<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1998
REGISTRATION NO. 333-11703
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRITON ENERGY LIMITED
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS
(State or other jurisdiction of incorporation)
NONE
(I.R.S. Employer Identification No.)
CALEDONIAN HOUSE,
MARY STREET, P.O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS
(809) 949-0050
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------------
ROBERT B. HOLLAND, III, ESQ.
TRITON ENERGY CORPORATION
6688 NORTH CENTRAL EXPRESSWAY
SUITE 1400
DALLAS, TEXAS 75206-9926
(214) 691-5200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
VINCENT PAGANO, JR., ESQ. DAVID J. GRAHAM, ESQ.
SIMPSON THACHER & BARTLETT ANDREWS & KURTH L.L.P.
425 LEXINGTON AVENUE 4200 TEXAS COMMERCE TOWER
NEW YORK, NEW YORK 10017-3909 HOUSTON, TEXAS 77002
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement consists of two separate Prospectuses, covering
registration of:
(1) Debt Securities, Ordinary Shares, Preference Shares and Warrants of
Triton Energy Limited; and
(2) Ordinary Shares to be issued pursuant to the Dividend Reinvestment and
Stock Purchase Plan of Triton Energy Limited.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
TRITON ENERGY LIMITED
PREFERENCE SHARES
ORDINARY SHARES
WARRANTS TO PURCHASE PREFERENCE SHARES
WARRANTS TO PURCHASE ORDINARY SHARES
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
---------------------
Triton Energy Limited ("TEL" or the "Company") may offer and sell from time
to time, in one or more series, (i) its preference shares, par value $.01 per
share (the "Preference Shares"), (ii) its Ordinary Shares, par value $.01 per
share (the "Ordinary Shares"), (iii) unsecured debt securities consisting of
notes, debentures or other evidences of indebtedness (the "Debt Securities")
which may be senior ("Senior Debt Securities"), senior subordinated ("Senior
Subordinated Debt Securities") or subordinated ("Subordinated Debt Securities"),
and (iv) warrants to purchase Preference Shares, Ordinary Shares or TEL Debt
Securities (the "Warrants"), or any combination of the foregoing.
The Preference Shares, Ordinary Shares, Debt Securities and Warrants are
collectively referred to as the "Securities". The Preference Shares, Ordinary
Shares, Debt Securities and Warrants may be offered at an aggregate initial
offering price not to exceed $200,000,000, at prices and on terms to be
determined at or prior to the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities and the initial price and the net proceeds to TEL from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Securities, without limitation, the following: (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior debt, senior subordinated debt or subordinated debt, maturity, rate or
rates (or method of determining the same) and time or times for the payment of
interest, if any, any terms for optional or mandatory redemption or repurchase
or sinking fund provisions, and any conversion or exchange rights, (ii) in the
case of Preference Shares, the designation, number of shares, liquidation
preference per share, initial public offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provisions, and any
conversion or exchange rights, (iii) in the case of Ordinary Shares, the number
of Ordinary Shares and the terms of the offering and sale thereof and (iv) in
the case of Warrants, the number and terms thereof, the designation and the
number of securities issuable upon their exercise, the exercise price, the terms
of the offering and sale thereof and, where applicable, the duration and
detachability thereof.
The Securities may be sold directly by TEL to investors, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any agents of TEL or any underwriters are involved in the
sale of any Securities in respect of which this Prospectus is being delivered,
the names of such agents or underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement.
<PAGE>
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS," BEGINNING ON PAGE 3.
---------------------
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 , 1998.
<PAGE>
AVAILABLE INFORMATION
TEL is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by TEL may be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Room
1024, Washington, D.C. 20549 and at the web site (http://www.sec.gov.)
maintained by the Commission; and at regional offices of the Commission at the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and at 7 World Trade Center, New York, New York 10048. Copies of such material
may be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement on Form S-3,
as amended (the "Registration Statement"), of which this Prospectus is a part.
For further information with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits
thereto. Statements made in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete; and while the Company
believes the descriptions of the material provisions of such contracts,
agreements and other documents contained in this Prospectus are accurate
summaries of such material provisions, reference is made to such contract,
agreement or other document filed as an exhibit to the Registration Statement
for a more complete description of the matter involved, and each such statement
is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus its Annual
Report on Form 10-K for the year ended December 31, 1997, its Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998, its
current reports on Form 8-K dated February 13, August 17 and September 10, 1998
and the description of the Ordinary Shares contained in its Registration
Statement on Form 8-A dated March 25, 1996, as amended by Form 8-A/A, dated
August 14, 1996.
Each document filed by the Company 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 offering of the Securities pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents that are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Investor Relations, Triton Energy, 6688 North Central Expressway,
Suite 1400, Dallas, Texas 75206-9926, telephone (214) 691-5200.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
The Company is a Cayman Islands company, certain of its officers and
directors may be residents of various jurisdictions outside the United States
and its Cayman Islands counsel, W.S. Walker & Company,
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<PAGE>
are residents of the Cayman Islands. All or a substantial portion of the assets
of TEL and of such persons may be located outside the United States. As a
result, it may be difficult for investors to effect service of process within
the United States upon such persons or to enforce in United States courts
judgments obtained against such persons in United States courts and predicated
upon the civil liability provisions of the Securities Act. Notwithstanding the
foregoing, TEL has irrevocably agreed that it may be served with process with
respect to actions based on offers and sales of securities made hereby in the
United States by serving Robert B. Holland, III, c/o Triton Energy Corporation,
6688 North Central Expressway, Suite 1400, Dallas, Texas 75206-9926, TEL's
United States agent appointed for that purpose. TEL has been advised by its
Cayman Islands counsel, W.S. Walker & Company, that there is doubt as to whether
Cayman Islands courts would enforce (a) judgments of United States courts
obtained in actions against such persons or TEL that are predicated upon the
civil liability provisions of the Securities Act or (b) in original actions
brought against TEL or such persons predicated upon the Securities Act. There is
no treaty in effect between the United States and the Cayman Islands providing
for such enforcement, and there are grounds upon which Cayman Islands courts may
not enforce judgments of United States courts. Certain remedies available under
the United States federal securities laws would not be allowed in Cayman Islands
courts as contrary to that nation's policy.
THE COMPANY
The Company is an international oil and gas exploration and production
company. The Company's principal properties, operations and oil and gas reserves
are located in Colombia and Malaysia-Thailand. The Company is actively exploring
for oil and gas in these areas, as well as in Southern Europe, Africa and the
Middle East.
TEL was formed in the Cayman Islands in 1995 and became the parent holding
company of Triton Energy Corporation ("TEC") through the merger (the "Merger")
of a subsidiary of TEL with and into TEC . The Merger was consummated on March
25, 1996. In connection with the Merger, each share of common stock of TEC was
converted into one Ordinary Share. TEL's principal executive offices are located
at Caledonian House, Mary Street, P.O. Box 1043, George Town, Grand Cayman,
Cayman Islands and its telephone number is (809) 949-0050. The "Company" refers
collectively to TEL and its consolidated subsidiaries.
RISK FACTORS
Certain statements included or incorporated by reference in this Prospectus,
such as statements regarding proven oil and gas reserves and statements of the
Company's and management's expectations, intentions, plans and beliefs, are
forward-looking statements (as such term is used in the Private Securities
Litigation Reform Act of 1995), and the factors discussed hereunder could cause
actual results and developments to be materially different from those expressed
in or implied by such statements. Accordingly, in addition to the other
information set forth in or incorporated by reference in this Prospectus and any
applicable Prospectus Supplement, potential investors in the Securities should
consider the following investment considerations.
THE OIL AND GAS INDUSTRY GENERALLY. The Company's strategy is to focus its
exploration activities on what the Company believes are relatively high
potential prospects. No assurance can be given that these prospects contain
significant oil and gas reserves or that the Company will be successful in its
exploration activities thereon. The Company follows the full cost method of
accounting for exploration and development of oil and gas reserves whereby all
acquisition, exploration and development costs are capitalized. Costs related to
acquisition, holding and initial exploration of concessions in countries with no
proved reserves are initially capitalized, including internal costs directly
identified with acquisition, exploration and development activities. The
Company's exploration concessions are periodically assessed for impairment on a
country by country basis. If the Company's investment in exploration concessions
within a country where no proved reserves are assigned is deemed to be impaired,
the concessions are written down
3
<PAGE>
to estimated recoverable value. If the Company abandons all exploration efforts
in a country where no proved reserves are assigned, all exploration costs
associated with the country are expensed. The Company's assessments of whether
its investment within a country is impaired and whether exploration activities
within a country will be abandoned are made from time to time based on its
review and assessment of drilling results, seismic data and other information it
deems relevant. Due to the unpredictable nature of exploration drilling
activities, the amount and timing of impairment expense are difficult to predict
with any certainty. Financial information concerning the Company's assets,
including capitalized costs by geographic area, is set forth in note 21 of Notes
to Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 and Note 3 of Notes to Condensed
Consolidated Financial Statements of the Company in the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
The markets for oil and natural gas historically have been volatile and are
likely to continue to be volatile in the future. Oil and natural gas prices have
been subject to significant fluctuations during the past several decades in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of additional factors that are
beyond the control of the Company. These factors include the level of consumer
product demand, weather conditions, domestic and foreign government regulations,
political conditions in the Middle East and other production areas, the foreign
supply of oil and natural gas, the price and availability of alternative fuels,
and overall economic conditions. It is impossible to predict future oil and gas
price movements with any certainty.
The Company's oil and gas business is also subject to all of the operating
risks normally associated with the exploration for and production of oil and
gas, including, without limitation, blowouts, cratering, pollution, earthquakes,
labor disruptions and fires, each of which could result in substantial losses to
the Company due to injury or loss of life and damage to or destruction of oil
and gas wells, formations, production facilities or other properties. In
accordance with customary industry practices, the Company maintains insurance
coverage limiting financial loss resulting from certain of these operating
hazards. Losses and liabilities arising from uninsured or underinsured events
would reduce revenues and increase costs to the Company. There can be no
assurance that any insurance will be adequate to cover losses or liabilities.
The Company cannot predict the continued availability of insurance, or its
availability at premium levels that justify its purchase.
The Company's oil and gas business is also subject to laws, rules and
regulations in the countries in which the Company operates, which generally
pertain to production control, taxation, environmental and pricing concerns and
other matters relating to the petroleum industry. Many jurisdictions have at
various times imposed limitations on the production of oil and natural gas by
restricting the rate of flow for oil and natural gas wells below their actual
capacity. There can be no assurance that present or future regulation will not
adversely affect the operations of the Company.
Moreover, because the Company may not be the operator or own a majority
interest in a number of contract areas, it will not be able to control the
timing or manner in which capital expenditures will occur in these areas to the
same degree as if it was the operator or owner of a majority interest. Any
inability of the Company to meet its obligations in these and other contract
areas could have a material adverse effect on its interests in these contract
areas.
FINANCIAL POSITION. To date, external sources of funding, asset sales and
net cash flow from operations have been sufficient to service the Company's
existing debt obligations and capital spending programs. The Company expects to
pursue external financing alternatives and may from time to time consider
dispositions of certain assets or operations in order to meet expenditure
requirements on existing or contemplated projects and to service its debt
obligations, the timing and nature of which may be affected by, among other
things, the timing and extent of production and capital expenditures in Colombia
and elsewhere. There can be no assurance as to the ability of the Company to
effect sales of its assets or to access public or private markets for such
financings, the timing of such sales or financings or the proceeds, if any, that
the
4
<PAGE>
Company could realize therefrom. Moreover, the Company's ability to pursue
additional debt financing is limited by covenants in the Company's credit
facilities.
For information regarding the Company's financial position and results of
operations, including the amounts of previous losses, and the Company's ratios
of earnings to fixed charges and earnings to combined fixed charges and
preference dividends, see "Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preference Dividends" herein and the Company's
Consolidated Statements of Operations, Consolidated Balance Sheets and
Consolidated Statements of Cash Flows in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 and other documents incorporated
herein by reference, including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in such Annual Report on
Form 10-K and in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
ENVIRONMENTAL MATTERS. The Company is subject to extensive environmental
laws and regulations. These laws regulate the discharge of oil, gas or other
materials into the environment and may require the Company to remove or mitigate
the environmental effects of the disposal or release of such materials at
various sites. The Company does not believe that its environmental risks are
materially different from those of comparable companies in the oil and gas
industry. Nevertheless, no assurance can be given that environmental laws and
regulations will not, in the future, adversely affect the Company's consolidated
results of operations, cash flows or financial position. Pollution and similar
environmental risks generally are not fully insurable.
RISKS OF INTERNATIONAL OPERATIONS. The Company derives substantially all of
its consolidated revenues from international operations. Risks inherent in
international operations include loss of revenue, property and equipment from
such hazards as expropriation, nationalization, war, insurrection and other
political risks; trade protection measures; risks of increases in taxes and
governmental royalties; and renegotiation of contracts with governmental
entities; as well as changes in laws and policies governing operations of other
companies. Other risks inherent in international operations are the possibility
of realizing economic currency exchange losses when transactions are completed
in currencies other than United States dollars and the Company's ability to
freely repatriate its earnings under existing exchange control laws.
CERTAIN FACTORS RELATING TO COLOMBIA. The Company is a participant in
significant oil and gas discoveries located in the Llanos Basin in the foothills
of the Andes Mountains, approximately 160 kilometers (100 miles) northeast of
Bogota, Colombia. The Company owns interests in three contiguous areas known as
the Santiago de las Atalayas ("SDLA"), Tauramena and Rio Chitamena contract
areas. Well results to date indicate that significant oil and gas deposits lie
across the SDLA, Tauramena and Rio Chitamena contract areas (the "Cusiana
Field"), and within the SDLA contract area (the "Cupiagua Field").
Development of reserves in the Cusiana and Cupiagua fields is ongoing and
will require additional drilling and completion of the production facilities
currently under construction. Pipelines connect the major producing fields in
Colombia to export facilities and to refineries. The Company expects that the
production facilities will be completed during 1998 and that drilling will
continue at least into 1999. There can be no assurance that the productivity of
the additional wells, when combined with the productivity of existing wells,
will over time, match the design capacity of the production facilities.
Guerilla activity in Colombia has from time to time disrupted the operation
of oil and gas projects causing increased costs. Such activity increased over
the last year, causing delays in the development of the Cupiagua Field. Although
the Colombian government, the Company and its partners have taken steps to
maintain security and favorable relations with the local population, there can
be no assurance that attempts to reduce or prevent guerilla activity will be
successful or that such activity will not disrupt operations in the future.
5
<PAGE>
Colombia is among several nations whose progress in stemming the production
and transit of illegal drugs is subject to annual certification by the President
of the United States. In 1998, the President of the United States announced that
Colombia would not be certified but was granted a national interest waiver.
There can be no assurance that in the future, Colombia will receive
certification or a waiver. The consequences of the failure to receive
certification or a national interest waiver generally include the following: all
bilateral aid, except anti-narcotics and humanitarian aid, has been or will be
suspended; the Export-Import Bank of the United States and the Overseas Private
Investment Corporation will not approve financing for new projects in Colombia;
U.S. representatives at multilateral lending institutions will be required to
vote against all loan requests from Colombia, although such votes will not
constitute vetoes; and the President of the United States and Congress retain
the right to apply future trade sanctions. Each of these consequences could
result in adverse economic consequences in Colombia and could further heighten
the political and economic risks associated with the Company's operations in
Colombia. Any changes in the holders of significant government offices could
have adverse consequences on the Company's relationship with the Colombian
national oil company and the Colombian government's ability to control guerilla
activities, and could exacerbate the factors relating to foreign operations
discussed above.
CERTAIN FACTORS RELATING TO MALAYSIA-THAILAND. The Company is a partner in
a significant gas exploration project located in the upper Malay Basin in the
Gulf of Thailand approximately 450 kilometers northeast of Kuala Lumpur and 750
kilometers south of Bangkok as a contractor under a production-sharing contract
covering Block A-18 of the Malaysia-Thailand Joint Development Area. Test
results to date indicate that significant gas and oil deposits lie within the
block.
Development of gas production is in the early planning stages but is
expected to take several years and require the drilling of additional wells and
the installation of production facilities, which will require significant
additional capital expenditures, the ultimate amount of which cannot be
predicted. Pipelines will also be required to be connected between Block A-18
and ultimate markets. The terms on which any gas produced from the Company's
contract area in Malaysia-Thailand is sold may be adversely affected by the
present monopoly, gas purchase and transportation conditions in both Malaysia
and Thailand. In connection with the sale to a subsidiary of Atlantic Richfield
Company ("ARCO") of one-half of the shares of TEL's subsidiary that held its
interest in Block A-18, ARCO agreed to pay all future exploration and
development costs attributable to the Company's and ARCO's collective interest
in Block A-18, up to $377 million or until first production from a gas field, at
which time the Company and ARCO would each pay 50% of such costs.
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the net
proceeds from the sale of the particular Securities offered by this Prospectus
and each Prospectus Supplement (the "Offered Securities") will be used
principally to continue funding the Company's obligations relating to the
development of its operations in Colombia and for general corporate purposes, as
well as to retire or refinance existing debt obligations.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERENCE DIVIDENDS
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preference dividends, earnings consist of
earnings (loss) from continuing operations before income taxes, minority
interest, extraordinary items and cumulative effect of accounting changes, plus
fixed charges (interest charges and preference share dividend requirements of
subsidiaries, adjusted to a pretax basis), less interest capitalized, less
preference share dividend requirements of subsidiaries adjusted to a pretax
basis and less undistributed earnings of affiliates whose debt is not guaranteed
by the Company.
6
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The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preference dividends for the Company for
the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED
DECEMBER 31,
----------- ------------------
1998 1997 1997 1996 1995
----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges......................... (a) (a) (a) (a) 1.1x
Ratio of earnings to combined fixed charges and preference
dividends................................................ (b) (b) (b) (b) 1.0x
<CAPTION>
SEVEN
MONTHS YEAR ENDED MAY 31,
ENDED
DECEMBER 31, --------------------------
1994 1994 1993
----------------- ----- -------------
<S> <C> <C> <C>
Ratio of earnings to fixed charges......................... (a) (a) (a)
Ratio of earnings to combined fixed charges and preference
dividends................................................ (b) (b) (b)
</TABLE>
- ------------------------
(a) Earnings were inadequate to cover fixed charges for the six months ended
June 30, 1998 and 1997 by $156,159,000 and $5,884,000, respectively, for the
years ended December 31, 1997 and 1996 by $8,922,000 and $6,275,000,
respectively, for the seven months ended December 31, 1994 by $30,565,000
and for the years ended May 31, 1994 and 1993 by $40,976,000 and
$152,391,000, respectively. Without nonrecurring items, earnings would have
been inadequate to cover fixed charges for the six months ended June 30,
1998 and 1997 by $25,614,000 and $10,726,000, respectively, for the years
ended December 31, 1997 and 1995 by $15,175,000 and $9,921,000,
respectively, for the seven months ended December 31, 1994 by $29,581,000
and for the years ended May 31, 1994 and 1993 by $51,415,000 and
$45,183,000, respectively.
(b) Earnings were inadequate to cover combined fixed charges and preference
dividends for the six months ended June 30, 1998 and 1997 by $156,346,000
and $6,097,000, respectively, for the years ended December 31, 1997 and 1996
by $9,322,000 and $7,260,000, respectively, for the seven months ended
December 31, 1994 by $31,014,000 and for the years ended May 31, 1994 and
1993 by $40,976,000 and $152,391,000, respectively. Without nonrecurring
items, earnings would have been inadequate to cover combined fixed charges
and preference dividends for the six months ended June 30, 1998 and 1997 by
$25,801,000 and $10,939,000, respectively, for the years ended December 31,
1997 and 1995 by $15,175,000 and $10,723,000, respectively, for the seven
months ended December 31, 1994 by $30,030,000, and for the years ended May
31, 1994 and 1993 by $51,415,000 and $45,183,000, respectively.
7
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be unsecured senior, senior subordinated or
subordinated debt of TEL and will be issued, in the case of Senior Debt
Securities, under a Senior Indenture (the "Senior Debt Indenture") between TEL
and The Chase Manhattan Bank, as trustee, in the case of Senior Subordinated
Debt Securities, under a Senior Subordinated Indenture (the "Senior Subordinated
Debt Indenture") between TEL and United States Trust Company of New York, as
trustee, and in the case of Subordinated Debt Securities, under a Subordinated
Indenture (the " Subordinated Debt Indenture") between TEL and The Chase
Manhattan Bank, as Trustee. The Senior Debt Indenture, the Senior Subordinated
Debt Indenture and the Subordinated Debt Indenture are sometimes hereinafter
referred to individually as an "Indenture" and collectively as the "Indentures."
None of the Indentures limits the amount of Debt Securities that may be issued
thereunder and the Indentures provide that the Debt Securities may be issued
from time to time in one or more series. The Indentures permit the appointment
of a different trustee for each series of Debt Securities. As used herein, the
term "Trustee" means The Chase Manhattan Bank or United States Trust Company of
New York, as the case may be. If there is at any time more than one trustee
under any Indenture, the term "Trustee" as used in this Prospectus will mean
each such trustee and will apply to each such trustee only with respect to those
series of Debt Securities with respect to which it is serving as trustee. The
Indentures are filed as exhibits to the Registration Statement of which this
Prospectus is a part. The following summaries of certain provisions of the
Indentures and the Debt Securities do not purport to be complete and, while TEL
believes the descriptions of the material provisions of the Indentures and Debt
Securities contained in this Prospectus are accurate summaries of such material
provisions, such summaries are subject to the detailed provisions of the
applicable Indenture to which reference is hereby made for a full description of
such provisions, including the definition of certain terms used herein. Section
references in parentheses below are to sections in each Indenture unless
otherwise indicated. Wherever particular sections or defined terms of the
applicable Indenture are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for provisions relating to subordination.
PROVISIONS APPLICABLE TO SENIOR, SENIOR SUBORDINATED AND SUBORDINATED DEBT
SECURITIES
GENERAL. Debt Securities will be unsecured senior, senior subordinated or
subordinated obligations of TEL. Except to the extent set forth in the
applicable Prospectus Supplement, none of the Indentures limits the payment of
dividends by or the acquisition of stock of TEL. Except to the extent set forth
in any Prospectus Supplement, the Indentures do not, and the Debt Securities
will not, contain any covenants or other provisions that are intended to afford
holders of the Debt Securities special protection in the event of either a
change of control of TEL or a highly leveraged transaction by TEL.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Debt Securities being offered (the "Offered Debt
Securities") (to the extent such terms are applicable to such Offered Debt
Securities): (i) the title of the Offered Debt Securities; (ii) classification
as Senior Debt Securities, Senior Subordinated Debt Securities or Subordinated
Debt Securities, aggregate principal amount, purchase price and denomination;
(iii) the date or dates on which the Offered Debt Securities will mature; (iv)
the method by which amounts payable in respect of principal, premium, if any, or
interest, if any, on or upon the redemption of such Offered Debt Securities may
be calculated; (v) the interest rate or rates (or the method by which such will
be determined), and the date or dates from which such interest, if any, will
accrue; (vi) the date or dates on which such interest, if any, will be payable;
(vii) the place or places where and the manner in which the principal of,
premium, if any, and interest, if any, on the Offered Debt Securities will be
payable and the place or places where the Offered Debt Securities may be
presented for transfer; (viii) the right, if any, or obligation, if any, of the
Company to redeem, repay or purchase the Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof, and
the period or periods within which, the price or prices
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(or the method by which such price or prices will be determined, or both) at
which, the form or method of payment therefor if other than in cash and the
terms and conditions upon which the Offered Debt Securities will be redeemed,
repaid or purchased pursuant to any such obligation; (ix) the terms for
conversion or exchange, if any, of the Offered Debt Securities; (x) any
provision relating to the issuance of the Offered Debt Securities at an original
issue discount; (xi) if the amounts of payments of principal of, premium, if
any, and interest, if any, on the Offered Debt Securities are to be determined
with reference to an index, the manner in which such amounts shall be
determined; (xii) any applicable United States federal income tax consequences;
(xiii) the currency or currencies for which the Offered Debt Securities may be
purchased and the currency or currencies in which principal, premium, if any,
and interest, if any, may be payable; (xiv) if a trustee other than The Chase
Manhattan Bank with respect to any series of Senior Debt Securities or
Subordinated Debt Securities or United States Trust Company of New York with
respect to any series of Senior Subordinated Debt Securities is named for such
series of Offered Debt Securities, the name of such Trustee; and (xv) any other
specific terms of the Offered Debt Securities, including any deleted, modified
or additional events of default or remedies or additional covenants provided
with respect to such Offered Debt Securities, and any terms that may be required
by or advisable under applicable laws or regulations.
Unless otherwise specified in any Prospectus Supplement, the Debt Securities
will be issuable in registered form and in denominations of $1,000 and any
integral multiple thereof (Section 2.7). No service charge will be made for any
transfer or exchange of any Debt Securities but the Issuers may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith (Section 2.8).
Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par that are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
applicable Prospectus Supplement.
In determining whether the holders of the requisite aggregate principal
amount of outstanding Debt Securities of any series have given any request,
demand, authorization, direction, notice, consent or waiver under the
Indentures, the principal amount of any series of Debt Securities originally
issued at a discount from their stated principal amount that will be deemed to
be outstanding for such purposes will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof.
GLOBAL SECURITIES. The Debt Securities of a series may be issued in whole
or in part in the form of one or more global securities ("Global Securities")
that will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the Prospectus Supplement relating to such series. Global
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security (i) may not be
transferred except as a whole and (ii) may only be transferred (A) by the
Depositary for such Global Security to its nominee, (B) by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or (C) by
such Depositary or any such nominee to a successor Depositary or nominee of such
successor Depositary (Section 2.8).
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will generally
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with
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such Depositary. Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Debt Securities or by the Issuers if such Debt
Securities are offered and sold directly by the Issuers.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the applicable Depositary ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt Securities
of the series represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture governing such Debt
Securities.
Payment of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. The Issuers expect that the Depositary for a
series of Debt Securities or its nominee, upon receipt of any payment of
principal of, premium, if any, and interest, if any, in respect of a Global
Security representing any such Debt Securities, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
for such Securities as shown on the records of such Depositary or its nominee.
The Issuers also expect that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name." Such payments will be the responsibility of such participants.
Neither the Company, the Trustee for such Debt Securities, any paying agent nor
the registrar for such Debt Securities will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Global Security for such Debt Securities
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
If Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by a Global Security and, in such event, will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. Further, if the Company so
specifies with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Global Security representing Debt Securities of such
series may, on terms acceptable to the Company, the Trustee and the Depositary
for such Global Security, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the Prospectus Supplement relating to such Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name. Individual
Debt Securities of such series so issued will be
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issued in registered form and in denominations, unless otherwise specified in
the applicable Prospectus Supplement relating to such series of Debt Securities,
of $1,000 and integral multiples thereof.
EVENTS OF DEFAULT. Unless otherwise specified in the applicable Prospectus
Supplement, an Event of Default is defined under each Indenture with respect to
the Debt Securities of any series issued under such Indenture as being: (a)
default in the payment of principal of or premium, if any, with respect to Debt
Securities of such series when due; (b) default in the payment of any
installment of interest upon any of the Debt Securities of such series when due,
continued for 30 days; (c) default in the payment or satisfaction of any sinking
fund or other purchase obligation with respect to Debt Securities of such series
when due; (d) default in the performance of any other covenant of the Company
applicable to Debt Securities of such series, continued for 90 days after
written notice to the Company by the Trustee or to the Company and the Trustee,
by the holders of at least 25% in aggregate principal amount of the Debt
Securities of such series then outstanding requiring the same to be remedied;
(e) certain events of bankruptcy, insolvency or reorganization of the Company;
and (f) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed of the Company resulting in the
acceleration of such indebtedness, or any default in payment of such
indebtedness (after expiration of any applicable grace periods and presentation
of any debt instruments, if required), if the aggregate amount of all such
indebtedness that has been so accelerated and with
respect to which there has been such a default in payment shall exceed
$20,000,000 and there has been a failure to obtain rescission or annulment of
all such accelerations or to discharge all such defaulted indebtedness within 20
days after written notice of the type specified in the foregoing clause (d)
(Section 5.1).
If any Event of Default shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding, by notice in writing to the Company
(and to the Trustee, if given by the holders), may declare the principal (or, in
the case of any series of Debt Securities originally issued at a discount from
their stated principal amount, such portion of the principal amount as may be
specified in the terms of such series) of all of the Debt Securities of such
series and the interest, if any, accrued thereon to be due and payable
immediately; provided, however, that the holders of a majority in aggregate
principal amount of the Debt Securities of such series then outstanding, by
notice in writing to the Company and the Trustee, may rescind and annul such
declaration and its consequences if all defaults under such Indenture are cured
or waived (Section 5.1).
Each Indenture provides that no holder of any series of Debt Securities then
outstanding may institute any suit, action or proceeding with respect to, or
otherwise attempt to enforce, such Indenture, unless (i) such holder previously
shall have given to the Trustee written notice of default and of the continuance
thereof, (ii) the holders of not less than 25% in aggregate principal amount of
such series of Debt Securities then outstanding shall have made written request
to the Trustee to institute such suit, action or proceeding and shall have
offered to the Trustee such reasonable indemnity as it may require with respect
thereto and (iii) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; PROVIDED that, subject to the subordination
provisions applicable to the Senior Subordinated Debt Securities and the
Subordinated Debt Securities, the right of any holder of any Debt Security to
receive payment of the principal of, premium, if any, or interest, if any, on
such Debt Security, on or after the respective due dates, or to institute suit
for the enforcement of any such payment shall not be impaired or affected
without the consent of such holder (Section 5.4). The holders of a majority in
aggregate principal amount of the Debt Securities of such series then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of such series,
provided that the Trustee may decline to follow such direction if the Trustee
determines that such action or proceeding is unlawful or would involve the
Trustee in personal liability (Section 5.7).
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The Company is required to furnish to the Trustee annually a certificate as
to compliance by the Issuers with all conditions and covenants under each
Indenture (Section 4.3).
DISCHARGE AND DEFEASANCE. Unless otherwise specified in the applicable
Prospectus Supplement, the Company can discharge or defease their respective
obligations with respect to any series of Debt Securities as set forth below
(Article Ten).
The Company may discharge all of its obligations (except those set forth
below) to holders of any series of Debt Securities issued under any Indenture
that have not already been delivered to the Trustee for cancellation and that
have either become due and payable, or are by their terms due and payable within
one year (or scheduled for redemption within one year), by irrevocably
depositing with the Trustee cash or U.S. Government Obligations (as defined in
such Indenture), or a combination thereof, as trust funds in an amount certified
to be sufficient to pay when due the principal of, premium, if any, and
interest, if any, on all outstanding Debt Securities of such series and to make
any mandatory sinking fund payments, if any, thereon when due.
Unless otherwise provided in the applicable Prospectus Supplement, the
Company may also elect at any time to (a) defease and be discharged from all of
its obligations (except those set forth below) to holders of any series of Debt
Securities issued under each Indenture ("defeasance") or (b) be released from
all of its obligations with respect to certain covenants applicable to any
series of Debt Securities issued under each Indenture ("covenant defeasance"),
if, among other things: (i) the Company irrevocably deposits with the Trustee
cash or U.S. Government Obligations, or a combination thereof, as trust funds in
an amount certified to be sufficient to pay when due the principal of, premium,
if any, and interest, if any, on all outstanding Debt Securities of such series
and to make any mandatory sinking fund payments, if any, thereon when due and
such funds have been so deposited for 91 days; (ii) such deposit will not result
in a breach or violation of, or cause a default under, any agreement or
instrument to which the Company is a party or by which it is bound; and (iii)
the Company delivers to the Trustee an opinion of counsel to the effect that the
holders of such series of Debt Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and that defeasance or covenant defeasance
will not otherwise alter the United States federal income tax treatment of such
holders' principal and interest payments, if any, on such series of Debt
Securities. Such opinion in the case of defeasance under clause (a) above must
be based on a ruling of the Internal Revenue Service or a change in United
States federal income tax law occurring after the date of the Indenture relating
to the Debt Securities of such series, since such a result would not occur under
current tax law (Section 10.1).
Notwithstanding the foregoing, no discharge, defeasance or covenant
defeasance described above shall affect the following obligations to or rights
of the holders of any series of Debt Securities: (i) rights of registration of
transfer and exchange of Debt Securities of such series, (ii) rights of
substitution of mutilated, defaced, destroyed, lost or stolen Debt Securities of
such series, (iii) rights of holders of Debt Securities of such series to
receive payments of principal thereof and premium, if any, and interest, if any,
thereon, upon the original due dates therefor (but not upon acceleration), and
to receive mandatory sinking fund payments thereon when due, if any, (iv)
rights, obligations, duties and immunities of the Trustee, (v) rights of holders
of Debt Securities of such series as beneficiaries with respect to property so
deposited with the Trustee payable to all or any of them and (vi) obligations of
the Company to maintain an office or agency in respect of Debt Securities of
such series (Section 10.1).
The Company may exercise the defeasance option with respect to any series of
Debt Securities notwithstanding the prior exercise of the covenant defeasance
option with respect to any series of Debt Securities. If the Company exercises
the defeasance option with respect to any series of Debt Securities, payment of
such series of Debt Securities may not be accelerated because of an Event of
Default with respect to such series of Debt Securities. If the Company exercises
the covenant defeasance option with respect to any series of Debt Securities,
payment of such series of Debt Securities may not be accelerated by reason of an
Event of Default with respect to the covenants to which such covenant defeasance
is
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applicable. However, if such acceleration were to occur by reason of another
Event of Default, the realizable value at the acceleration date of the cash and
U.S. Government Obligations in the defeasance trust could be less than the
principal of, premium, if any, and interest, if any, and any mandatory sinking
fund payments, if any, then due on such series of Debt Securities, in that the
required deposit in the defeasance trust is based upon scheduled cash flow
rather than market value, which will vary depending upon interest rates and
other factors.
MODIFICATION OF THE INDENTURE. Each Indenture provides that the Company and
the Trustee may enter into supplemental indentures without the consent of the
holders of the Debt Securities to (a) evidence the assumption by a successor
entity of the obligations of the Company under such Indenture, (b) add covenants
or new events of default for the protection of the holders of such Debt
Securities, (c) cure any ambiguity or correct any inconsistency in the
Indenture, (d) establish the form and terms of Debt Securities of any series,
(e) evidence the acceptance of appointment by a successor trustee, (f) secure
such Debt Securities, (g) designate a bank or trust company other than The Chase
Manhattan Bank to act as Trustee for a series of Senior Debt Securities or
Subordinated Debt Securities and United States Trust Company of New York to act
as Trustee for a series of Senior Subordinated Debt Securities, (h) modify the
existing covenants and events of default solely in respect of, or add new
covenants and events of default that apply solely to, Debt Securities not yet
issued and outstanding on the date of such supplemental indenture, (i) provide
for the issuance of Debt Securities of any series in coupon form and
exchangeability of such Debt Securities for fully registered Debt Securities,
(j) modify, eliminate or add to the provisions of such Indenture as necessary to
effect the qualification of such Indenture under the Trust Indenture Act of 1939
and to add certain provisions expressly permitted by such Act, and (k) modify
the provisions to provide for the denomination of Debt Securities in foreign
currencies which shall not adversely affect the interests of the holders of such
Debt Securities in any material respect. (Section 8.1).
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of Debt Securities of each series then outstanding
and affected, to add any provisions to, or change in any manner or eliminate any
of the provisions of, such Indenture or of any supplemental indenture or modify
in any manner the rights of the holders of the Debt Securities of such series;
PROVIDED that the Company and the Trustee may not, without the consent of the
holder of each outstanding Debt Security affected thereby, (a) extend the stated
final maturity of any Debt Security, reduce the principal amount thereof, reduce
the rate or extend the time of payment of interest, if any, thereon, reduce or
alter the method of computation of any amount payable on redemption, repayment
or purchase by the Company, change the coin or currency in which principal,
premium, if any, and interest, if any, are payable, reduce the amount of the
principal of any original issue discount security payable upon acceleration or
provable in bankruptcy, impair or affect the right to institute suit for the
enforcement of any payment or repayment thereof or, if applicable, adversely
affect any right of prepayment at the option of the holder or (b) reduce the
aforesaid percentage in aggregate principal amount of Debt Securities of any
series issued under such Indenture (Section 8.2).
CONSOLIDATION, MERGER, SALE OR CONVEYANCE. Except as otherwise provided in
the applicable Prospectus Supplement, the Indentures provide that TEL may,
without the consent of the holders of Debt Securities, consolidate with, merge
into or transfer, exchange or dispose of all of its properties to, any other
corporation or partnership organized under the laws of the United States or any
political subdivision thereof or therein or under the laws of the Cayman Islands
or any political subdivision thereof, provided that (i) the successor
corporation assumes all obligations of TEL, by supplemental indenture
satisfactory in form to the applicable Trustee executed and delivered to such
Trustee, under the Indentures and the Debt Securities, (ii) immediately after
giving effect to such consolidation, merger, exchange or other disposition, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing and
(iii) certain other conditions are met. (Section 9.1).
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CERTAIN DEFINITIONS. Except as otherwise provided in the applicable
Prospectus Supplement, the following definitions are applicable to the
discussions of the Indentures (Article One).
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on the most recent consolidated balance sheet of TEL and its Restricted
Subsidiaries, less applicable reserves and other properly deductible items and
after deducting therefrom (a) all current liabilities and (b) all goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles, all in accordance with generally accepted accounting
principles consistently applied.
"Indebtedness," with respect to any person, means, without duplication:
(a)(i) the principal of, premium, if any, and interest, if any, on
indebtedness for money borrowed of such person, indebtedness of such person
evidenced by bonds, notes, debentures or similar obligations, and any
guaranty by such person of any indebtedness for money borrowed or
indebtedness evidenced by bonds, notes, debentures or similar obligations of
any other person, whether any such indebtedness or guaranty is outstanding
on the date of the Indenture or is thereafter created, assumed or incurred,
(ii) obligations of such person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (iii)
the principal of and premium, if any, and interest, if any, on indebtedness
incurred, assumed or guaranteed by such person in connection with the
acquisition by it or any of its subsidiaries of any other businesses,
properties or other assets, (iv) lease obligations that such person
capitalized in accordance with Statement of Financial Accounting Standards
No. 13 promulgated by the Financial Accounting Standards Board or such other
generally accepted accounting principles as may be from time to time in
effect, (v) any indebtedness of such person representing the balance
deferred and unpaid of the purchase price of any property or interest
therein (except any such balance that constitutes an accrued expense or
trade payable) and any guaranty, endorsement or other contingent obligation
of such person in respect of any indebtedness of another that is outstanding
on the date of the Indenture or is thereafter created, assumed or incurred
by such person and (vi) obligations of such person under interest rate,
commodity or currency swaps, caps, collars, options and similar arrangements
if and to the extent that any of the foregoing indebtedness in (i) through
(vi) would appear as a liability on the balance sheet of such person in
accordance with generally accepted accounting principles; and
(b) any amendments, modifications, refundings, renewals or extensions of
any indebtedness or obligation described as Indebtedness in clause (a)
above.
"Restricted Subsidiary" means (a) any Subsidiary of TEL other than an
Unrestricted Subsidiary, and (b) any Subsidiary of TEL which was an Unrestricted
Subsidiary but which, subsequent to the date of the Indentures, is designated by
the Board of Directors of TEL to be a Restricted Subsidiary; PROVIDED, HOWEVER,
that TEL may not designate any such Subsidiary to be a Restricted Subsidiary if
TEL would thereby breach any covenant or agreement contained in the Indentures
(on the assumptions that any outstanding Indebtedness of such Subsidiary was
incurred at the time of such designation).
"Subsidiary" of any specified Person means any corporation of which such
Person, or such Person and one or more Subsidiaries of such Person, or any one
or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Person and its Subsidiaries to
elect a majority of the directors, either at all times, or so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Unrestricted Subsidiary" means (a) any Subsidiary of TEL acquired or
organized after the date of the Indentures, PROVIDED, HOWEVER, that such
Subsidiary shall not be a successor, directly or indirectly, to any Restricted
Subsidiary and (b) any Subsidiary of TEL substantially all the assets of which
consist of stock or other securities of a Subsidiary or Subsidiaries of the
character described in clause (a) above, unless and until such Subsidiary shall
have been designated to be a Restricted Subsidiary.
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PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
GENERAL. Senior Debt Securities will be issued under a Senior Debt
Indenture and will rank PARI PASSU with all other unsecured and unsubordinated
debt of the Issuers.
LIMITATIONS ON LIENS. The Senior Debt Indentures provide that, so long as
any Senior Debt Securities are outstanding, the Company will not, and will not
permit any Restricted Subsidiary to, pledge, mortgage, hypothecate or grant a
security interest in, or permit any mortgage, pledge, security interest or other
lien upon, any property or assets owned by the Company or any Restricted
Subsidiary to secure any Indebtedness, without making effective provision
whereby outstanding Senior Debt Securities shall be equally and ratably secured.
Under the terms of the Senior Debt Indentures, the foregoing limitation does
not apply to (a) any mortgage, pledge, security interest, lien or encumbrance
upon any property or assets created at the time of the acquisition of such
property or assets by the Company or any Restricted Subsidiary or within one
year after such time to secure all or a portion of the purchase price for such
property or assets; (b) any mortgage, pledge, security interest, lien or
encumbrance upon any property or assets existing thereon at the time of the
acquisition thereof by the Company or any Restricted Subsidiary (whether or not
the obligations secured thereby are assumed by the Company or any Restricted
Subsidiary); (c) any mortgage, pledge, security interest, lien or encumbrance
upon any property or assets, whenever acquired, of any corporation or other
entity that becomes a Restricted Subsidiary after the date of the Senior Debt
Indenture, provided that (i) the instrument creating such mortgage, pledge,
security interest, lien or encumbrance shall be in effect prior to the time such
corporation or other entity becomes a Restricted Subsidiary and (ii) such
mortgage, pledge, security interest, lien or encumbrance shall only apply to
properties or assets owned by such corporation or other entity at the time it
becomes a Restricted Subsidiary or thereafter acquired by it from sources other
than the Company or another Restricted Subsidiary; (d) any mortgage, pledge,
security interest, lien or encumbrance arising from or in connection with a
conveyance by the Company or a Restricted Subsidiary of any production payment
with respect to oil, gas, natural gas, carbon dioxide, sulphur, helium, coal,
metals, minerals, steam, timber or other natural resources; (e) any mortgage,
pledge, security interest, lien or encumbrance with respect to, or other
transfer of, crude oil, natural gas or other petroleum hydrocarbons in place for
a period of time until, or in an amount such that, the transferee will realize
therefrom a specified amount (however determined) of money or of such crude oil,
natural gas or other petroleum hydrocarbons; (f) any mortgage, pledge, security
interest, lien or encumbrance required by any contract or statute in order to
permit the Company or any Restricted Subsidiary to perform any contract or
subcontract made by it with or at the request of the United States or any State
thereof or any foreign government or any department, agency, organization or
instrumentality thereof, or to secure partial, progress, advance or other
payments to the Company or any Restricted Subsidiary by such governmental unit
pursuant to the provisions of any contract or statute; (g) any mortgage, pledge,
security interest, lien or encumbrance in favor of the Company or any wholly-
owned Subsidiary of the Company; (h) any mortgage, pledge, security interest,
lien or encumbrance created or assumed by the Company or a Restricted Subsidiary
in connection with the issuance of debt securities the interest on which is
excludable from gross income of the holder of such security pursuant to the
Internal Revenue Code of 1986, as amended, for the purpose of financing, in
whole or in part, the acquisition or construction of property or assets to be
used by the Company or a Subsidiary; (i) any extension, renewal or refunding of
any mortgage, pledge, security interest, lien or encumbrance described in the
foregoing subparagraphs (a) through (h) on substantially the same property or
assets theretofore subject thereto; or (j) any mortgage, pledge, security
interest, lien or encumbrance securing any Indebtedness in an amount which,
together with all other Indebtedness secured by a mortgage, pledge, security
interest, lien or encumbrance that is not otherwise permitted by the foregoing
provisions, does not at the time of the incurrence of the Indebtedness so
secured exceed 20% of Consolidated Net Tangible Assets. For the purpose of this
provision, "security interest" will include the interest of the lessor under a
lease with a term of three years or more that should be, in accordance with
generally accepted accounting
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principles, recorded as a capital lease, and any such lease of property or
assets not acquired from the Company or any Restricted Subsidiary in
contemplation of such lease shall be treated as though the lessee had purchased
such property or assets from the lessor. (Section 3.6 of the Senior Debt
Indentures).
PROVISIONS APPLICABLE SOLELY TO SENIOR SUBORDINATED DEBT SECURITIES AND
SUBORDINATED DEBT SECURITIES
SUBORDINATION. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated Debt
Indenture, to all Senior Indebtedness. The Senior Subordinated Debt Securities
will be subordinate and junior in right of payment, to the extent set forth in
the Senior Subordinated Debt Indentures, to all Senior Indebtedness of the
Company. The Senior Subordinated Debt Securities will rank senior to all
existing and future Indebtedness of the Company that is neither Senior
Indebtedness nor Senior Subordinated Indebtedness, and only Indebtedness of the
Company that is Senior Indebtedness will rank senior to the Senior Subordinated
Debt Securities in accordance with the subordination provisions of the Senior
Subordinated Debt Indentures.
"SENIOR INDEBTEDNESS" is defined in the Subordinated Debt Indenture and the
Senior Subordinated Debt Indentures as Indebtedness of the Company outstanding
at any time (other than the Indebtedness evidenced by the Debt Securities of any
series) except (a) any Indebtedness as to which, by the terms of the instrument
creating or evidencing the same, it is provided that such Indebtedness is not
senior or prior in right of payment to the Debt Securities or is PARI PASSU or
subordinate by its terms in right of payment to the Debt Securities, (b)
renewals, extensions and modifications of any such Indebtedness, (c) any
Indebtedness of the Company to a wholly-owned Subsidiary of the Company, (d)
interest accruing after the filing of a petition initiating certain events of
bankruptcy or insolvency unless such interest is an allowed claim enforceable
against such Issuer in a proceeding under federal or state bankruptcy laws and
(e) trade payables.
"SENIOR SUBORDINATED INDEBTEDNESS" of the Company means the Senior
Subordinated Debt Securities and any other Indebtedness of the Company that
ranks PARI PASSU with the Senior Subordinated Debt Securities. Any Indebtedness
of the Company that is subordinate or junior by its terms in right of payment to
any other Indebtedness of the Company shall be subordinate to Senior
Subordinated Indebtedness of the Company unless the instrument creating or
evidencing the same or pursuant to which the same is outstanding specifically
provides that such Indebtedness (i) is to rank PARI PASSU with other Senior
Subordinated Indebtedness of the Company and (ii) is not subordinated by its
terms to any Indebtedness of the Company which is not Senior Indebtedness of the
Company.
"SUBORDINATED INDEBTEDNESS" of the Company means the Senior Subordinated
Debt Securities, any other Senior Subordinated Indebtedness of the Company and
any other Indebtedness that is subordinate or junior in right of payment to
Senior Indebtedness of the Company.
If (i) the Company should default in the payment of any principal of,
premium, if any, or interest, if any, on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise or (ii) any other default with
respect to Senior Indebtedness shall occur and the maturity of such Senior
Indebtedness has been accelerated in accordance with its terms, then, upon
written notice of such default to the Company by the holders of such Senior
Indebtedness or any trustee therefor, unless and until such default shall have
been cured or waived or shall have ceased to exist or such acceleration shall
have been rescinded, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) will be made or agreed to be made for
principal of, premium, if any, or interest, if any, on any of the Senior
Subordinated Debt Securities or the Subordinated Debt Securities, or in respect
of any redemption, retirement, purchase or other acquisition of the Senior
Subordinated Debt Securities or the Subordinated Debt Securities other than
those made in capital stock of the Company (or cash in lieu of fractional shares
thereof) (Sections 13.1 and 13.4 of the Senior Subordinated Debt Indentures and
Sections 13.1 and 13.4 of the Subordinated Debt Indenture).
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If any default (other than a default described in the preceding paragraph)
under the Senior Indebtedness, pursuant to which the maturity thereof may be
accelerated immediately or the expiration of any applicable grace periods occurs
(a "Senior Nonmonetary Default"), then, upon the receipt by the Company and the
Trustee of written notice thereof (a "Payment Notice") from or on behalf of
holders of such Senior Indebtedness specifying an election to prohibit such
payment and other action by the Company in accordance with the following
provisions of this paragraph, the Company may not make any payment or take any
other action that would be prohibited by the immediately preceding paragraph
during the period (the "Payment Blockage Period") commencing on the date of
receipt of such Payment Notice and ending on the earlier of (i) the date, if
any, on which the holders of such Senior Indebtedness or their representative
notify the Trustee that such Senior Nonmonetary Default is cured or waived or
ceases to exist or the Senior Indebtedness to which such Senior Nonmonetary
Default relates is discharged or (ii) the 179th day after the date of receipt of
such Payment Notice. Notwithstanding the provisions described in the immediately
preceding sentence, the Company may resume payments on the Senior Subordinated
Debt Securities and the Subordinated Debt Securities after such Payment Blockage
Period.
If (i) (A) without the consent of the Company, a receiver, conservator,
liquidator or trustee of the Company or of any of its property is appointed by
the order or decree of any court or agency or supervisory authority having
jurisdiction, and such decree or order remains in effect for more than 60 days
or (B) the Company is adjudicated bankrupt or insolvent or (C) any of its
property is sequestered by court order and such order remains in effect for more
than 60 days or (D) a petition is filed against the Company under any state or
federal bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or receivership law of any jurisdiction whether
now or hereafter in effect, and is not dismissed within 60 days after such
filing; (ii) the Company (A) commences a voluntary case or other proceeding
seeking liquidation, reorganization, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or other relief with respect to itself or its
debt or other liabilities under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or (B) consents to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or (C) fails generally to, or cannot, pay its
debts generally as they become due or (D) takes any corporate action to
authorize or effect any of the foregoing; or (iii) any Subsidiary of the Company
takes, suffers or permits to exist any of the events or conditions referred to
in the foregoing clause (i) or (ii), then all Senior Indebtedness of the Company
(including any interest thereon accruing after the commencement of any such
proceedings) will first be paid in full before any payment or distribution,
whether in cash, securities or other property, is made by the Company to any
holder of Senior Subordinated Debt Securities or Subordinated Debt Securities on
account of the principal of, premium, if any, or interest, if any, on such
Senior Subordinated Debt Securities or Subordinated Debt Securities, as the case
may be. Any payment or distribution, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the indebtedness evidenced by the Senior Subordinated Debt
Securities or the Subordinated Debt Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment) that would otherwise (but
for the subordination provisions) be payable or deliverable in respect of the
Senior Subordinated Debt Securities or the Subordinated Debt Securities of any
series will be paid or delivered directly to the holders of Senior Indebtedness
of the Company in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) has been paid in full. In the
event of any such proceeding, after payment in full of all sums owing with
respect to Senior Indebtedness, the holders of Senior Subordinated Debt
Securities, together with the holders of any obligations of the Company ranking
on a parity with the Senior Subordinated Debt Securities, will be entitled to be
repaid from the remaining assets of the Company the amounts at that time due and
owing on account of unpaid principal of, premium, if any, or
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interest, if any, on the Senior Subordinated Debt Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or obligations of
the Company ranking junior to the Senior Subordinated Debt Securities (including
the Subordinated Debt Securities) and such other obligations (Section 13.1 of
the Senior Subordinated Debt Indentures and Section 13.1 of the Subordinated
Debt Indenture).
If any payment or distribution of any character, whether in cash, securities
or other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the Senior Subordinated Debt Securities or the Subordinated Debt
Securities, to the payment of all Senior Indebtedness of the Company then
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), shall be received by the Trustee, or any
holder of any Senior Subordinated Debt Securities or Subordinated Debt
Securities in contravention of any of the terms of the Senior Subordinated Debt
Indentures or the Subordinated Debt Indenture, as the case may be, such payment
or distribution of securities will be received in trust for the benefit of, and
will be paid over or delivered and transferred to, the holders of the Senior
Indebtedness of the Company then outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full (Section 13.1 of the Senior Subordinated Debt Indentures
and Section 13.1 of the Subordinated Debt Indenture).
By reason of such subordination, in the event of the insolvency of the
Company holders of Senior Indebtedness of such Issuer may receive more, ratably,
than holders of the Senior Subordinated Debt Securities or Subordinated Debt
Securities. Such subordination will not prevent the occurrence of any Event of
Default (as defined in the Indentures) or limit the right of acceleration in
respect of the Senior Subordinated Debt Securities or Subordinated Debt
Securities.
CONCERNING THE TRUSTEE
The Chase Manhattan Bank, the Trustee under the Senior Debt Indentures and
the Subordinated Debt Indenture, may make loans to TEL in the normal course of
business. The Chase Manhattan Bank serves as trustee with respect to the
Company's 8 3/4% Senior Notes due 2002 and the Company's 9 1/4% Senior Notes due
2005. If a bank or trust company other than The Chase Manhattan Bank or United
States Trust Company of New York is to act as Trustee for a series of Debt
Securities, information concerning such other Trustee will be set forth in the
Prospectus Supplement relating to such series of Debt Securities.
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DESCRIPTION OF SHARE CAPITAL OF TEL
The following statements with respect to TEL's share capital are subject to
the detailed provisions of the Company's Articles of Association (the "Articles
of Association"), its Memorandum of Association (the "Memorandum of
Association"), the resolutions with respect to the Convertible Preference Shares
(the "Resolutions"), and the Preference Share Purchase Rights created pursuant
to the Rights Agreement entered into between the Company and The Chase Manhattan
Bank, as Rights Agent (the "Rights Agreement"). These statements do not purport
to be complete and, while the Company believes the descriptions of the material
provisions of the Articles of Association, Memorandum of Association,
Resolutions and Rights Agreement contained in this Prospectus are accurate
statements with respect to such material provisions, such statements are subject
to the detailed provisions in the Articles of Association, Memorandum of
Association, Resolutions and Rights Agreement to which reference is hereby made
for a full description of such provisions.
PREFERENCE SHARES
Under the Articles of Association, the Company has authority to issue
20,000,000 preference shares, par value $.01 per share. There were 209,639
shares of 5% convertible preference shares, par value $.01 per share (the
"Convertible Preference Shares") outstanding at August 31, 1998. No other
preference shares are currently outstanding.
The Preference Shares may be issued by resolutions of the Company's Board of
Directors from time to time without any action of the shareholders. Such
resolutions may authorize issuances in one or more classes or series of the
preference shares and may fix and determine dividend and liquidation
preferences, voting rights, conversion privileges, redemption terms, and other
privileges and rights of the shareholders of each class or series so authorized.
The specific terms of a particular series of Preference Shares offered hereby
will be described in a Prospectus Supplement relating to such series and will
include the following:
(i) The maximum number of shares to constitute the series and the
distinctive designation thereof;
(ii) The annual dividend rate, if any, on shares of the series, the date
or dates from which dividends will begin to accrue or accumulate and the
dates upon which such dividends shall be payable and whether dividends will
be cumulative;
(iii) Whether the shares of the series will be redeemable and, if so, the
price at and the terms and conditions on which the shares of the series may
be redeemed, including the time during which shares of the series may be
redeemed and any accumulated dividends thereon that the holders of shares of
the series shall be entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms and
provisions relating to the operation of such fund;
(vi) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class or
series of share capital of TEL or another corporation or any series of any
other class or classes, or of any other series of the same class, including
the price or prices or the rates of conversion or exchange and the method,
if any, of adjusting the same;
(vii) The voting rights, if any, on the shares of the series; and
(viii) Any other preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions thereof.
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OUTSTANDING 5% CONVERTIBLE PREFERENCE SHARES
DIVIDENDS. Holders of Convertible Preference Shares are entitled to
receive, when, as, and if declared by the Board of Directors of the Company out
of funds of the Company legally available for payment, cumulative cash dividends
at the annual rate per share equal to 5 percent of the Redemption Price (defined
to be $34.41 per share) of the shares payable semi-annually on September 30 and
March 30 in each year, except that if any such date is a Saturday, Sunday, or
legal holiday, then such dividend shall be payable on the next day that is not a
Saturday, Sunday, or legal holiday. Dividends accrue from the date on which the
Convertible Preference Shares were issued and are payable to holders of record
as they appear on the stock books of the Company on such record dates as are
fixed by the Board of Directors of the Company. The amount of dividends payable
for each semi-annual dividend period is computed by dividing the annual dividend
amount by two. The amount of dividends payable for any period other than a full
semi-annual dividend period is computed on the basis of a 360-day year of twelve
30-day months. No interest will be payable in respect of any dividend payment on
the Convertible Preference Shares which may be in arrears.
If dividends on the Convertible Preference Shares shall not have been
declared and paid in full, or funds set aside for payment, by a date 15 days
after a dividend payment date (a "Calculation Date"), dividends payable on the
Convertible Preference Shares shall be increased by an amount equal to the prime
rate of Morgan Guaranty Trust Company of New York as in effect on each
Calculation Date plus 1 percent applied against the amount of dividends so due
and unpaid until such dividends shall be paid (the "Penalty Dividend").
The Convertible Preference Shares have priority as to dividends over
Ordinary Shares and any other series or class of the Company's shares hereafter
issued which ranks junior as to dividends to the Convertible Preference Shares
("Junior Dividend Shares"), and no dividend (other than dividends payable solely
in Junior Dividend Shares) may be paid on, and no purchase, redemption, or other
acquisition may be made by the Company of, any Junior Dividend Shares unless all
accrued and unpaid dividends on the Convertible Preference Shares have been paid
or declared and set apart for payment. The Company may not pay dividends on any
class or series of its shares having parity with the Convertible Preference
Shares as to dividends ("Parity Dividend Shares"), unless it has paid or
declared and set apart for payment or contemporaneously pays or declares and
sets apart for payment all accrued and unpaid dividends for all prior periods on
the Convertible Preference Shares and may not pay dividends on the Convertible
Preference Shares unless it has paid or declared and set apart for payment or
contemporaneously pays or declares and sets apart for payment all accrued and
unpaid dividends for all prior periods on the Parity Dividend Shares.
Notwithstanding the preceding sentence, whenever all accrued dividends are not
paid in full on the Convertible Preference Shares or any Parity Dividend Shares,
all dividends declared on the Convertible Preference Shares and such Parity
Dividend Shares will be declared or made pro rata so that the amount of
dividends declared per share on the Convertible Preference Shares and such
Parity Dividend Shares will bear the same ratio that accrued and unpaid
dividends per share on the Convertible Preference Shares and such Parity
Dividend Shares bear to each other. The Convertible Preference Shares will be
junior as to dividends to any series or class of TEL's shares hereafter issued
which ranks senior as to dividends to the Convertible Preference Shares ("Senior
Dividend Shares"), and if at any time TEL has failed to pay or declare and set
apart for payment accrued and unpaid dividends on any Senior Dividend Shares,
TEL may not pay any dividend on the Convertible Preference Shares.
LIQUIDATION RIGHTS. In case of the voluntary or involuntary liquidation,
dissolution, or winding up of the Company, holders of Convertible Preference
Shares are entitled to receive an amount per share equal to the Redemption
Price, plus any accrued and unpaid dividends (including Penalty Dividends) to
the payment date (the "Liquidation Price"), before any payment or distribution
is made to the holders of Ordinary Shares or any other series or class of the
Company's shares hereafter issued which ranks junior as to liquidation rights to
the Convertible Preference Shares, but the holders of Convertible Preference
Shares will not be entitled to receive the Liquidation Price of such shares
until the liquidation price of any
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other series or class of the Company's shares hereafter issued which ranks
senior as to liquidation rights to the Convertible Preference Shares ("Senior
Liquidation Shares") has been paid in full; provided, if, at such time, any
holder of Convertible Preference Shares has any outstanding debts, liabilities
or engagements to or with the Company (whether presently payable or not), either
alone or jointly with any other person, whether a shareholder or not,
(including, without any limitation, any liability associated with the unpaid
purchase price of such Convertible Preference Shares), the liquidator appointed
to oversee the liquidation of the Company may deduct from the fixed liquidation
amount payable in respect of such Convertible Preference Shares the aggregate
amount of such debts, liabilities and engagements and apply such amount to any
of such debts, liabilities or engagements. The holders of Convertible Preference
Shares and all series or classes of the Company's shares hereafter issued which
rank on a parity as to liquidation rights with the Convertible Preference Shares
are entitled to share ratably, in accordance with the respective preferential
amounts payable on such shares, in any distribution (after payment of the
liquidation price of the Senior Liquidation Shares) which is not sufficient to
pay in full the aggregate of the amounts payable thereon. After payment in full
of the Liquidation Price of the Convertible Preference Shares, the holders of
such shares will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation or merger of the
Company with another company nor a sale or transfer of all or part of the
Company's assets for cash, securities, or other property will be considered a
liquidation, dissolution, or winding up of the Company.
REDEMPTION. The Company may, at its option, redeem the Convertible
Preference Shares, in whole or in part, at any time. The redemption price
payable upon such optional redemption shall be the Redemption Price plus any
accrued and unpaid dividends (including Penalty Dividends) to the redemption
date. Such Redemption Price shall be payable in cash.
The Convertible Preference Shares shall be subject to mandatory redemption
by the Company on March 30, 2004. At the option of the Company, such redemption
may be for (i) cash at the Redemption Price plus any accrued and unpaid
dividends (including Penalty Dividends) to the redemption date; (ii) such number
of Ordinary Shares whose aggregate value (based on the then current market price
determined as set forth in the Resolutions) equals the Redemption Price plus any
accrued and unpaid dividends (including Penalty Dividends) to the redemption
date; or (iii) a combination of cash and Ordinary Shares equal to the Redemption
Price plus any accrued and unpaid dividends (including Penalty Dividends) to the
redemption date. The Redemption Price equals $34.41 per share.
VOTING RIGHTS. The holders of Convertible Preference Shares have no voting
rights except as described below or as required by Cayman Islands law. In
exercising any such vote each outstanding Convertible Preference Share is
entitled to one vote.
So long as any Convertible Preference Shares are outstanding, the Company
will not, without the affirmative vote or consent of the holders of at least
two-thirds of the outstanding Convertible Preference Shares, voting or
consenting separately as a class with holders of any other class of the
Company's preference shares similarly affected, issue other than wholly for cash
consideration, any shares of any class of Senior Dividend Shares or Senior
Liquidation Shares, or amend the Articles of Association in a manner adversely
affecting the rights of such shareholders.
The Articles of Association may be amended to increase the number of
authorized shares of the Company's preference shares without the vote of the
holders of the outstanding Convertible Preference Shares.
The holders of the Convertible Preference Shares have no pre-emptive rights
with respect to any shares of the Company or any other securities of TEL
convertible into or carrying rights or options to purchase any such shares.
CONVERSION RIGHTS. The holders of Convertible Preference Shares are
entitled to convert their Convertible Preference Shares into Ordinary Shares
subject to the qualifications described below, except
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that, with respect to Convertible Preference Shares called for redemption,
conversion rights will expire at the close of business on the fifth day prior to
the redemption date (unless the Company defaults in the payment of the
Redemption Price). No payment or adjustment will be made in respect of dividends
on the Convertible Preference Shares that may be accrued or unpaid or in arrears
upon conversion of shares of Convertible Preference Shares except as set forth
below. No fractional shares will be issued and, in lieu of any fractional share,
the Company will pay a cash adjustment based on the then current market price
(determined as set forth in the Resolutions) of the Ordinary Shares.
Each Convertible Preference Share is convertible initially into one Ordinary
Share. However, the number of Ordinary Shares issuable on conversion of each
Convertible Preference Share (the "Conversion Rate") is subject to adjustment as
described below.
The Conversion Rate is subject to adjustment in certain circumstances,
including in respect of any dividends not declared and paid in full in respect
of any dividend payment date occurring prior to the date of conversion and any
Penalty Dividends payable thereon, upon the issuance of Ordinary Shares as a
stock dividend, in connection with combinations and subdivisions of Ordinary
Shares, upon certain reclassifications of Ordinary Shares, upon the issuance to
the Company's shareholders of rights or warrants to subscribe for or purchase
Ordinary Shares at a price per share less than the then current market price of
Ordinary Shares, and in connection with certain distributions to the Company's
shareholders of evidences of indebtedness or assets. Except in the case of the
adjustment in respect of dividends, no adjustment in the Conversion Price will
be required unless it would result in at least a 1 percent increase or decrease
in the Conversion Price; however, any adjustment not made will be carried
forward.
In case of any consolidation or merger of the Company with any other
company, or in the case of any merger of another company into the Company (other
than a merger with a company in which merger the Company is the continuing
company and which does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of the Company), or in the case of a sale
or conveyance of all or substantially all of the assets of the Company to
another company, the Company will be required to make proper provisions so that
the holder of each Convertible Preference Share then outstanding will have the
right thereafter to convert such Convertible Preference Share into the kind or
amount of shares of stock and other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of Ordinary
Shares into which such Convertible Preference Share might have been converted
immediately prior to such consolidation, merger, sale or conveyance.
PREFERENCE SHARE PURCHASE RIGHTS
The Board of Directors of TEL has adopted a Shareholder Rights Plan pursuant
to which preference share purchase rights attach to all Ordinary Shares at the
rate of one right for each Ordinary Share. The Chase Manhattan Bank is the
Rights Agent for the Preference Share Purchase Rights. Each right entitles the
registered holder to purchase from the Company one one-thousandth of a Series A
Junior Participating Preference Share, par value $.01 per share (the "Junior
Preference Shares"), of the Company at a price of $120 per one one-thousandth of
a share of such Junior Preference Shares, subject to adjustment.
Generally, the rights only become distributable ten days following public
announcement that a person has acquired beneficial ownership of 15% or more of
the Ordinary Shares or ten business days following commencement of a tender or
exchange offer for 15% or more of the outstanding Ordinary Shares; provided
that, pursuant to the terms of the Shareholder Rights Plan, Oppenheimer Group,
Inc. may increase its level of beneficial ownership to 19.9% without triggering
a distribution of the rights. If, among other events, any person becomes the
beneficial owner of 15% or more of the Ordinary Shares (except as aforesaid),
each right not owned by such person generally becomes the right to purchase such
number of Ordinary Shares that is equal to the amount obtained by dividing the
right's exercise price (currently $120) by 50% of the market price of the
Ordinary Shares on the date of the first occurrence. In addition, if the Company
is subsequently merged or certain other extraordinary business transactions are
consummated,
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each right generally becomes a right to purchase such number of shares of common
stock of the acquiring person that is equal to the amount obtained by dividing
the right's exercise price by 50% of the market price of such Ordinary Shares on
the date of the first occurrence.
Under certain circumstances, the Company's directors may determine that a
tender offer or merger is fair to all shareholders and prevent the rights from
being exercised. At any time after any person or group acquires 15% or more of
the Ordinary Shares outstanding (except as aforesaid) and prior to the
acquisition by such person or group of 50% or more of the outstanding Ordinary
Shares or the occurrence of an event described in the prior paragraph, the Board
of Directors of the Company may exchange the rights (other than rights owned by
such person or group which will have become void), in whole or in part, at an
exchange ratio of one Ordinary Share, or one one-thousandth of a Junior
Preference Share per right (subject to adjustment). The Company has the ability
to amend the rights (except the redemption price) in any manner prior to the
public announcement that a 15% position has been acquired or a tender offer has
been commenced.
Any Junior Preference Shares issued pursuant to the Shareholders Rights Plan
will rank junior as to dividends and liquidation to the Convertible Preference
Shares. Junior Preference Shares purchasable upon exercise of the rights will
not be redeemable. Each Junior Preference Share will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per Ordinary Share. In the event of liquidation, the holders of the
Junior Preference Shares will be entitled to a minimum preferential liquidation
payment of $1000 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 1,000 times the payment made per Ordinary
Share. Each Junior Preference Share will have 1,000 votes, voting together with
Ordinary Shares. Finally, in the event of any merger, consolidation or other
transaction in which Ordinary Shares are converted or exchanged, each Junior
Preference Share will be entitled to receive 1,000 times the amount received per
Ordinary Share. These rights are protected by customary antidilution provisions.
The Company will be entitled to redeem the rights at $0.01 a right at any
time prior to the time that a 15% position has been acquired. The rights will
expire on May 22, 2005.
ORDINARY SHARES
GENERAL. Under the Articles of Association, the Company has authority to
issue 200,000,000 Ordinary Shares. There were 36,636,452 Ordinary Shares
outstanding as of August 31, 1998.
VOTING AND OTHER RIGHTS. Under the Articles of Association, the holders of
Ordinary Shares are entitled to one vote for each share held on all matters
submitted to shareholders' meetings, including the election and removal of
directors, and vote together as a single class with any voting preference shares
unless the terms of any voting preference shares or the Articles of Association
otherwise provide. The Articles of Association provide that the quorum required
for a general meeting of the shareholders is a majority of the outstanding
Ordinary Shares entitled to vote at such meeting. All matters voted upon at any
duly held shareholders' meeting shall be carried by a majority of the votes cast
at the meeting by shareholders represented in person or by proxy, except (i)
election of directors, who are elected by plurality vote, (ii) approval of a
merger or a similar arrangement, which, pursuant to Cayman Islands law, requires
the approval by 75% of the votes cast (but, in any event, under the Articles of
Association, at least a majority of the outstanding shares), and (iii) approval
of a Special Resolution (as defined below). A change of corporate name, the
voluntary dissolution, liquidation or winding-up of the affairs of the Company,
a reduction of paid-up share capital, and any amendment to the Company's
Articles of Association or Memorandum of Association require approval by a
Special Resolution by the shareholders of the Company. A Special Resolution
requires the approval of at least two-thirds of the votes cast by the
shareholders represented in person or by proxy at a duly convened meeting. The
Board of Directors or the
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President may at any time proceed to convene a general meeting of the Company.
The Company must provide at least 10 days' notice of a general meeting.
Because holders are not entitled to cumulate their votes, shareholders
holding a majority of the outstanding Ordinary Shares, voting together as a
class with the holders of any voting preference shares which may be issued, are
able to elect all members of the board of directors of TEL. The Articles of
Association provide that the directors are to be elected in three classes of
approximately equal number and for a term of three years, with the result that
shareholders will not vote for the election of a majority of directors in any
single year. Holders of Ordinary Shares have no preemptive rights.
The Articles of Association provide that whenever the share capital of TEL
is divided into different classes of shares, the rights attached to any class
may (unless otherwise provided by the terms of issue of the shares of that
class) be varied only with the consent in writing of the holders of such class
or pursuant to a Special Resolution adopted at a meeting with such holders
voting separately as a class. The Articles of Association further provide that,
unless otherwise provided by the rights attached to any shares, such rights will
not be deemed to be varied by the allotment of further shares which confer on
the holders voting rights more favorable than those conferred by such shares.
Such rights will not otherwise be deemed to be varied by the creation or
issuance of further shares, including any additional Ordinary Shares or
different classes of shares with preferential rights as to dividends or capital.
There are no limitations on the right of nonresident shareholders to hold or
vote their Ordinary Shares imposed by Cayman Islands law or the Articles of
Association.
DIVIDEND RIGHTS. The holders of Ordinary Shares are entitled at any time to
receive such dividends as are declared by the Board of Directors. The ability of
the Company to pay dividends on capital stock is restricted by covenants in the
Company's credit facilities. The Company currently intends to retain earnings
for use in its business and the financing of its capital requirements. The
payment of any future cash dividends is necessarily dependent upon the earnings
and financial needs of the Company, along with applicable legal and contractual
restrictions.
LIQUIDATION OF THE COMPANY. If, at the time of any liquidation, dissolution
or winding-up of the Company the holder of Ordinary Shares has any outstanding
debts, liabilities or engagements to or with the Company (whether presently
payable or not), either alone or jointly with any other person, whether a
shareholder or not (including, without limitation, any liability associated with
the unpaid purchase price of such Ordinary Shares), the liquidator appointed to
oversee the liquidation of the Company may deduct from the amount payable in
respect of such Ordinary Shares the aggregate amount of such debts, liabilities
and engagements and apply such amount to any of such holder's debts, liabilities
or engagements to or with TEL (whether presently payable or not). The liquidator
may distribute, in kind, to the holders of the Ordinary Shares remaining assets
of TEL or may sell, transfer or otherwise dispose of all or any part of such
remaining assets to any other company, trust or entity and receive payment
therefor in cash, shares or obligations of such other company, trust or entity
or any combination thereof, and may sell all or any part of the consideration so
received, and may distribute the consideration received or any balance or
proceeds thereof to holders of the Ordinary Shares in accordance with the
procedures set forth above. The liquidator may, with the like sanction, vest the
whole or any part of such assets in trustees upon such trusts for the benefit of
the contributories as the liquidator, with the like sanction shall think fit,
but so that no shareholder shall be compelled to accept any shares or other
securities whereon there is any liability.
DESCRIPTION OF WARRANTS
TEL may issue Warrants, including Warrants to purchase Ordinary Shares or
Preference Shares and Warrants to purchase Debt Securities. Warrants may be
issued independently of or together with any other Securities and may be
attached to or separate from such Securities. Each series of Warrants will be
issued under a separate Warrant Agreement (each a "Warrant Agreement") to be
entered into between TEL and a Warrant Agent ("Warrant Agent"). The Warrant
Agent will act solely as an agent of TEL in connection
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with the Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with holders or beneficial owners of
Warrants. The following sets forth certain general terms and provisions of the
Warrants offered hereby. Further terms of the Warrants and the applicable
Warrant Agreement will be set forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the designation, aggregate principal amount and terms of the securities
purchasable upon exercise of such Warrants; (v) the designation and terms of the
Securities with which such Warrants are issued and the number of such Warrants
issued with each such security; (vi) if applicable, the date on and after which
such Warrants and the related securities will be separately transferable; (vii)
the price at which the securities purchasable upon exercise of such Warrants may
be purchased; (viii) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (ix) the minimum or
maximum amount of such Warrants which may be exercised at any one time; (x)
information with respect to book-entry procedures, if any; (xi) a discussion of
certain Federal income tax considerations; and (xii) any other terms of such
Warrants, including terms, procedures and limitations relating to the exchange
and exercise of such Warrants.
PLAN OF DISTRIBUTION
TEL may sell the Securities to or through underwriters or dealers, and also
may sell the Securities directly to one or more other purchasers or through
agents. Securities may also be sold by the Company upon the exercise of the
rights to purchase Securities which may be issued to the holders of the
Company's outstanding Securities. The applicable Prospectus Supplement will set
forth the names of any underwriters or agents involved in the sale of the
Offered Securities and any applicable commissions or discounts.
Underwriters, dealers or agents may offer and sell the Offered Securities at
a fixed price or prices, which may be changed, or from time to time at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. In connection with the sale of the
Securities, underwriters or agents may be deemed to have received compensation
from TEL in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters or
agents may sell the Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters or commissions from the purchasers for whom they may act as
agent.
The Securities (other than the Ordinary Shares), when first issued, will
have no established trading market. Any underwriters or agents to or through
whom Securities are sold by TEL for public offering and sale may make a market
in such Securities, but such underwriters or agents will not be obligated to do
so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
Securities.
Any underwriters, dealers or agents participating in the distribution of the
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Securities may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended (the "1933 Act"). Underwriters, dealers or agents may be
entitled, under agreements entered into with TEL, to indemnification against or
contribution toward certain civil liabilities, including liabilities under the
1933 Act.
If so indicated in the Prospectus Supplement, TEL will authorize
underwriters or other persons acting as its agents to solicit offers by certain
institutions to purchase Securities from it pursuant to contracts providing for
payment and delivery on a future date. Institutions with which such contracts
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others,
but in all cases will be subject to the condition that the
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purchase of the Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject. The
underwriters and such agents will not have any responsibility in respect of the
validity or performance of such contracts.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Securities will be
passed upon for TEL by W.S. Walker & Company, Grand Cayman, Cayman Islands.
Certain legal matters with respect to the Securities will be passed upon for the
underwriters or agents, if any, named in the Prospectus Supplement by Andrews &
Kurth L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
Certain information with respect to the gas and oil reserves of the Company
and its subsidiaries derived from the report of DeGolyer and MacNaughton,
independent petroleum engineers, has been incorporated by reference herein in
reliance upon such firm as experts with respect to the matters contained
therein.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
TRITON ENERGY LIMITED
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
------------------
Triton Energy Limited ("TEL" or the "Company") hereby offers participation
in its Dividend Reinvestment and Stock Purchase Plan (the "Plan"). The Plan is
designed to provide holders of TEL's ordinary shares, $.01 par value per share
("Ordinary Shares"), and 5% Convertible Preference Shares, $.01 par value per
share ("5% Preference Shares" and, together with any other class of TEL's
preference shares that may be outstanding, "Preference Shares") and other
interested investors with a convenient and economical method to purchase
Ordinary Shares from the Company by making optional cash investments and
reinvesting all or a portion of any cash dividends in Ordinary Shares. The Plan
is also intended to provide the Company with a cost-efficient and flexible
mechanism to raise equity capital because shares issuable under the Plan are
expected to be newly issued Ordinary Shares. Holders of shares in broker or
nominee names may participate in the Plan, in which case, brokers or nominees
will make optional cash investments and reinvest dividends on behalf of
beneficial owners. Some of the significant features of the Plan are as follows:
- Participants may purchase Ordinary Shares by making optional cash
investments of $100 to $10,000 in a given month or, for persons who are
not then shareholders, by making an initial optional cash investment of
$5,000 to $10,000. Optional cash investments in excess of $10,000 may be
made only with permission of the Company.
- Holders of 5% Preference Shares and holders of Ordinary Shares, if the
Company begins to pay dividends on Ordinary Shares, may purchase Ordinary
Shares by automatically reinvesting all or a portion of their cash
dividends.
Participation in the Plan is entirely voluntary, and participants may
terminate their participation at any time.
The Company has never declared or paid a cash dividend on its Ordinary
Shares and the Company expects to retain any earnings for use in its business.
The ability of the Company to pay dividends on its capital stock, other than the
5% Preference Shares, is restricted by covenants in the Company's credit
facilities. The Plan, however, is designed to accommodate the reinvestment of
dividends in the event that the Company should pay dividends on the Ordinary
Shares in the future. Holders of Ordinary Shares are cautioned that the
existence of the Plan in no way implies that the Company will modify its current
policy of not paying dividends. The payment of dividends at any time is
dependent upon the Company's earnings and financial needs, along with applicable
legal and contractual restrictions.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS," BEGINNING ON PAGE 3.
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 , 1998.
<PAGE>
AVAILABLE INFORMATION
TEL is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by TEL may be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Room
1024, Washington, D.C. 20549 and at the Web site (http://www.sec.gov.)
maintained by the Commission; and at regional offices of the Commission at the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and at 7 World Trade Center, New York, New York 10048. Copies of such material
may be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement on Form S-3,
as amended (the "Registration Statement"), of which this Prospectus is a part.
For further information with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits
thereto. Statements made in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete; and while the Company
believes the descriptions of the material provisions of such contracts,
agreements and other documents contained in this Prospectus are accurate
summaries of such material provisions, reference is made to such contract,
agreement or other document filed as an exhibit to the Registration Statement
for a more complete description of the matter involved, and each such statement
is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus its Annual
Report on Form 10-K for the year ended December 31, 1997, its Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998, its
current reports on Form 8-K dated February 13, August 17 and September 10, 1998
and the description of the Ordinary Shares contained in its Registration
Statement on Form 8-A, dated March 25, 1996, as amended by Form 8-A/A, dated
August 14, 1996.
Each document filed by the Company 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 offering of the Securities pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents that are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Investor Relations, Triton Energy, 6688 North Central Expressway,
Suite 1400, Dallas, Texas 75206-9926, telephone (214) 691-5200.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
The Company is a Cayman Islands company, certain of its officers and
directors may be residents of various jurisdictions outside the United States
and its Cayman Islands counsel, W.S. Walker & Company,
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are residents of the Cayman Islands. All or a substantial portion of the assets
of TEL and of such persons may be located outside the United States. As a
result, it may be difficult for investors to effect service of process within
the United States upon such persons or to enforce in United States courts
judgments obtained against such persons in United States courts and predicated
upon the civil liability provisions of the Securities Act. Notwithstanding the
foregoing, TEL has irrevocably agreed that it may be served with process with
respect to actions based on offers and sales of securities made hereby in the
United States by serving Robert B. Holland, III, c/o Triton Energy Corporation,
6688 North Central Expressway, Suite 1400, Dallas, Texas 75206-9926, TEL's
United States agent appointed for that purpose. TEL has been advised by its
Cayman Islands counsel, W.S. Walker & Company, that there is doubt as to whether
Cayman Islands courts would enforce (a) judgments of United States courts
obtained in actions against such persons or TEL that are predicated upon the
civil liability provisions of the Securities Act or (b) in original actions
brought against TEL or such persons predicated upon the Securities Act. There is
no treaty in effect between the United States and the Cayman Islands providing
for such enforcement, and there are grounds upon which Cayman Islands courts may
not enforce judgments of United States courts. Certain remedies available under
the United States federal securities laws would not be allowed in Cayman Islands
courts as contrary to that nation's policy.
THE COMPANY
The Company is an international oil and gas exploration and production
company. The Company's principal properties, operations and oil and gas reserves
are located in Colombia and Malaysia-Thailand. The Company is actively exploring
for oil and gas in these areas, as well as in Southern Europe, Africa and the
Middle East.
TEL was formed in the Cayman Islands in 1995 and became the parent holding
company of Triton Energy Corporation ("TEC") through the merger (the "Merger")
of a subsidiary of TEL with and into TEC . The Merger was consummated on March
25, 1996. In connection with the Merger, each share of common stock of TEC was
converted into one Ordinary Share. TEL's principal executive offices are located
at Caledonian House, Mary Street, P.O. Box 1043, George Town, Grand Cayman,
Cayman Islands and its telephone number is (809) 949-0050. The "Company" refers
collectively to TEL and its consolidated subsidiaries.
RISK FACTORS
Certain statements included or incorporated by reference in this Prospectus,
such as statements regarding proven oil and gas reserves and statements of the
Company's and management's expectations, intentions, plans and beliefs, are
forward-looking statements (as such term is used in the Private Securities
Litigation Reform Act of 1995), and the factors discussed hereunder could cause
actual results and developments to be materially different from those expressed
in or implied by such statements. Accordingly, in addition to the other
information set forth in or incorporated by reference in this Prospectus and any
applicable Prospectus Supplement, potential investors in the Securities should
consider the following investment considerations.
THE OIL AND GAS INDUSTRY GENERALLY. The Company's strategy is to focus its
exploration activities on what the Company believes are relatively high
potential prospects. No assurance can be given that these prospects contain
significant oil and gas reserves or that the Company will be successful in its
exploration activities thereon. The Company follows the full cost method of
accounting for exploration and development of oil and gas reserves whereby all
acquisition, exploration and development costs are capitalized. Costs related to
acquisition, holding and initial exploration of concessions in countries with no
proved reserves are initially capitalized, including internal costs directly
identified with acquisition, exploration and development activities. The
Company's exploration concessions are periodically assessed for impairment on a
country by country basis. If the Company's investment in exploration concessions
within a country where no proved reserves are assigned is deemed to be impaired,
the concessions are written down
3
<PAGE>
to estimated recoverable value. If the Company abandons all exploration efforts
in a country where no proved reserves are assigned, all exploration costs
associated with the country are expensed. The Company's assessments of whether
its investment within a country is impaired and whether exploration activities
within a country will be abandoned are made from time to time based on its
review and assessment of drilling results, seismic data and other information it
deems relevant. Due to the unpredictable nature of exploration drilling
activities, the amount and timing of impairment expense are difficult to predict
with any certainty. Financial information concerning the Company's assets,
including capitalized costs by geographic area, is set forth in note 21 of Notes
to Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 and note 3 of Notes to Condensed
Consolidated Financial Statements in the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998.
The markets for oil and natural gas historically have been volatile and are
likely to continue to be volatile in the future. Oil and natural gas prices have
been subject to significant fluctuations during the past several decades in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of additional factors that are
beyond the control of the Company. These factors include the level of consumer
product demand, weather conditions, domestic and foreign government regulations,
political conditions in the Middle East and other production areas, the foreign
supply of oil and natural gas, the price and availability of alternative fuels,
and overall economic conditions. It is impossible to predict future oil and gas
price movements with any certainty.
The Company's oil and gas business is also subject to all of the operating
risks normally associated with the exploration for and production of oil and
gas, including, without limitation, blowouts, cratering, pollution, earthquakes,
labor disruptions and fires, each of which could result in substantial losses to
the Company due to injury or loss of life and damage to or destruction of oil
and gas wells, formations, production facilities or other properties. In
accordance with customary industry practices, the Company maintains insurance
coverage limiting financial loss resulting from certain of these operating
hazards. Losses and liabilities arising from uninsured or underinsured events
would reduce revenues and increase costs to the Company. There can be no
assurance that any insurance will be adequate to cover losses or liabilities.
The Company cannot predict the continued availability of insurance, or its
availability at premium levels that justify its purchase.
The Company's oil and gas business is also subject to laws, rules and
regulations in the countries in which the Company operates, which generally
pertain to production control, taxation, environmental and pricing concerns and
other matters relating to the petroleum industry. Many jurisdictions have at
various times imposed limitations on the production of oil and natural gas by
restricting the rate of flow for oil and natural gas wells below their actual
capacity. There can be no assurance that present or future regulation will not
adversely affect the operations of the Company.
Moreover, because the Company may not be the operator or own a majority
interest in a number of contract areas, it will not be able to control the
timing or manner in which capital expenditures will occur in these areas to the
same degree as if it was the operator or owner of a majority interest. Any
inability of the Company to meet its obligations in these and other contract
areas could have a material adverse effect on its interests in these contract
areas.
FINANCIAL POSITION. To date, external sources of funding, asset sales and
net cash flow from operations have been sufficient to service the Company's
existing debt obligations and capital spending programs. The Company expects to
pursue external financing alternatives and may from time to time consider
dispositions of certain assets or operations in order to meet expenditure
requirements on existing or contemplated projects and to service its debt
obligations, the timing and nature of which may be affected by, among other
things, the timing and extent of production and capital expenditures in Colombia
and elsewhere. There can be no assurance as to the ability of the Company to
effect sales of its assets or to access public or private markets for such
financings, the timing of such sales or financings or the proceeds, if any, that
the
4
<PAGE>
Company could realize therefrom. Moreover, the Company's ability to pursue
additional debt financing is limited by covenants in the Company's credit
facilities.
For information regarding the Company's financial position and results of
operations, including the amounts of previous losses, and the Company's ratios
of earnings to fixed charges and earnings to combined fixed charges and
preference dividends, see "Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preference Dividends" herein and the Company's
Consolidated Statements of Operations, Consolidated Balance Sheets and
Consolidated Statements of Cash Flows in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 and other documents incorporated
herein by reference, including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in such Annual Report on
Form 10-K and in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
ENVIRONMENTAL MATTERS. The Company is subject to extensive environmental
laws and regulations. These laws regulate the discharge of oil, gas or other
materials into the environment and may require the Company to remove or mitigate
the environmental effects of the disposal or release of such materials at
various sites. The Company does not believe that its environmental risks are
materially different from those of comparable companies in the oil and gas
industry. Nevertheless, no assurance can be given that environmental laws and
regulations will not, in the future, adversely affect the Company's consolidated
results of operations, cash flows or financial position. Pollution and similar
environmental risks generally are not fully insurable.
RISKS OF INTERNATIONAL OPERATIONS. The Company derives substantially all of
its consolidated revenues from international operations. Risks inherent in
international operations include loss of revenue, property and equipment from
such hazards as expropriation, nationalization, war, insurrection and other
political risks; trade protection measures; risks of increases in taxes and
governmental royalties; and renegotiation of contracts with governmental
entities; as well as changes in laws and policies governing operations of other
companies. Other risks inherent in international operations are the possibility
of realizing economic currency exchange losses when transactions are completed
in currencies other than United States dollars and the Company's ability to
freely repatriate its earnings under existing exchange control laws.
CERTAIN FACTORS RELATING TO COLOMBIA. The Company is a participant in
significant oil and gas discoveries located in the Llanos Basin in the foothills
of the Andes Mountains, approximately 160 kilometers (100 miles) northeast of
Bogota, Colombia. The Company owns interests in three contiguous areas known as
the Santiago de las Atalayas ("SDLA"), Tauramena and Rio Chitamena contract
areas. Well results to date indicate that significant oil and gas deposits lie
across the SDLA, Tauramena and Rio Chitamena contract areas (the "Cusiana
Field"), and within the SDLA contract area (the "Cupiagua Field").
Development of reserves in the Cusiana and Cupiagua fields is ongoing and
will require additional drilling and completion of the production facilities
currently under construction. Pipelines connect the major producing fields in
Colombia to export facilities and to refineries. The Company expects that the
production facilities will be completed during 1998 and that drilling will
continue at least into 1999. There can be no assurance that the productivity of
the additional wells, when combined with the productivity of existing wells,
will over time, match the design capacity of the production facilities.
Guerilla activity in Colombia has from time to time disrupted the operation
of oil and gas projects causing increased costs. Such activity increased over
the last year, causing delays in the development of the Cupiagua Field. Although
the Colombian government, the Company and its partners have taken steps to
maintain security and favorable relations with the local population, there can
be no assurance that attempts to reduce or prevent guerilla activity will be
successful or that such activity will not disrupt operations in the future.
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Colombia is among several nations whose progress in stemming the production
and transit of illegal drugs is subject to annual certification by the President
of the United States. In 1998, the President of the United States announced that
Colombia would not be certified but was granted a national interest waiver.
There can be no assurance that in the future, Colombia will receive
certification or a waiver. The consequences of the failure to receive
certification or a national interest waiver generally include the following: all
bilateral aid, except anti-narcotics and humanitarian aid, has been or will be
suspended; the Export-Import Bank of the United States and the Overseas Private
Investment Corporation will not approve financing for new projects in Colombia;
U.S. representatives at multilateral lending institutions will be required to
vote against all loan requests from Colombia, although such votes will not
constitute vetoes; and the President of the United States and Congress retain
the right to apply future trade sanctions. Each of these consequences could
result in adverse economic consequences in Colombia and could further heighten
the political and economic risks associated with the Company's operations in
Colombia. Any changes in the holders of significant government offices could
have adverse consequences on the Company's relationship with the Colombian
national oil company and the Colombian government's ability to control guerilla
activities, and could exacerbate the factors relating to foreign operations
discussed above.
CERTAIN FACTORS RELATING TO MALAYSIA-THAILAND. The Company is a partner in
a significant gas exploration project located in the upper Malay Basin in the
Gulf of Thailand approximately 450 kilometers northeast of Kuala Lumpur and 750
kilometers south of Bangkok as a contractor under a production-sharing contract
covering Block A-18 of the Malaysia-Thailand Joint Development Area. Test
results to date indicate that significant gas and oil deposits lie within the
block.
Development of gas production is in the early planning stages but is
expected to take several years and require the drilling of additional wells and
the installation of production facilities, which will require significant
additional capital expenditures, the ultimate amount of which cannot be
predicted. Pipelines will also be required to be connected between Block A-18
and ultimate markets. The terms on which any gas produced from the Company's
contract area in Malaysia-Thailand is sold may be adversely affected by the
present monopoly, gas purchase and transportation conditions in both Malaysia
and Thailand. In connection with the sale to a subsidiary of Atlantic Richfield
Company ("ARCO") of one-half of the shares of TEL's subsidiary that held its
interest in Block A-18, ARCO agreed to pay all future exploration and
development costs attributable to the Company's and ARCO's collective interest
in Block A-18, up to $377 million or until first production from a gas field, at
which time the Company and ARCO would each pay 50% of such costs.
USE OF PROCEEDS
The net proceeds from the sale of the Ordinary Shares offered hereby, to the
extent purchased directly from the Company, will be used principally to continue
funding the Company's obligations relating to the development of its operations
in Colombia and for general corporate purposes, as well as to retire or
refinance existing debt obligations.
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THE PLAN
The following questions and answers explain and constitute the Triton Energy
Limited Dividend Reinvestment and Stock Purchase Plan.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide holders of TEL's Ordinary Shares and
Preference Shares and other interested investors with a convenient and
economical method to purchase Ordinary Shares and to reinvest all or a portion
of their cash dividends in Ordinary Shares, although the Company does not expect
to pay dividends on its Ordinary Shares. In addition, the Plan will provide the
Company with a cost-efficient and flexible mechanism to raise equity capital
through sales of Ordinary Shares under the Plan. Whether significant additional
capital is raised may be affected, in part, by the Company's decision to waive
the limitations applicable to optional cash investments. See Question 13
regarding the Company's criteria for granting a Request for Waiver.
HOLDERS OF ORDINARY SHARES ARE CAUTIONED THAT THE EXISTENCE OF THE PLAN IN
NO WAY IMPLIES THAT THE COMPANY WILL MODIFY ITS CURRENT POLICY OF NOT PAYING
DIVIDENDS.
PARTICIPATION OPTIONS
2. WHAT OPTIONS ARE AVAILABLE UNDER THE PLAN?
Registered holders or beneficial owners of Ordinary Shares or Preference
Shares (including the holders of 5% Preference Shares) of TEL (each a
"Participant") and other interested investors may elect to participate in the
Plan. Participants may make optional cash investments to purchase Ordinary
Shares, subject to a minimum investment of $100 and a maximum investment of
$10,000 per month. Optional cash investments submitted by brokerage firms or
other nominees on behalf of Participants will be aggregated for purposes of
determining whether the $10,000 limit will be exceeded. Interested investors
that are not shareholders of the Company may make an initial optional cash
investment in Ordinary Shares of not less than $5,000 and not more than $10,000.
In certain instances, however, TEL may permit greater optional cash investments.
See Question 12 regarding optional cash investments and Question 13 regarding a
Request for Waiver. Participants may also have cash dividends, if any, on all or
a portion of their shares which are registered and are held by the Plan
automatically reinvested in Ordinary Shares.
3. WHAT ARE THE BENEFITS AND RESTRICTIONS OF THE PLAN?
BENEFITS
- Eligible shareholders may purchase Ordinary Shares pursuant to optional
cash investments of not less than $100 and not more than $10,000 (except
with the consent of the Company) in any month. Optional cash investments
may be made occasionally or at regular intervals, as each Participant
desires. The Plan provides Participants the opportunity to automatically
reinvest cash dividends, if any, on all or a portion of their Ordinary
Shares or Preference Shares in Ordinary Shares. Participants may make
optional cash investments even if dividends on their shares, if any, are
not being reinvested under the Plan.
- Persons not presently shareholders of the Company may become Participants
by making an initial cash investment of not less than $5,000 and not more
than $10,000 (except with the consent of the Company) to purchase Ordinary
Shares under the Plan.
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- Ordinary Shares purchased directly from the Company under the Plan may be
issued at a discount to the market price without payment of trading fees;
such discount may vary each month between 0% and 3% and may be changed at
the sole discretion of the Company at any time.
- Participants will avoid the need for safekeeping of certificates for
Ordinary Shares credited to their Plan accounts and may submit for
safekeeping certificates held by them and registered in their name. See
Question 15 and 16.
- Participants that are registered holders may direct the Administrator to
sell or transfer all or a portion of their shares held in the Plan and
therefore may find the Plan an economical way to liquidate their holdings.
See Question 17.
- Periodic statements reflecting all current activity in Plan accounts,
including purchases, sales and latest balances, will simplify
recordkeeping for registered holders. See Question 18.
RESTRICTIONS
- Participants may not be able to depend on the availability of a market
discount regarding shares acquired under the Plan and optional investments
may be subject to the trading price for the Ordinary Shares satisfying a
minimum price condition. Any discount established for the purchase of
shares directly from the Company will not insure the availability of a
discount or the same discount in future months. Each month, the Company
may change or eliminate the discount or set any minimum price condition
without prior notice to Participants. In addition, although the Company
intends to issue shares directly in connection with the Plan, the Company
may also, without prior notice to Participants, change its determination
as to whether Ordinary Shares will be purchased by the Administrator
directly from the Company or in the open market or in privately negotiated
transactions from third parties (although the Company may not effect such
a change more than once in any three month period). See Question 13.
- The purchase price per share will be an average price and, therefore, may
exceed the price at which shares are trading on the Investment Date when
the shares are issued. See Question 11 and 12 regarding the purchase price
of the shares and Question 13 regarding the establishment of a minimum
price condition.
- Execution of sales of shares held in the Plan may be subject to delay. See
Question 12 and 17.
- No interest will be paid on funds held by the Company pending reinvestment
or investment. See Question 12 and 13.
- Shares deposited in a Plan account may not be pledged until the shares are
withdrawn from the Plan. See Question 27.
4. WHO WILL ADMINISTER THE PLAN?
The Plan will be administered by The Chase Manhattan Bank (the "
Administrator"), or such successor administrator as TEL may designate (the
"Administrator"). The Administrator acts as agent for Participants, keeps
records of the accounts of Participants, sends regular account statements to
Participants, and performs other duties relating to the Plan. Shares purchased
for each Participant under the Plan will be held by the Administrator and will
be registered in the name of such Participant, unless and until a Participant
requests that a stock certificate for all or part of such shares be issued, as
more fully described in Question 15. Correspondence with the Administrator
should be sent to:
The Chase Manhattan Bank
P.O. Box 750
Pittsburgh, PA 15230
or call: 1-800-953-2499
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PARTICIPATION
5. WHO IS ELIGIBLE TO PARTICIPATE?
A "registered holder" (which means a shareholder whose Ordinary Shares or
Preference Shares are registered in the stock transfer books of TEL in his or
her name) or a "beneficial owner" (which means a shareholder whose Ordinary
Shares or Preference Shares, as the case may be, are registered in a name other
than his or her name, for example, in the name of a broker, bank, or other
nominee), may participate in the Plan. A registered holder may participate in
the Plan directly; a beneficial owner must either become a registered holder by
having such shares transferred into his or her name or by making arrangements
with his or her broker, bank or other nominee to participate in the Plan on the
Participant's behalf. In addition, an interested investor that is not a
shareholder may participate in the Plan by making an initial optional cash
investment in Ordinary Shares of not less than $5,000 or more than $10,000. In
certain circumstances, however, TEL may permit greater optional cash
investments. See Question 6 regarding enrollment and Question 13 regarding a
Request for Waiver.
The right to participate in the Plan is not transferable to another person
apart from a transfer of the underlying shares. TEL reserves the right to
exclude from participation in the Plan persons who utilize the Plan to engage in
short-term trading activities that cause aberrations in the trading volume of
the Ordinary Shares. In addition, the Company reserves the right to treat
optional cash investments submitted on forms reflecting Participants with the
same name, address or social security or taxpayer identification number as a
single investment for purposes of determining whether the $10,000 limit will be
exceeded.
Participants residing in jurisdictions in which their participation in the
Plan would be unlawful will not be eligible to participate in the Plan.
ENROLLMENT
6. HOW DOES AN ELIGIBLE HOLDER OF ORDINARY SHARES, PREFERENCE SHARES OR ANY
OTHER INTERESTED INVESTOR ENROLL IN THE PLAN AND BECOME A PARTICIPANT?
Each eligible registered holder may enroll in the Plan and become a
Participant by completing and signing an Authorization and Enrollment Form
(enclosed herein) and returning it to the Administrator at the address set forth
in Question 4. An Authorization and Enrollment Form may also be obtained at any
time upon request from the Administrator at the same address. If shares are
registered in more than one name (e.g., joint tenants, trustees), all registered
holders of such shares must sign the Authorization and Enrollment Form exactly
as their names appear on the account registration.
Eligible beneficial owners must instruct their brokers, banks or other
nominees in whose name their shares are held to participate in the Plan on their
behalf. If a broker, bank or other nominee holds shares of beneficial owners
through a securities depository, such broker, bank or other nominee may also be
required to provide a Broker and Nominee Form (a "B/N Form") to the
Administrator in order to participate in the optional cash investment portion of
the Plan. Optional cash investments submitted by brokerage firms or other
nominees on behalf of Participants, whether on the same B/N Form or different
B/N Forms, will be aggregated for purposes of determining whether the $10,000
limit will be exceeded. See Question 12 and 13.
An interested investor who is not presently a shareholder of the Company,
but desires to become a Participant by making an initial investment in Ordinary
Shares, may join the Plan by signing an Authorization and Enrollment Form and
forwarding it, together with such initial investment, to the Administrator at
the address set forth in Question 4. See Question 12 regarding initial optional
cash investments.
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7. WHAT DOES THE AUTHORIZATION AND ENROLLMENT FORM PROVIDE?
The Authorization and Enrollment Form will appoint the Administrator as
agent for the Participant and direct the Administrator to apply optional cash
investments transmitted therewith as well as optional cash investments
subsequently submitted to the purchase on such Participant's behalf of full and
fractional Ordinary Shares in accordance with the Plan.
With respect to dividends, the Authorization and Enrollment Form will
appoint the Administrator as agent for the Participant and direct the Company to
pay to the Administrator the Participant's cash dividends on all or a specified
number of the Preference Shares and Ordinary Shares owned by the Participant on
the applicable record date and designated by the Participant to be included in
the Plan; and to reinvest, at the Participant's discretion, cash dividends on
whole and fractional Ordinary Shares that have been credited to the
Participant's account pursuant to dividend reinvestment or optional cash
investment that have been designated to be included in the Plan ("Plan Shares").
Cash dividends will continue to be reinvested with respect to the number of
Preference Shares and Ordinary Shares (including Plan Shares) designated on the
Authorization and Enrollment Form until the Participant specifies otherwise in
writing or terminates participation in the Plan and until the Plan is
terminated.
The Authorization and Enrollment Form provides for the purchase of Ordinary
Shares through the following investment options:
(1) "Full Dividend Reinvestment"
This option directs the Administrator to invest in accordance with
the Plan all cash dividends on all whole or fractional Preference Shares
and Ordinary Shares then or subsequently registered in the Participant's
name. This option also permits the Participant to make optional cash
investments and directs the Administrator to apply such investments
towards the purchase of Ordinary Shares in accordance with the Plan.
(2) "Partial Dividend Reinvestment"
This option directs the Administrator to invest in accordance with
the Plan all cash dividends on the specified number of whole or
fractional Preference Shares and Ordinary Shares then registered in the
Participant's name and so designated in the appropriate space on the
Authorization and Enrollment Form. If this option is selected, the
Participant will continue to receive cash dividends in the usual manner
on all Preference Shares and Ordinary Shares that have not been
designated for participation in the Plan. This option also permits the
Participant to make optional cash investments and directs the
Administrator to apply such investments towards the purchase of Ordinary
Shares in accordance with the Plan.
(3) "Optional Cash Investments Only"
This option permits a Participant to make optional cash investments
and directs the Administrator to apply such investments towards the
purchase of Ordinary Shares in accordance with the Plan. If this option
is selected, unless the Participant designates such additional shares for
participation in the Plan, the Participant will continue to receive cash
dividends on all Preference Shares and Ordinary Shares registered in his
or her name in the usual manner, and the Administrator will apply only
optional cash investments received from the Participant towards the
purchase of Ordinary Shares.
Any one of the above three options may be selected. In each case, cash
dividends will be reinvested on all shares designated for participation in the
Plan until the Participant specifies otherwise or withdraws from the Plan
altogether, or until the Plan is terminated.
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Any Participant who returns a properly executed Authorization and Enrollment
Form to the Administrator without electing an investment option will be enrolled
as having selected Full Dividend Reinvestment.
8. WHEN WILL PARTICIPATION IN THE PLAN BEGIN?
A Participant who has properly completed and submitted an Authorization and
Enrollment Form may submit an optional cash investment to purchase shares under
the Plan with such Authorization and Enrollment Form. Thereafter, optional cash
investments may be made at any time, but not more frequently than once each
month, through the use of the appropriate forms sent to Participants with each
periodic statement. Payments received by the Administrator prior to the first
day of a Pricing Period (as defined in Question 11) will be used to purchase
shares on the Investment Date (as defined below) immediately following such
Pricing Period.
If a properly completed Authorization and Enrollment Form requesting
reinvestment of dividends is received by the Administrator on or before the
record date established by the Company's Board of Directors for a particular
Preference Share or Ordinary Share cash dividend, that dividend will be used to
purchase Ordinary Shares for the Participant on the next Investment Date
applicable to optional cash investments following the dividend payment date. If
an Authorization and Enrollment Form is received from a Participant after the
record date established for a particular dividend, the reinvestment of dividends
will begin with respect to dividends paid following the next dividend record
date. For a discussion of the price to Participants of the Ordinary Shares
purchased under the Plan and the limitations on optional cash investments, see
Question 11 and 13, respectively.
The dates on which optional cash investments are to be invested and any
Preference Share or Ordinary Share dividends are to be reinvested are herein
collectively referred to as the "Investment Dates". For optional cash
investments, the Investment Date will be the first Trading Day (as defined
below) subsequent to the Pricing Period. A "Trading Day" means a day on which
trades in Ordinary Shares are reported on the New York Stock Exchange (the
"NYSE").
The record date for optional cash purchases is the business day immediately
preceding the first day of the Pricing Period to which the Investment Date
relates. Please see Appendix I for information with respect to Pricing Periods,
Investment Dates and other information.
No interest will be paid on optional cash investments or cash dividends
pending investment in Ordinary Shares.
Eligible shareholders and other interested investors may enroll in the Plan
at any time. Once enrolled, a Participant will remain enrolled until the
Participant discontinues participation or until the Company terminates the Plan.
See Question 19 regarding withdrawal from the Plan and Question 26 regarding
termination of the Plan.
PURCHASES
9. WHEN WILL SHARES BE ACQUIRED UNDER THE PLAN?
If shares are being acquired for the Plan directly from the Company,
dividends and optional cash investments will be reinvested or invested, as the
case may be, on the Investment Date.
If shares are being acquired for the Plan through open market or privately
negotiated transactions, all dividends and all optional cash investments will be
applied to the purchase of Ordinary Shares pursuant to the Plan as soon as
practicable on or after the applicable Investment Date.
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10. WHAT IS THE SOURCE OF SHARES TO BE PURCHASED UNDER THE PLAN?
The Company anticipates that optional cash investments and dividends
reinvested through the Plan will be used to purchase shares directly from TEL,
either from treasury or authorized but unissued Ordinary Shares. The Company
may, however, determine instead to purchase shares on the open market or in
privately negotiated transactions from third parties, or both purchase shares
from third parties and issue shares directly.
11. WHAT WILL BE THE PRICE TO THE PARTICIPANT OF ORDINARY SHARES PURCHASED
UNDER THE PLAN?
The price to Participants of Ordinary Shares purchased directly from the
Company with optional cash investments or with cash dividends will be the
average of the Daily Prices (defined below) of the Ordinary Shares for the
twelve Trading Days ending immediately preceding the applicable Investment Date,
excluding from the average, in the case of purchases with optional cash
investments pursuant to a Request for Waiver in a given month, any Daily Price
which does not equal or exceed any applicable Threshold Price (defined below).
The Company may establish a discount of 0% to 3% applicable to shares purchased
directly from TEL under the Plan. See Question 13. The period encompassing the
first twelve Trading Days of each month constitutes the relevant "Pricing
Period" for that particular month. The Daily Price for a Trading Day shall be
the average of the high and low trading prices of the Ordinary Shares on that
day on the NYSE, rounded to three decimal places.
The Company may, in its sole discretion, establish for any given Pricing
Period a minimum price for optional cash investments pursuant to a Request for
Waiver (the "Threshold Price"). Any such Threshold Price will be a stated dollar
amount established by the Company at least three Trading Days prior to the
commencement of each Pricing Period.
If the Company exercises its option to purchase Ordinary Shares from third
parties, all shares so purchased by the Administrator will be acquired as soon
as practicable on or after the applicable Investment Date at a price to the
Participant of the weighted average purchase price for such shares, including
trading fees, computed up to three decimal places, if necessary, paid by the
Administrator for the Ordinary Shares.
12. HOW ARE OPTIONAL CASH INVESTMENTS MADE?
All registered holders, including brokers, banks and nominees with respect
to shares registered in their name on behalf of beneficial owners, that have
submitted signed Authorization and Enrollment Forms are eligible to make
optional cash investments at any time.
A broker, bank or nominee, as holder on behalf of a beneficial owner, may
utilize an Authorization and Enrollment Form for optional cash investments
unless it holds the shares in the name of a securities depository. In that
event, the optional cash investment must be accompanied by a Broker and Nominee
Form ("B/N Form").
The B/N Form provides the sole means whereby a broker, bank or other nominee
holding shares on behalf of beneficial owners in the name of a securities
depository may make optional cash investments on behalf of such beneficial
owners. In such case, the broker, bank or other nominee must use a B/N Form for
transmitting optional cash investments on behalf of the beneficial owners. A B/N
Form must be delivered to the Administrator at the address specified in Question
4 each time that such broker, bank or other nominee transmits optional cash
investments on behalf of the beneficial owners. B/N Forms will be furnished by
the Administrator upon request.
Other interested investors that are not shareholders of the Company are also
eligible to make such an initial investment in Ordinary Shares through an
optional cash investment by submitting Authorization and Enrollment Forms and
funds representing their desired initial investment.
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The Administrator will apply all optional cash investments for which good
funds are received on or before the first business day immediately preceding the
first day of the Pricing Period to the purchase of Ordinary Shares on the next
following Investment Date, or if shares are acquired on the open market or in
privately negotiated transactions, as soon as practicable on or after such
Investment Date.
NO INTEREST WILL BE EARNED ON OPTIONAL CASH INVESTMENTS OR DIVIDENDS HELD
PENDING INVESTMENT. THE COMPANY SUGGESTS THEREFORE THAT ANY OPTIONAL CASH
INVESTMENT A PARTICIPANT WISHES TO MAKE BE SENT SO AS TO REACH THE ADMINISTRATOR
AS CLOSE AS POSSIBLE TO THE FIRST BUSINESS DAY PRECEDING THE FIRST DAY OF THE
PRICING PERIOD FOR THE NEXT FOLLOWING INVESTMENT DATE. ANY QUESTIONS REGARDING
THESE DATES SHOULD BE DIRECTED TO THE ADMINISTRATOR AT THE ADDRESS OR TELEPHONE
NUMBER SET FORTH IN QUESTION 4.
All optional cash investments received by the Administrator after the close
of business on the first business day immediately preceding the first day of the
Pricing Period and before the next succeeding Investment Date will promptly be
returned to the Participant without interest.
Participants should be aware that since investments under the Plan are made
as of specified dates, one may lose any advantage that otherwise might be
available from being able to select the timing of an investment. NEITHER THE
COMPANY NOR THE ADMINISTRATOR CAN ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON
ORDINARY SHARES PURCHASED UNDER THE PLAN.
ALL OPTIONAL CASH INVESTMENTS MADE BY CHECK SHOULD BE MADE PAYABLE TO THE
CHASE MANHATTAN BANK AND MAILED TO THE ADMINISTRATOR AT THE ADDRESS LISTED IN
QUESTION 4. OTHER FORMS OF PAYMENT, SUCH AS WIRE TRANSFERS, MAY BE MADE, BUT
ONLY IF APPROVED IN ADVANCE BY THE ADMINISTRATOR. INQUIRIES REGARDING OTHER
FORMS OF PAYMENTS AND ALL OTHER WRITTEN INQUIRIES SHOULD BE DIRECTED TO THE
ADMINISTRATOR AT THE ADDRESS LISTED IN QUESTION 4.
13. WHAT LIMITATIONS APPLY TO OPTIONAL CASH INVESTMENTS?
MINIMUM/MAXIMUM LIMITS. For any Investment Date, optional cash investments
made by shareholders of the Company are subject to a minimum of $100 and a
maximum of $10,000 (except as noted below), and optional cash investments made
by interested investors who are not then shareholders of the Company are subject
to a minimum initial investment of $5,000 and a maximum of $10,000 (except as
noted below). See Question 8 regarding the determination of Investment Dates for
optional cash investments. Optional cash investments of less than the allowable
monthly minimum amount and that portion of any optional cash investment that
exceeds the allowable monthly maximum amount will be returned, except as noted
below, promptly to Participants, without interest. Optional cash investments
submitted by brokerage firms or other nominees on behalf of Participants,
whether on the same B/N Form or different B/N Forms, will be aggregated for
purposes of determining whether the $10,000 limit will be exceeded. In addition,
the Company reserves the right to treat optional cash investments submitted on
forms reflecting Participants with the same name, address or social security or
taxpayer identification number as a single investor for purposes of determining
whether the $10,000 limit will be exceeded.
REQUEST FOR WAIVER. Optional cash investments in excess of $10,000 per month
may be made only pursuant to a request for waiver (a "Request for Waiver")
accepted by the Company. Participants who wish to submit an optional cash
investment in excess of $10,000 for any Investment Date, including those whose
proposed investments have been aggregated so as to exceed $10,000 as described
above, must obtain the prior written approval of the Company and a copy of such
written approval must accompany any such optional cash investment. A Request for
Waiver should be directed to the Treasurer of the Company at (214) 691-5200, or
at such other number as may be established by the Company from time to time. THE
COMPANY HAS SOLE DISCRETION TO GRANT ANY APPROVAL FOR OPTIONAL CASH INVESTMENTS
IN EXCESS OF THE ALLOWABLE MAXIMUM AMOUNT. In deciding whether to approve a
Request for Waiver, the Company will consider relevant factors including, but
not limited to, the Company's need for additional funds, the attractiveness of
obtaining such additional funds through the sale of Ordinary Shares as compared
to other sources of funds, the purchase price likely to apply to any sale of
Ordinary Shares, the Participant submitting the
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request, the extent and nature of such Participant's prior participation in the
Plan, the number of Ordinary Shares held of record by such Participant and the
aggregate amount of optional cash investments in excess of $10,000 for which
Request for Waiver have been submitted by all Participants. If Requests for
Waiver are submitted for any Investment Date for an aggregate amount in excess
of the amount the Company is then willing to accept, the Company may honor such
requests in order of receipt, pro rata or by any other method that the Company
determines to be appropriate. Upon granting any Request for Waiver the Company
may, at its sole discretion, reduce the Discount (as defined below) with respect
to the full amount of such optional cash investment and the Company may agree to
different Discounts among persons to whom it has granted a Request for Waiver.
TEL RESERVES THE RIGHT TO MODIFY, SUSPEND OR TERMINATE PARTICIPATION IN THE
PLAN BY OTHERWISE ELIGIBLE REGISTERED HOLDERS OR BENEFICIAL OWNERS OF ORDINARY
SHARES FOR ANY REASON WHATSOEVER INCLUDING ELIMINATION OF PRACTICES THAT ARE NOT
CONSISTENT WITH THE PURPOSES OF THE PLAN.
THRESHOLD PRICE WITH RESPECT TO OPTIONAL CASH INVESTMENTS MADE PURSUANT TO
REQUESTS FOR WAIVER. TEL may establish for any Pricing Period a Threshold Price
applicable to optional cash investments made pursuant to Requests for Waiver. At
least three Trading Days prior to the first day of the applicable Pricing
Period, TEL will determine whether to establish a Threshold Price, and if a
Threshold Price is established, its amount, and will so notify the
Administrator. This determination will be made by TEL in its discretion after a
review of current market conditions, the level of participation in the Plan, and
current and projected capital needs. Participants may ascertain whether a
Threshold Price has been set or waived for any given pricing period by
telephoning the Company at (214) 691-5200, or at such other number as may be
established by the Company from time to time.
If established for any Pricing Period, the Threshold Price will be stated as
a dollar amount that the average of the high and low sale prices of the TEL on
the NYSE for each Trading Day of the relevant Pricing Period must equal or
exceed. In the event that the Threshold Price is not satisfied for a Trading Day
in the Pricing Period, then that Trading Day will be excluded from the Pricing
Period with respect to optional cash investments made pursuant to Requests for
Waiver, and all trading prices for that day will be excluded from the
determination of the purchase price. A day will also be excluded if no trades of
Ordinary Shares are made on the NYSE for that day. Thus, for example, if the
Threshold Price is not satisfied for three of the twelve Trading Days in a
Pricing Period, then the purchase price will be based upon the remaining nine
Trading Days in which the Threshold Price was satisfied.
In addition, a portion of each optional cash investment made pursuant to a
Request for Waiver will be returned for each Trading Day of a Pricing Period in
which the Threshold Price is not satisfied or for each day in which no trades of
Ordinary Shares are reported on the NYSE. The returned amount will equal
one-twelfth of the total amount of such optional cash investment (not just the
amount exceeding $10,000) for each Trading Day that the Threshold Price is not
satisfied. Thus, for example, if the Threshold Price is not satisfied or no such
sales are reported for three of the twelve Trading Days in a Pricing Period,
3/12 (i.e., 25%) of such optional cash investment will be returned to the
Participant without interest.
The establishment of the Threshold Price and the possible return of a
portion of the investment applies only to optional cash investments made
pursuant to a Request for Waiver. Setting a Threshold Price for a Pricing Period
shall not affect the setting of a Threshold Price for any subsequent Pricing
Period. For any particular month, TEL may waive its right to set a Threshold
Price. Neither TEL nor the Administrator shall be required to provide any
written notice to Participants as to the Threshold Price for any Pricing Period.
Participants may, however, ascertain whether a Threshold Price has been set or
waived for any given Pricing Period by telephoning the Company at (214)
691-5200, or at such other number as may be established by the Company from time
to time.
DISCOUNT. Each month, at least three Trading Days prior to the first day of
the applicable Pricing Period, TEL may establish a discount from the market
price applicable to shares purchased directly from TEL under the Plan in
connection with optional cash investments. Such discount (the "Discount") may be
14
<PAGE>
between 0% and 3% of the purchase price and may vary each month, but once
established, such Discount will apply uniformly to all purchases of Ordinary
Shares directly from the Company made pursuant to the Plan for that month,
except that the Discount may be decreased with respect to optional cash
investments made pursuant to a Request for Waiver. Any change in the Discount
will be made in TEL's sole discretion after a review of current market
conditions, the level of participation in the Plan, and current and projected
capital needs. Participants may obtain the Discount applicable to the next
Pricing Period by telephoning the Company at (214) 691-5200, or at such other
number as may be established by the Company from time to time. Setting a
Discount for a particular month shall not affect the setting of a Discount for
any subsequent month.
14. WHAT IF A PARTICIPANT HAS MORE THAN ONE ACCOUNT?
For the purpose of the limitations discussed in Question 13, TEL reserves
the right to aggregate all optional cash investments for Participants with more
than one account using the same name, address or social security or taxpayer
identification number. For Participants unable to supply a social security or
taxpayer identification number, their participation may be limited by TEL to
only one Plan account. Also for the purpose of such limitations, all Plan
accounts that TEL believes to be under common control or management or to have
common ultimate beneficial ownership may be aggregated. In the event the Company
exercises its right to aggregate investments and the result would be an
investment in excess of $10,000 without an approved Request for Waiver, the
Company will return, without interest, within thirty days of receipt, any
amounts in excess of the investment limitations.
CERTIFICATES
15. WILL CERTIFICATES BE ISSUED FOR SHARE PURCHASES?
All shares purchased pursuant to the Plan will be held in "book entry" form
through accounts maintained by the Administrator. This service protects against
the loss, theft, or destruction of certificates evidencing shares. Upon written
request of a Participant or upon withdrawal of a Participant from the Plan or
upon termination of the Plan, the Administrator will have certificates issued
and delivered for all full shares credited to that Participant's account.
Certificates will be issued only in the same names as those enrolled in the
Plan. In no event will certificates for fractional shares be issued. See
Question 16 and 17.
16. MAY A PARTICIPANT ADD ORDINARY SHARES TO HIS OR HER ACCOUNT BY
TRANSFERRING SHARE CERTIFICATES THAT THE PARTICIPANT POSSESSES?
Any Participant may send to the Plan for safekeeping all Ordinary Share
certificates which such Participant holds. Certificates forwarded to the
Administrator by registered mail will be automatically covered by an
Administrator blanket bond up to the first $100,000 of value. The safekeeping of
shares offers the advantage of protection against loss, theft or destruction of
certificates as well as convenience, if and when shares are sold through the
Plan. All shares represented by such certificates will be kept for safekeeping
in "book entry" form and combined with any full and fractional shares then held
by the Plan for the Participant.
To deposit certificates for safekeeping under the Plan, a Participant must
be enrolled in the Plan. Stock certificates as well as all written inquiries
about the safekeeping service should be directed to the Administrator at the
address listed in Question 4.
Shares deposited for safekeeping may be withdrawn by the Participant by
submitting a written request to the Administrator.
15
<PAGE>
SALE OF SHARES
17. CAN PARTICIPANTS SELL SHARES HELD UNDER THE PLAN?
Participants may request that all or a portion of the shares held in their
accounts by the Plan (including shares held for safekeeping) be sold. Following
receipt of written instructions from a Participant, the Administrator will sell,
through an independent broker or institution, those shares and will remit a
check for the proceeds of such sale, less applicable trading fees, service
charges and any taxes. Prior written instructions from the Participant must be
received at least 24 hours preceding the sale. Shares will be sold at least once
per week by the Plan at then current market prices in transactions carried out
through one or more brokerage firms. This procedure for selling shares may be
particularly attractive to holders of small amounts of Ordinary Shares because
the Plan can combine odd lots and small numbers of shares into larger blocks to
be sold, and thereby take advantage of lower trading fees that otherwise might
not be available to individual Participants in the sale of their shares. The
initial trading fee for sales of shares will be $15.00 per transaction plus $.12
per share. See Question 23.
REPORTS
18. WHAT REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
Unless a Participant participates in the Plan through a broker, bank or
nominee, each Participant will receive from the Administrator a detailed
statement of the Participant's account following each dividend payment and
account transaction. These detailed statements will show total cash dividends
received, if any, total optional cash investments received, total shares
purchased (including fractional shares), price paid per share, and total shares
held in the Plan. THESE STATEMENTS SHOULD BE RETAINED BY THE PARTICIPANT TO
DETERMINE THE TAX COST BASIS FOR SHARES PURCHASED PURSUANT TO THE PLAN. Any
Participant that participates in the Plan through a broker, bank or nominee,
should contact such party for such a statement.
WITHDRAWAL
19. HOW MAY PARTICIPANTS WITHDRAW FROM THE PLAN?
Except as set forth below, a Participant may terminate enrollment in the
Plan by giving written notice to the Administrator no later than two days prior
to the first day of the next Pricing Period, and thereafter all cash dividends
on shares owned by such Participant will be sent to the Participant. See
Question 17. In the event that a purchase of Ordinary Shares on behalf of a
Participant pursuant to the Plan is pending, such Participant may not terminate
enrollment until after the Investment Date relating to such Pricing Period. Any
fractional shares held in the Plan at the time of termination will be converted
to cash on the basis of the then current market price of the Ordinary Shares. If
a Participant's Plan account balance falls below one full share, the
Administrator reserves the right to liquidate the fraction and remit the
proceeds, less any applicable fees, to the Participant at its address of record.
TAXES
20. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE
PLAN?
For federal income tax purposes, Participants will be treated as having
received a distribution from the Company upon the purchase of shares pursuant to
the Plan with an optional cash investment in an amount equal to the excess, if
any, of the fair market value of the shares acquired on the Investment Date over
the optional cash investment. Any such deemed distribution will be treated as a
taxable dividend to the extent attributable to current or accumulated earnings
and profits of the Company. The purchased shares will have a tax basis equal to
the amount of the optional cash investment plus the amount of the deemed
distribution, if any, which is treated as a dividend. The fair market value of
shares acquired on an Investment Date is likely to differ from the optional cash
investment.
16
<PAGE>
Additionally, Participants will be treated as having received a distribution
from the Company equal to the fair market value on the Investment Date of the
shares acquired with reinvested dividends pursuant to the Plan. Such
distribution will be treated as a dividend to the extent attributable to current
or accumulated earnings and profits of the Company. Any excess will first be
treated as a tax-free return of capital, causing a reduction in the basis of
existing shares, and the balance will be treated as capital gain recognized on a
sale or exchange. A Participant's tax basis in the dividend shares will equal
the fair market value of such shares on the Investment Date.
When a Participant receives certificates for whole shares credited to the
Participant's account under the Plan, the Participant will not realize any
taxable income. However, a Participant that receives a cash adjustment for a
fraction of a share may realize a gain or loss with respect to such fraction. A
gain or loss may also be realized by the Participant whenever whole shares are
sold, either pursuant to the Participant's request, upon withdrawal from the
Plan or after withdrawal from the Plan. The amount of such gain or loss will be
the difference between the amount that the Participant realizes for the shares
or fraction of a share and the tax basis of the Participant in the shares.
A Participant's holding period for shares acquired pursuant to the Plan will
begin on the day following the Investment Date.
In the case of corporate shareholders, dividends may be eligible for the
dividends-received tax deduction.
The foregoing is only a summary of the federal income tax consequences of
participation in the Plan and does not constitute tax advice. This summary does
not reflect every possible outcome that could result from participation in the
Plan and, therefore, Participants are advised to consult their own tax advisors
with respect to the tax consequences applicable to their particular situation.
OTHER PROVISIONS
21. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS SHARES OR ACQUIRES
ADDITIONAL SHARES?
If a Participant has elected to have dividends automatically reinvested in
the Plan and subsequently sells or transfers all or any part of the shares
registered in the Participant's name, automatic reinvestment will continue as
long as shares are registered in the name of the Participant or held for the
Participant by the Administrator or until termination of enrollment. Similarly,
if a Participant has elected the "Full Dividend Reinvestment" option under the
Plan and subsequently acquires additional shares registered in the Participant's
name, dividends paid on such shares will automatically be reinvested until
termination of enrollment. If, however, a Participant has elected the "Partial
Dividend Reinvestment" option and subsequently acquires additional shares that
are registered in the Participant's name, dividends paid on such shares will not
be automatically reinvested under the Plan. See Question 7. Participants may,
however, change their dividend reinvestment elections by submitting new
Authorization and Enrollment Forms.
22. HOW WILL A PARTICIPANT'S SHARES BE VOTED?
For any meeting of shareholders, each Participant will receive proxy
materials in order to vote all shares held by the Plan for the Participant's
account. All shares will be voted as designated by the Participant or may be
voted in person at the meeting of shareholders.
23. WHO PAYS THE EXPENSES OF THE PLAN?
There is no fee for enrolling in the program. Participation is voluntary and
a Participant may discontinue its participation at any time. However, there are
fees associated with the Plan and the Administrator's services. Initially, it is
expected that shares for the Plan will be purchased directly from the Company,
and therefore there will be no trading fees or service charges in connection
with purchases of
17
<PAGE>
shares. However, where shares for the Plan are purchased in the open market or
in privately negotiated transactions, Participants will have to pay a fee
initially equal to $5.00 per transaction plus $.12 per share in the case of
optional cash investments, payable through a deduction from the amount invested.
Participants that request the sale of any of their shares held in the Plan must
pay a fee initially equal to $15.00 per transaction plus $.12 per share plus any
applicable taxes. The Administrator may effect any open market purchases and
sales of shares for the Plan through a broker-dealer (who may be an affiliate of
the Administrator), in which case such broker-dealer will receive a commission
for effecting such transactions. The Administrator may also charge Participants
for additional services not provided under the Plan or where specified charges
are indicated. Any fees may be changed by the Administrator at any time, without
notice to Participants. Participants may obtain a current listing of all
applicable administrative fees by contacting the Administrator at the address or
telephone number listed in Question 4 above. Brokers or nominees that
participate on behalf of beneficial owners for whom they are holding shares may
also charge such beneficial owners fees in connection with such participation,
for which neither the Administrator nor the Company will be responsible.
24. WHAT ARE THE RESPONSIBILITIES OF TEL OR THE ADMINISTRATOR UNDER THE
PLAN?
Neither TEL nor the Administrator will be liable for any act done in good
faith or for any good faith omission to act, including, without limitation, any
claims of liability arising out of a failure to terminate a Participant's
account upon such Participant's death or adjudication of incompetence prior to
the receipt of notice in writing of such death or adjudication of incompetence,
the prices at which shares are purchased for the Participant's account, the
times when purchases are made or fluctuations in the market value of the
Ordinary Shares. Neither TEL nor the Administrator has any duties,
responsibilities or liabilities except those expressly set forth in the Plan.
THE PARTICIPANT SHOULD RECOGNIZE THAT THE COMPANY CANNOT ASSURE A PROFIT OR
PROTECT AGAINST A LOSS ON THE SHARES PURCHASED BY A PARTICIPANT UNDER THE PLAN.
25. WHAT HAPPENS IF TEL ISSUES A STOCK DIVIDEND OR DECLARES A STOCK SPLIT?
Any Ordinary Shares distributed by TEL as a result of a stock dividend or a
stock split on shares held under the Plan for a Participant will be credited to
the Participant's account.
26. IF TEL HAS A RIGHTS OFFERING RELATED TO THE ORDINARY SHARES, HOW WILL A
PARTICIPANT'S ENTITLEMENT BE COMPUTED?
A Participant's entitlement in a rights offering related to the Ordinary
Shares will be based upon the number of whole shares credited to the
Participant's account. Rights based on a fraction of a share credited to a
Participant's Plan account will be sold for that account and the net proceeds
will be invested as an optional cash payment on the next Investment Date. In the
event of a rights offering, transaction processing may be curtailed or suspended
by the Administrator for a short period of time following the record date for
such action to permit the Administrator to calculate the rights allocable to
each account.
27. MAY SHARES IN A PARTICIPANT'S ACCOUNT BE PLEDGED?
No shares credited to a Participant's account may be pledged and any such
purported pledge will be void. If a Participant wishes to pledge shares, those
shares must be withdrawn from the Plan.
28. MAY A PARTICIPANT TRANSFER ALL OR A PART OF THE PARTICIPANT'S SHARES
HELD IN THE PLAN TO ANOTHER PERSON?
A Participant may transfer or give gifts of Ordinary Shares to anyone by
contacting the Administrator and requesting a Gift/Transfer Form. After the
transfer or purchase is completed, upon the request of a Participant, the
Administrator will send the Participant a non-negotiable gift announcement,
which the
18
<PAGE>
Participant can present to the recipient. A notice indicating the deposit of
Ordinary Shares will be forwarded to the recipient.
A Participant may also transfer all or a portion of his or her shares into
an account established for another person within the Plan. In order to effect
such a "book-to-book" transfer, the transferee must complete an Authorization
and Enrollment Form to open a new account within the Plan. (See Question 7). The
Authorization and Enrollment Form should be sent to the Administrator along with
a written request to effect the " book-to-book" transfer indicating the number
of shares to be transferred to the new account.
29. MAY THE PLAN BE CHANGED OR TERMINATED?
While the Plan is intended to continue indefinitely, TEL reserves the right
to amend, modify, suspend or terminate the Plan at any time. Participants will
be notified in writing of any modifications made to the Plan.
19
<PAGE>
PLAN OF DISTRIBUTION AND UNDERWRITERS
Pursuant to the Plan, TEL may be requested to approve optional cash
investments in excess of the allowable maximum amounts pursuant to Requests for
Waiver on behalf of Participants that may be engaged in the securities business.
In deciding whether to approve such a request, TEL will consider relevant
factors including, but not limited to, whether the Plan is then acquiring newly
issued Ordinary Shares or acquiring shares through open market purchases or
privately negotiated transactions, the Company's need for additional funds, the
attractiveness of obtaining such funds by the sale of Ordinary Shares under the
Plan in comparison to other sources of funds, the purchase price likely to apply
to any sale of Ordinary Shares, the Participant submitting the request,
including the extent and nature of such Participant's prior participation in the
Plan and the number of Ordinary Shares held of record by such Participant and
the aggregate number of Requests for Waiver that have been submitted by all
Participants. Persons who acquire Ordinary Shares through the Plan and resell
them shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with the anti-manipulation regulations concerning
security offerings under the Exchange Act and may be considered to be
underwriters within the meaning of the Securities Act. TEL will not extend to
any such person any rights or privileges other than those to which it would be
entitled as a Participant, nor will TEL enter into any agreement with any such
person regarding such person's purchase of such shares or any resale or
distribution thereof. TEL may, however, approve requests for optional cash
investments by such persons in excess of allowable maximum limitations. If such
requests are submitted for any Investment Date for an aggregate amount in excess
of the amount TEL is willing to accept, TEL may honor such requests in order of
receipt, pro rata or by any other method which TEL determines to be appropriate.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Ordinary Shares
will be passed upon by W.S. Walker & Company, Grand Cayman, Cayman Islands.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
Certain information with respect to the gas and oil reserves of the Company
and its subsidiaries derived from the report of DeGolyer and MacNaughton,
independent petroleum engineers, has been incorporated by reference herein in
reliance upon such firm as experts with respect to the matters contained
therein.
20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES, OR AN OFFER OR SOLICITATION WITH RESPECT TO THOSE SECURITIES
TO WHICH IT RELATES TO ANY PERSONS IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION CONTAINED OR INCORPORATED HEREIN AT ITS DATE IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Enforceability of Civil Liabilities Against
Foreign Persons.............................. 3
The Company.................................... 3
Risk Factors................................... 3
Use of Proceeds................................ 6
The Plan....................................... 7
Plan of Distribution and Underwriters.......... 20
Legal Matters.................................. 20
Experts........................................ 20
</TABLE>
TRITON ENERGY LIMITED
DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
---------------------
PROSPECTUS
---------------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
offering described in this Registration Statement are as follows:
<TABLE>
<S> <C>
Registration Fee.................................................. $ 99,270
Legal fees and expenses........................................... 250,000
Blue Sky fees and expenses........................................ 15,000
Accounting fees and expenses...................................... 20,000
Printing and duplicating expenses................................. 200,000
Miscellaneous expenses............................................ 5,000
---------
Total........................................................... $ 589,270
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
TEL is a Cayman Islands company. Article XXXIII of TEL's Articles of
Association contains provisions with respect to indemnification of TEL's
officers and directors. Such provisions provide that TEL shall indemnify, in
accordance with and to the full extent now or hereafter permitted by law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, an
action by or in the right of TEL), by reason of his acting as a director,
officer, employee or agent of, or his acting in any other capacity for or on
behalf of, TEL, against any liability or expense actually and reasonably
incurred by such person in respect thereof. TEL shall also advance the expenses
of defending any such act, suit or proceeding in accordance with and to the full
extent now or hereafter permitted by law. Such indemnification and advancement
of expenses are not exclusive of any other right to indemnification or
advancement of expenses provided by law or otherwise. The Articles of
Association also provide that except under certain circumstances, directors of
TEL shall not be personally liable to TEL or its shareholders for monetary
damages for breach of fiduciary duties as a director.
The Companies Law (1995 Revision) of the Cayman Islands does not set out any
specific restrictions on the ability of a company to indemnify officers or
directors. However, the application of basic principles and certain Commonwealth
case law which is likely to be persuasive in the Cayman Islands, would indicate
that indemnification is generally permissible except in the event that there had
been fraud or wilful default on the part of the officer or director or reckless
disregard of his duties and obligations to TEL.
ITEM 16. EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the from of prospectus filed with the Commission
pursuant to Rule 462(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the " Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraph (1)(i) and (1)(ii) above do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Triton
Energy Limited annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and have duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Dallas,
State of Texas, on September 18, 1998.
TRITON ENERGY LIMITED
BY: /S/ ROBERT B. HOLLAND, III
-----------------------------------------
(Robert B. Holland, III)
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed on
September 18, 1998 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ ROBERT B. HOLLAND, III Chief Executive Officer
------------------------------------------- (Principal Executive Officer)
(Robert B. Holland, III)
* Senior Vice President and Chief Financial Officer
------------------------------------------- (Principal Financial and Accounting Officer)
(Peter Rugg)
* Director
-------------------------------------------
(Ernest E. Cook)
* Director
-------------------------------------------
(Jesse E. Hendricks)
* Director
-------------------------------------------
(John P. Lewis)
* Director
-------------------------------------------
(Michael E. McMahon)
* Director
-------------------------------------------
(Sheldon R. Erikson)
* Director
-------------------------------------------
(Edwin D. Williamson)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
* Director
-------------------------------------------
(Fitzgerald S. Hudson)
Director
-------------------------------------------
(John R. Huff)
Director
-------------------------------------------
Thomas P. Kellogg, Jr.
Director
-------------------------------------------
(James C. Musselman)
Director
-------------------------------------------
(Lamar Norsworthy)
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ ROBERT B. HOLLAND, III
--------------------------------------
(Robert B. Holland, III)
AS ATTORNEY IN FACT
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1.2* -- Form of Underwriting Agreement (Debt Securities and Warrants to Purchase Debt Securities)
1.3* -- Form of Underwriting Agreement (Equity Securities and Warrants to Purchase Equity Securities).
4.2* -- Form of Debt Securities
4.5* -- Form of Senior Debt Indenture between TEL and The Chase Manhattan Bank, as Trustee
4.6* -- Form of Senior Subordinated Debt Indenture between TEL and United States Trust Company of New
York, as Trustee
4.7* -- Form of Subordinated Debt Indenture between TEL and The Chase Manhattan Bank, as Trustee
4.8* -- Form of Warrant Agreement for Preference Shares and Ordinary Shares (including form of Warrant
Certificate).
4.10* -- Form of Warrant Agreement for Debt Securities (including form of Warrant Certificate).
5.1* -- Opinion of Simpson Thacher & Bartlett.
5.2* -- Opinion of W.S. Walker & Company.
12.1* -- Computation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12.1 to
TEL's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1998 (the "Form 10-Q").
12.2* -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends (incorporated
by reference to Exhibit 12.2 to the Form 10-Q).
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2 -- Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
23.3 -- Consent of W.S. Walker & Company (included in Exhibit 5.2).
23.4 -- Consent of DeGolyer and MacNaughton, independent petroleum engineers.
24.1* -- Powers of Attorney of Board of Directors of TEL.
25.2* -- Statement of eligibility of The Chase Manhattan Bank as Trustee under the Senior Debt Indenture.
25.3* -- Statement of eligibility of The Chase Manhattan Bank as Trustee under the Subordinated Debt
Indenture.
25.5* -- Statement of eligibility of United States Trust Company of New York as Trustee under the Senior
Subordinated Debt Indenture.
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (No. 333-11703) of
our report dated February 5, 1998 appearing on page F-2 of Triton Energy
Limited's Annual Report on Form 10-K for the year ended December 31, 1997. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Dallas, Texas
September 17, 1998
<PAGE>
EXHIBIT 23.4
DEGOLYER AND MACNAUGHTON
ONE ENERGY SQUARE
DALLAS, TEXAS 76206
SEPTEMBER 15, 1998
Triton Energy Limited
Caledonian House
Mary Street
P. O. Box 1043
George Town
Grand Cayman, Cayman Islands
Gentlemen:
DeGolyer and MacNaughton (the firm) hereby consents (i) to the incorporation
by reference in the Annual Report on Form 10-K of Triton Energy Limited (Triton)
for the year ended December 31, 1997, (the Annual Report) and in the
Registration Statement on Form S-3 (the Registration Statement) of certain data
from the firm's February 24, 1998, report entitled "Appraisal Report, as of
December 31, 1997 on Certain Properties in Colombia owned by Triton Colombia
Incorporated," under the heading "Business and Properties--Reserves" and in note
24 of the Notes to the Consolidated Financial Statements of the Annual Report
under the heading "Oil and Gas Reserve Data" and (ii) to the specific references
to the firm under the abovementioned headings and under the heading "Experts" in
the Registration Statement. However, the firm's estimates of reserves of the
Cusiana and Cupiagua fields have been combined with estimates of reserves of
other Colombian properties not prepared by the firm, and we are necessarily
unable to verify the accuracy of the reserves estimate prepared by others.
Very truly yours,
/s/ DeGolyer and MacNaughton
DeGOLYER AND MacNAUGHTON
