default shall have occurred and be continuing
and shall be attributable to the failure of AGL Resources to pay interest (or
premium, if any) on principal of the Exchange Junior Subordinated Debentures on
the due date, a holder of Exchange Capital Securities may institute a Direct
Action. AGL Resources may not amend the Indenture to remove the foregoing right
to bring a Direct Action without the prior written consent of the holders of all
of the Capital Securities. If the right to bring a Direct Action is removed
following the Exchange Offer, the Trust may become subject to the reporting
obligations under the Exchange Act. Notwithstanding any payments made to a
holder of Capital Securities by AGL Resources in connection with a Direct
Action, AGL Resources shall remain obligated to pay the principal of (or
premium, if any) or interest on the Exchange Junior Subordinated Debentures, and
AGL Resources shall be subrogated to the rights of the holder of such Exchange
Capital Securities with respect to payments on the Exchange Capital Securities
to the extent of any payments made by AGL Resources to such holder in any Direct
Action.
The holders of the Exchange Capital Securities will not be able to
exercise directly any remedies, other than those set forth in the preceding
paragraph, available to the holders of the Exchange Junior Subordinated
Debentures unless there shall have been an Event of Default under the
Declaration of Trust. See "Description of Exchange Capital Securities--Events of
Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that AGL Resources shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any Person, and no
Person shall consolidate with or merge into AGL Resources or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to AGL Resources, unless: (i) in case AGL Resources consolidates with or merges
into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any State or the District of Columbia,
and such successor Person expressly assumes AGL Resources' obligations on the
Exchange Junior Subordinated Debentures; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; and (iii) certain other conditions as prescribed in
the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Exchange Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving AGL Resources that may adversely affect
holders of the Exchange Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity within one year, and AGL Resources deposits or causes to be
deposited with the Indenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity Date, as the case may be, then the
Indenture will cease to be of further effect (except as to AGL Resources'
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and AGL
Resources will be deemed to have satisfied and discharged the Indenture.
SUBORDINATION
The Indenture provides that the Exchange Junior Subordinated Debentures
issued thereunder will be subordinate and junior in right of payment to all
Senior Indebtedness. No payment of principal (including redemption payments),
premium, if any, or interest on the Exchange Junior Subordinated Debentures may
be made at any time when (i) any Senior Indebtedness is not paid when due, (ii)
any applicable grace period with respect to such default has ended and such
default has not been cured or waived or ceased to exist, or (iii) the maturity
of any Senior Indebtedness has been accelerated because of a default.
Upon any distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of AGL Resources, all Senior Indebtedness must be paid in
full before the holders of the Exchange Junior Subordinated Debentures are
entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Exchange Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in full
before the holders of Exchange Junior Subordinated Debentures will be entitled
to receive or retain any payment in respect of the Exchange Junior Subordinated
Debentures.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, unless the terms thereof specifically provide that
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it is not superior in right of payment to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, AGL Resources for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, but shall not include (i) any trade accounts payable in the
ordinary course of business, (ii) any such indebtedness that by its terms ranks
pari passu with or junior in right of payment to the Junior Subordinated
Debentures, (iii) all other debt securities, and guarantees in respect of those
debt securities, issued after the Issue Date to any other trust, or a trustee of
such trust, partnership or other entity affiliated with AGL Resources that is a
financing vehicle of AGL Resources (a "financing entity") in connection with the
issuance by such financing entity of equity securities or other securities
guaranteed by AGL Resources pursuant to an instrument that ranks pari passu with
or junior in right of payment to the Guarantee, and (iv) any other indebtedness
that would otherwise qualify as "Indebtedness for Money Borrowed" to the extent
that such indebtedness by its terms ranks pari passu with or junior in right of
payment to any of the indebtedness described in (i), (ii) or (iii).
AGL Resources is a holding company and almost all of the operating
assets of AGL Resources are owned by AGL Resources' subsidiaries. AGL Resources
relies primarily on dividends from such subsidiaries to meet its obligations for
payment of principal and interest on its outstanding debt obligations and
corporate expenses. AGL Resources is a legal entity separate and distinct from
its subsidiaries. The principal sources of AGL Resources' income are dividends
and fees from its subsidiaries. Because AGL Resources is a holding company, the
right of AGL Resources to participate in any distribution of assets of any
subsidiary, upon such subsidiary's liquidation or reorganization or otherwise,
is subject to the prior claims of creditors of the subsidiary. Accordingly, the
Exchange Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of AGL Resources' subsidiaries. Holders of
Exchange Junior Subordinated Debentures should look only to the assets of AGL
Resources for payments of interest and principal and premium, if any.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by AGL Resources. AGL Resources expects from
time to time to incur additional indebtedness constituting Senior Indebtedness.
RESTRICTIONS ON TRANSFER
The Exchange Junior Subordinated Debentures will be issued, and may be
transferred only, in minimum denominations of not less than $1,000 and multiples
of $1,000 in excess thereof. Any such transfer, sale, or other disposition of
Exchange Junior Subordinated Debentures in a denomination of less than $1,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange Junior
Subordinated Debentures for any purpose, including but not limited to the
receipt of payments on such Exchange Junior Subordinated Debentures, and such
transferee shall be deemed to have no interest whatsoever in such Exchange
Junior Subordinated Debentures.
GOVERNING LAW
The Indenture and the Exchange Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
Following the Exchange Offer and the qualification of the Indenture
under the Trust Indenture Act, the Indenture Trustee shall have and be subject
to all the duties and responsibilities specified with respect to a Indenture
Trustee under the Trust Indenture Act. Subject to such provisions, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Exchange Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might
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be incurred thereby. The Indenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Indenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
MISCELLANEOUS
AGL Resources has agreed, pursuant to the Indenture, for so long as
Trust Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Trust (provided that certain
successors which are permitted pursuant to the Indenture may succeed to AGL
Resources' ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate the Trust, except in connection with a
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities in liquidation of the Trust, and (iii) to use its reasonable efforts,
consistent with the terms and provisions of the Declaration of Trust to cause
the Trust to remain classified as (a) a business trust, except in connection
with certain mergers, consolidations or amalgamations permitted by the
Declaration of Trust, and (b) a grantor trust and not as an association taxable
as a corporation for United States federal income tax purposes.
DESCRIPTION OF EXCHANGE GUARANTEE
The Exchange Guarantee will be executed and delivered by AGL Resources
concurrently with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders from time to time of the Exchange Capital
Securities. The Bank of New York will act as guarantee trustee ("Guarantee
Trustee") under the Exchange Guarantee. The Exchange Guarantee has been
qualified under the Trust Indenture Act. This summary of certain provisions of
the Exchange Guarantee does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of the Exchange
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act. The Guarantee Trustee will hold the Exchange Guarantee for the
benefit of the holders of the Exchange Capital Securities.
GENERAL
AGL Resources will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined
herein) to the holders of the Exchange Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Exchange Capital Securities, to the extent not paid by or on
behalf of the Trust (the "Guarantee Payments"), will be subject to the Exchange
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
Exchange Capital Securities, to the extent that the Trust has funds on hand
legally available therefor at such time, (ii) the applicable Redemption Price
with respect to Exchange Capital Securities called for redemption, to the extent
that the Trust has funds on hand legally available therefor at such time, or
(iii) upon a voluntary or involuntary termination and liquidation of the Trust,
the lesser of (a) the Liquidation Distribution, to the extent that the Trust has
funds on hand legally available therefor, and (b) the amount of assets of the
Trust remaining available for distribution to holders of Exchange Capital
Securities. AGL Resources' obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by AGL Resources to the
holders of the Exchange Capital Securities or by causing the Trust to pay such
amounts to such holders.
The Exchange Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided therein. See "--Status
of the Exchange Guarantee". Because AGL Resources is a holding company, the
right of AGL Resources to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise, is
subject to the prior claims of creditors of that subsidiary, except to the
extent AGL Resources may itself be recognized as a creditor of that subsidiary.
Accordingly, AGL Resources' obligations under the Exchange Guarantee will be
effectively subordinated to all existing and future liabilities of AGL
Resources' subsidiaries, and claimants should look only to the assets of AGL
Resources for payments thereunder. See "Description of the Exchange Junior
Subordinated Debentures--General." The Exchange Guarantee does not limit the
incurrence
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or issuance of other secured or unsecured debt of AGL Resources, including
Senior Indebtedness, whether under the Indenture, any other indenture that AGL
Resources may enter into in the future or otherwise.
AGL Resources will, through the Exchange Guarantee, the Declaration of
Trust, the Exchange Junior Subordinated Debentures and the Indenture, taken
together, fully, irrevocably and unconditionally guarantee all of the Trust's
obligations under the Exchange Capital Securities but will not apply to any
payment of Distributions except to the extent the Trust has funds legally
available therefor. If AGL Resources does not make interest payments on the
Exchange Junior Subordinated Debentures held by the Trust, the Trust will not
pay Distributions on the Exchange Capital Securities and will not have funds
legally available therefor.
STATUS OF THE EXCHANGE GUARANTEE
The Exchange Guarantee will constitute an unsecured obligation of AGL
Resources and will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as Exchange Junior Subordinated Debentures,
except in the case of a bankruptcy or insolvency proceeding in respect of AGL
Resources, in which case the Exchange Guarantee will rank subordinate and junior
in right of payment to all liabilities (other than Other Guarantees) of AGL
Resources.
The Exchange Guarantee will rank pari passu with all Other Guarantees
issued by AGL Resources. The Exchange Guarantee will constitute a guarantee of
payment and not of collection (i.e., the guaranteed party may institute a legal
proceeding directly against AGL Resources to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against any
other Person or entity). The Exchange Guarantee will be held for the benefit of
the holders of the Exchange Capital Securities. The Exchange Guarantee will not
be discharged except by payment of the Guarantee Payments in full to the extent
not paid by the Trust or upon distribution to the holders of the Exchange
Capital Securities of the Exchange Junior Subordinated Debentures. The Exchange
Guarantee does not place a limitation on the amount of additional Senior
Indebtedness that may be incurred by AGL Resources. AGL Resources expects from
time to time to incur additional indebtedness constituting Senior Indebtedness.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the Exchange Capital Securities (in which case
no vote will be required), the Exchange Guarantee may not be amended without the
prior approval of the holders of a majority of the Liquidation Amount of such
outstanding Exchange Capital Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Exchange Capital
Securities--Voting Rights; Amendment of the Declaration of Trust." All
guarantees and agreements contained in the Exchange Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of AGL Resources
and shall inure to the benefit of the holders of the Exchange Capital Securities
then outstanding.
EVENTS OF DEFAULT
An event of default under the Exchange Guarantee will occur upon the
failure of AGL Resources to perform any of its payment or other obligations
thereunder. The holders of a majority in Liquidation Amount of the Exchange
Capital Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Exchange Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Exchange Guarantee. The
Guarantee Trustee may decline to follow any such direction if (i) it shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or (ii) that the action or proceeding
so directed may not lawfully be taken or would involve the Guarantee Trustee in
personal liability.
Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against AGL Resources to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other Person.
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AGL Resources, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not AGL Resources is in
compliance with all the conditions and covenants applicable to it under the
Exchange Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of an event of default by AGL Resources in performance of the Exchange
Guarantee, will undertake to perform only such duties as are specifically set
forth in the Exchange Guarantee and, after default with respect to the Exchange
Guarantee, must exercise the same degree of care and skill as a prudent Person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Guarantee Trustee will be under no obligation to exercise any of
the powers vested in it by the Exchange Guarantee at the request of any holder
of the Exchange Capital Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE EXCHANGE GUARANTEE
The Exchange Guarantee will terminate and be of no further force and
effect upon full payment of the applicable Redemption Price of the Exchange
Capital Securities, upon full payment of the Liquidation Amount payable upon
liquidation of the Trust, or upon distribution of Exchange Junior Subordinated
Debentures to the holders of the Exchange Capital Securities. The Exchange
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Exchange Capital Securities must restore
payment of any sums paid under the Exchange Capital Securities or the Exchange
Guarantee.
GOVERNING LAW
The Exchange Guarantee will be governed by and construed in accordance
with the laws of the State of New York.
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES, THE
EXCHANGE JUNIOR SUBORDINATED DEBENTURES AND THE EXCHANGE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Exchange Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by AGL Resources
as and to the extent set forth under "Description of Exchange Guarantee." Taken
together, AGL Resources' obligations under the Exchange Junior Subordinated
Debentures, the Indenture, the Declaration of Trust and the Exchange Guarantee
will provide, in the aggregate, a full, irrevocable and unconditional guarantee
of payments of Distributions and other amounts due on the Exchange Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Exchange Capital Securities. If and to the extent that AGL Resources does not
make the required payments on the Exchange Junior Subordinated Debentures, the
Trust will not have sufficient funds to make the related payments, including
Distributions, on the Exchange Capital Securities. The Exchange Guarantee will
not cover any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, the remedy of a holder of Exchange
Capital Securities is to institute a Direct Action. The obligations of AGL
Resources under the Exchange Guarantee will be subordinate and junior in right
of payment to all Senior Indebtedness.
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SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the Exchange Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Exchange Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of the
Exchange Junior Subordinated Debentures will be equal to the sum of the
Liquidation Amount or Redemption Price, as applicable, of the Exchange Capital
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Exchange Junior Subordinated Debentures will match the
Distribution Rate and Distribution and other payment dates for the Trust
Securities; (iii) AGL Resources shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of Trust
Securities under such Trust Securities; and (iv) the Declaration of Trust will
provide that the Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF EXCHANGE CAPITAL SECURITIES
A holder of any Exchange Capital Security may institute a legal
proceeding directly against AGL Resources to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against the
Guarantee Trustee, the Trust or any other Person or entity. A default or event
of default under any Senior Indebtedness would not constitute a default or Event
of Default under the Declaration of Trust. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the Indenture will provide that no payments may be made in respect
of the Exchange Junior Subordinated Debentures until such Senior Indebtedness
has been paid in full or any payment default thereunder has been cured or
waived. Failure to make required payments on Exchange Junior Subordinated
Debentures would constitute an Event of Default under the Declaration of Trust.
LIMITED PURPOSE OF THE TRUST
The Exchange Capital Securities will represent preferred undivided
beneficial interests in the assets of the Trust, and the Trust exists for the
sole purpose of issuing and selling the Trust Securities, using the proceeds
from the sale of the Trust Securities to acquire the Original Junior
Subordinated Debentures and engaging in only those other activities necessary,
advisable or incidental thereto.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of
the Trust Securities, upon any voluntary or involuntary termination and
liquidation of the Trust, the holders of the Trust Securities will be entitled
to receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of Exchange Capital Securities--Liquidation of the Trust
and Distribution of Junior Subordinated Debentures." Upon any voluntary or
involuntary liquidation or bankruptcy of AGL Resources, the Property Trustee, as
holder of the Exchange Junior Subordinated Debentures, would be a subordinated
creditor of AGL Resources, subordinated in right of payment to all Senior
Indebtedness as set forth in the Indenture, but entitled to receive payment in
full of principal (and premium, if any) and interest, before any stockholders of
AGL Resources receive payments or distributions. Since AGL Resources will be the
guarantor under the Exchange Guarantee and will agree to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of its Trust Securities), the positions of a holder of Exchange Capital
Securities and a holder of Exchange Junior Subordinated Debentures relative to
other creditors and to stockholders of AGL Resources in the event of liquidation
or bankruptcy of AGL Resources are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Long Aldridge Norman LLP, counsel to AGL Resources
and the Trust ("Tax Counsel"), the following is a summary of certain of the
material United States federal income tax consequences of the purchase,
ownership, and disposition of Capital Securities held as capital assets by a
holder who purchases such Capital Securities upon initial issuance. It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or Persons that will hold the
Capital Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to Persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Capital Securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations thereunder, the administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. Prospective investors
should note that no rulings have been or are expected to be sought from the IRS
with respect to any of these issues and, since an opinion of Tax Counsel is not
binding on the Internal Revenue Service (the "IRS") or the courts, no assurance
can be given that the IRS will not take contrary positions. Moreover, no
assurance can be given that any of the opinions expressed herein will not be
challenged by the IRS or, if challenged, that such a challenge would not be
successful.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Original Securities for Exchange Securities should not
be a taxable event to holders for United States federal income tax purposes.
Since the exchange of Original Securities for Exchange Securities will occur by
operation of the terms of the Original Securities, the Exchange Securities
should not be considered to differ materially in kind or extent from the
Original Securities and, therefore, should not be treated as an "exchange" for
United States Federal income tax purposes. Accordingly, the Exchange Capital
Securities should have the same adjusted issue price as the Original Capital
Securities, and a holder should have the same adjusted tax basis and holding
period in the Exchange Capital Securities as the holder had in the Original
Capital Securities immediately before the exchange. Moreover, a holder which
had acquired Original Capital Securities with either market discount or bond
premium will be treated as holding Exchange Capital Securities with the same
amount of market discount or bond premium and will be required to include such
market discount in or deduct such bond premium from their income in the same
manner as on the Original Capital Securities. Holders are urged to consult
their tax advisors regarding the applicability of the market discount and bond
premium rules.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Original Junior Subordinated
Debentures, Tax Counsel rendered its opinion generally to the effect that, under
then current law and assuming full compliance with the terms of the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Original Junior Subordinated Debentures will be
classified for United States federal income tax purposes as indebtedness of AGL
Resources.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Original Capital Securities, Tax
Counsel rendered its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Declaration of Trust and
the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities generally
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will be considered the owner of an undivided interest in the Junior Subordinated
Debentures, and each holder will be required to include in its gross income any
interest (or OID accrued) with respect to its allocable share of those Junior
Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations")
applicable to debt instruments issued on or after August 13, 1996, a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. AGL Resources believes
that the likelihood of its exercising its option to defer payments of interest
is "remote" since exercising that option would prevent AGL Resources from
declaring dividends on any class of its equity securities. Accordingly, AGL
Resources intends to take the position, based on the advice of Tax Counsel, that
the Junior Subordinated Debentures will not be considered to be issued with OID
and, accordingly, stated interest on the Junior Subordinated Debentures
generally will be taxable to a holder as ordinary income at the time it is paid
or accrued in accordance with such holder's method of accounting.
Under the Regulations, if AGL Resources were to exercise its option to
defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though AGL
Resources would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote", the Junior Subordinated Debentures would be
treated as having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute indebtedness
of AGL Resources, corporate holders of the Capital Securities will not be
entitled to a dividends-received deduction with respect to any income
recognized with respect to the Capital Securities.
MARKET DISCOUNT
A purchaser of a Capital Security at a discount from the Liquidation
Amount at maturity of such purchaser's pro rata share of the Junior Subordinated
Debentures acquires such Capital Security with "market discount." However,
market discount with respect to a Capital Security will be considered to be zero
if it is de minimis. Market discount will be de minimis with respect to a
Capital Security if it is less than the product of (i) 0.25% of the adjusted
issue price of the purchaser's pro rata share of the Junior Subordinated
Debentures multiplied by (ii) the number of complete years to maturity of such
Junior Subordinated Debentures after the date of purchase. The purchaser of a
Capital Security with more than a de minimis amount of market discount generally
will be required to treat any gain on the sale, exchange, redemption or other
disposition of all or part of the Capital Securities (or related Junior
Subordinated Debentures) as ordinary income to the extent of accrued (but not
previously taxed) market discount. Market discount generally will accrue ratably
during the period from the date of purchase of such Capital Security to the
maturity date of the Junior Subordinated Debentures, unless the holder
irrevocably elects to accrue such market discount on the basis of a constant
interest rate.
A holder who has acquired a Capital Security at a market discount
generally will be required to defer any deductions of interest expense
attributable to any indebtedness incurred or continued to purchase or carry the
Capital
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Security, to the extent such interest expense exceeds the related interest
income. Any such deferred interest expense generally will be allowable as a
deduction not later than the year in which the related market discount income is
recognized. As an alternative to the inclusion of market discount in income upon
disposition of all or a portion of a Capital Security or the related Junior
Subordinated Debentures (including redemptions thereof), a holder may make an
election (which may not be revoked without the IRS's consent) to include market
discount in income as it accrues on all market discount instruments acquired by
the holder during or after the taxable year for which the election is made.
In that case, the preceding deferral rule for interest expense will not apply.
In lieu of the foregoing treatment of market discount and interest
expense, a holder may elect to treat any market discount (including a de minimis
amount) as OID and accrue such discount on a constant-yield basis in the same
manner as the holder accrues OID.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
AGL Resources will have the right at any time to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities. Under current law, such a distribution, for United States
federal income tax purposes, would be treated as a nontaxable event to each
holder, and each holder would receive an aggregate tax basis in the Junior
Subordinated Debentures equal to such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding period in Junior
Subordinated Debentures would begin on the date such Junior Subordinated
Debentures were received.
Under certain circumstances described herein (see "Description of
Exchange Capital Securities"), the Junior Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to holders in
redemption of their Capital Securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Capital Securities, and a holder could recognize
gain or loss as if it sold such redeemed Capital Securities for cash. See
"--Sales of Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities will recognize gain or loss
equal to the difference between its adjusted tax basis in the Capital Securities
and the amount realized on the sale of such Capital Securities (other than with
respect to accrued and unpaid interest which has not yet been included in
income, which will be treated as ordinary income). A holder's adjusted tax basis
in the Capital Securities generally will be its initial purchase price increased
by OID (if any) previously includable in such holder's gross income to the date
of disposition and decreased by payments (if any) received on the Capital
Securities in respect of OID.
The Taxpayer Relief Act of 1997, which was signed into law by
President Clinton on August 5, 1997, made certain changes in the taxation of
individuals on long-term capital gains. Generally, for the tax years ending
after May 6, 1997, the maximum tax rate on net capital gains has been reduced
from 28% to 20% and the rate for individuals that previously paid a 15% tax on
capital gains has been reduced from 15% to 10%. From May 7, 1997 to July 28,
1997, the lower rates apply to assets held for more than 12 months, and
effective July 29, 1997, the lower rates apply to assets held longer than 18
months. The Taxpayer Relief Act of 1997 also made changes in the amount of net
capital gain taken into account in computing alternative minimum tax for
corporations. Holders are urged to consult their tax advisors regarding the
applicability of the changes in the treatment of capital gains made by the
Taxpayer Relief Act of 1997.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) who disposes of
his Capital Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid interest)
a holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
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POSSIBLE TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have (i) a
weighted average maturity in excess of 40 years, or (ii) a maximum term in
excess of 20 years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. Neither the 1996 Proposed Legislation nor similar
legislation was enacted during the 104th Congress. On February 6, 1997,
President Clinton proposed in the administration's fiscal year 1998 budget
certain new tax changes (the "1997 Proposed Legislation") that would, among
other things, generally deny corporate issuers a deduction for interest or OID
in respect of certain debt obligations if such debt obligations have a maximum
term in excess of 15 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On August 5, 1997, President Clinton
signed the Taxpayer Relief Act of 1997, which enacted into law certain
provisions of the 1997 Proposed Legislation. The Taxpayer Relief Act of 1997
does not contain any provision that would affect AGL Resources' ability to
deduct interest payable on the Junior Subordinated Debentures. However, there
can be no assurance that other legislation enacted after the date hereof will
not adversely affect the ability of AGL Resources to deduct the interest
payable on the Junior Subordinated Debentures. There can be no assurance,
therefore, that a Tax Event will not occur. A Tax Event would permit AGL
Resources to cause a redemption of the Capital Securities before June 1, 2007.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate, or trust that is not a U.S. Holder
for United States federal income tax purposes. A "U.S. Holder" is a holder of
Capital Securities who or which is a citizen or individual resident (or is
treated as a citizen or individual resident) of the United States for federal
income tax purposes, a corporation or partnership created or organized (or
treated as created or organized for federal income tax purposes) in or under the
laws of the United States or any political subdivision thereof, an estate the
income of which is includible in its gross income for federal income tax
purposes without regard to its source, or a trust if, and only if, (i) a court
within the United States is able to exercise primary supervision over the
administration of the trust and (ii) one or more United States trustees have the
authority to control all substantial decisions of the trust. Under present
United States federal income tax laws: (i) payments by the Trust or any of its
paying agents to any holder of a Capital Security who or which is a United
States Alien Holder will not be subject to United States federal withholding
tax; provided that, (a) the beneficial owner of the Capital Security does not
actually or constructively own 10 percent or more of the total combined voting
power of all classes of stock of AGL Resources entitled to vote, (b) the
beneficial owner of the Capital Security is not a controlled foreign corporation
that is related to AGL Resources through stock ownership, and (c) either (A) the
beneficial owner of the Capital Security certifies to the Trust or its agent,
under penalties of perjury, that it is not a United States holder and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Trust or its agent, under penalties
of perjury, that such statement has been received from the beneficial owner by
it or by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and (ii) a United States
Alien Holder of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts
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will be allowed as a credit against the holder's United States federal income
tax, provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Each of AGL Resources (the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust) and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified Person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA. Any
purchaser proposing to acquire Exchange Capital Securities with assets of any
Plan should consult with its counsel. The purchase and/or holding of Exchange
Capital Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which AGL Resources, the
Property Trustee or any affiliate is a service provider (or otherwise is a party
in interest or a disqualified Person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Exchange
Capital Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts), or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager). In addition, a Plan fiduciary considering the purchase
of Exchange Capital Securities should be aware that the assets of the Trust may
be considered "plan assets" for ERISA purposes. In such event, service providers
with respect to the assets of the Trust may become parties in interest or
disqualified Persons with respect to investing Plans, and any discretionary
authority exercised with respect to the Exchange Junior Subordinated Debentures
by such Persons could be deemed to constitute a prohibited transaction under
ERISA or the Code. In order to avoid such prohibited transactions, each
investing Plan, by purchasing the Exchange Capital Securities, will be deemed to
have directed the Trust to invest in the Exchange Junior Subordinated Debentures
and to have appointed the Property Trustee.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities where such
Original Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and AGL
Resources have agreed that, starting on the Expiration Date and ending on the
close of business on the 180th day following the Expiration Date, or, if
earlier, when all such Exchange Capital Securities have been disposed of by such
broker-dealer, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until April 19, 1998, all dealers effecting transactions in the
Exchange Capital Securities may be required to deliver a prospectus.
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The Trust and AGL Resources will not receive any proceeds from any sale
of Exchange Capital Securities by broker-dealers. Exchange Capital Securities
received by broker-dealers for their own account pursuant to the Exchange Offer
may be sold from time to time in one or more transactions, in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Capital Securities. Any
broker-dealer that resells Exchange Capital Securities that were received by it
for its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Capital Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of Exchange Capital Securities and any commissions or
concessions received by any such Persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Until 180 days after the Expiration Date or upon such earlier date as
described above, the Trust and the Company will promptly send additional copies
of this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Trust and the Company have agreed to pay all expenses incident to the Exchange
Offer other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Capital Securities (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the
Exchange Capital Securities will be passed upon by Richards, Layton & Finger,
Wilmington, Delaware, special Delaware counsel to AGL Resources and the Trust.
The validity of the Junior Subordinated Debentures and the Guarantee and certain
matters relating thereto will be passed upon on behalf of AGL Resources by Long
Aldridge Norman LLP, Atlanta, Georgia. Long Aldridge Norman LLP will also pass
upon certain matters relating to United States federal income tax
considerations.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from AGL
Resources Inc.'s Annual Report on Form 10-K for the year ended September 30,
1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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======================================================
NO DEALER, SALESMAN OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AGL RESOURCES, THE TRUST,
THE INITIAL PURCHASERS OR ANY OF THEIR RESPECTIVE AGENTS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AGL
RESOURCES OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 7
Incorporation of Certain Documents by
Reference........................... 7
Summary............................... 8
Risk Factors.......................... 15
AGL Resources Inc..................... 19
Use of Proceeds....................... 21
Summary Consolidated Financial Data... 22
AGL Capital Trust..................... 23
The Exchange Offer.................... 23
Description of Exchange Securities.... 34
Description of Exchange Capital
Securities.......................... 34
Description of Exchange Junior
Subordinated Debentures............. 45
Description of Exchange Guarantee..... 54
Relationship Among the Exchange
Capital Securities, the Exchange
Junior Subordinated Debentures and
the Exchange Guarantee.............. 56
Certain Federal Income Tax
Consequences........................ 58
ERISA Considerations.................. 62
Plan of Distribution.................. 63
Validity of Securities................ 63
Experts............................... 63
</TABLE>
======================================================
======================================================
$75,000,000
AGL CAPITAL TRUST
OFFER TO EXCHANGE ITS
SERIES B 8.17% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS
SERIES A 8.17% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
AGL RESOURCES INC.
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PROSPECTUS
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SEPTEMBER 16, 1997
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