SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ___________ to December 31, 1996
Commission file number 1-14420
TRANSCANADA CAPITAL
(Exact name of registrant as specified in its charter)
Delaware 13-7095718
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
c/o IBJ Schroder Bank & Trust Company, Administrative Trustee
One State Street
New York, New York 10004
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (212) 858-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
- ------------------- -----------------------------------------
TransCanada Capital Cumulative Trust New York Stock Exchange
Originated Preferred Securities
Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>
None
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to filed such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [_] Not applicable.
State the aggregate market value of the voting stock held by non-affiliates of
the registrant.
Not applicable.
2
<PAGE>
PART I
------
Item 1. Business
- ------- --------
The registrant's only assets consists of 8.75% Junior Subordinated
Debentures due July 24, 2045 (the "Debentures") issued by TransCanada
Pipelines Limited, a Canadian corporation ("TransCanada"). TransCanada
is a Canadian corporation with operations principally in the
transportation and marketing of natural gas. TransCanada was
incorporated in 1951 by a Special Act of the Parliament of Canada and
was continued on June 1, 1979 under the Canada Business Corporations
Act. TransCanada is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, files reports and other information with the
SEC. Under a multijurisdictional disclosure system adopted by the
United States, such reports and other information may be prepared in
accordance with the disclosure requirements of Canada, which
requirements are different from those of the United States. Reports
and other information concerning TransCanada can be inspected and
copied at prescribed rates at the SEC's Public Reference Room,
Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549, as
well as the following Regional Offices of the SEC: 7 World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies
of such material may be obtained from the Public Reference Room of the
SEC at 450 Fifth Street, N.W. Washington, D.D. 20549, at prescribed
rates. Such reports and other information also may be inspected at the
offices of the New York Stock Exchange on which TransCanada's common
shares are traded, at 20 Broad Street, New York, New York 10005.
Item 2. Properties
- ------- ----------
Not Applicable
Item 3. Legal Proceedings
- ------- -----------------
None
Item 4. Submission of Matters To A Vote Of Security Holders.
- ------- ----------------------------------------------------
None
3
<PAGE>
PART II
-------
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters
- ------- ---------------------------------------------------------------------
Number of Holders of Cumulative Trust Originated Preferred Securities
("Preferred Securities"): One
Principal Market: New York Stock Exchange
The high and low prices for the Preferred Securities on the New York Stock
Exchange for the periods indicated below were:
1996
----
3rd Quarter 4th Quarter
(from date of -----------
initial offering)
-----------------
High 26-1/4 27
Low 24-19/32 25-3/8
Cash distributions are paid on the Preferred Securities quarterly from the
assets of the Trust which, as noted above, consist solely of the Debentures.
Accordingly, payment of distributions on the Preferred Securities is dependent
upon receipt of payments due under the Debentures. Cash distributions on the
Preferred Securities per share for the periods indicated below were:
1996
----
3rd Quarter 4th Quarter
(from date of -----------
initial offering)
-----------------
$0.419294 $0.546906
Item 6. Selected Financial Data
- ------- -----------------------
Not Applicable
4
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
Not Applicable
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
Not Applicable
Item 9. Changes In and Disagreements With Accountants On Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
Not Applicable
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Not Applicable
Item 11. Executive Compensation
- -------- ----------------------
Not Applicable
5
<PAGE>
PART III
--------
Item 12. Security Ownership Of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
(a) To the knowledge of registrant, no person (including any "group" as
that term is defined in sections 13(d)(3) of the Securities Exchange
Act of 1934) is the beneficial owner of more than five percent of the
Preferred Securities.
(b) Not Applicable
(c) Not Applicable
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
None
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, And Reports On Form 8-K
- -------- ----------------------------------------------------------------
(a) Financial Statements and Exhibits
1. Financial Statements
Unaudited balance sheet of registrant as of December 31, 1996
Unaudited statement of trust receipts and distributions of
registrant from inception through December 31, 1996
Unaudited statement of cash flows of registrant from inception
through December 31, 1996
2. Exhibits
99 Report showing for 1996, the amounts received by the
registrant from TransCanada in respect of the Debentures,
and the distributions paid by the registrant to holders of
the Preferred Securities and Common Securities of
registrant.
(b) Reports on Form 8-K
Forms 8-K report dated September 30, 1996 and December 31, 1996,
reporting under Item 5 (Other Events) the distributions made on the Preferred
Securities on
6
<PAGE>
September 30, 1996, respectively, and the interest payments received on the
Debentures on that date.
(c) Not applicable.
(d) Not applicable.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
By: IBJ SCHRODER BANK & TRUST COMPANY
as Administrative Trustee
Date: July 28, 1997 By:/s/ Stuart Rothenberg
(information provided as ---------------------------------
of December 31, 1996) Stuart Rothenberg
Assistant Vice President
7
EXHIBIT 99
CASH TRANSACTIONS
Payments received from TransCanada on 8.75% Junior Subordinated Debentures
due July 24, 2045
Date Payment Amount
---- --------------
September 30, 1996 $2,683,484.27
December 31, 1996 $3,500,196.88
Distributions paid to Holders of TransCanada Capital Cumulative Trust
Originated Preferred Securities and Common Securities.
Preferred Common Total
Date Securities Securities Amount Paid
---- ---------- ---------- -----------
September 30, 1996 2,683,333.33 150.94 $2,683,484.27
December 31, 1996 3,500,000.00 196.88 $3,500,196.88
<PAGE>
[KPMG LOGO]
Financial Statements of
TRANSCANADA CAPITAL
Year ended December 31, 1996
<PAGE>
NOTICE TO READER
We have compiled the balance sheet of TransCanada Capital as at December 31,
1996 and the statements of trust receipts and distributions and cash flows for
the period from June 11, 1996 to December 31, 1996 from information provided by
the trustee. We have not audited, reviewed or otherwise attempted to verify the
accuracy or completeness of such information. Readers are cautioned that these
statements may not be appropriate for their purposes.
KPMG
Chartered Accountants
Calgary, Canada
July 21, 1997
<PAGE>
TransCanada Capital
Unaudited Balance Sheet
December 31, 1996 June 11, 1996
----------------- -------------
Assets
Junior Subordinated Debentures $160,009,000 $ --
============ ========
Liabilities and Shareholder's Equity
Redeemable Preferred Securities $160,000,000 $ --
Shareholder's Equity
Common Securities 9,000 --
------------ --------
$160,009,000 $ --
============ ========
<PAGE>
TransCanada Capital
Unaudited Statement of Trust Receipts and Distributions
For the period from June 11, 1996 (date of formation) to December 31, 1996
Interest from Junior Subordinated Debentures $ 6,183,681
Distributions on Preferred Securities (6,183,333)
Distributions on Common Securities (348)
-----------
$ --
===========
<PAGE>
TransCanada Capital
Unaudited Statement of Cash Flows
For the period from June 11, 1996 (date of formation) to December 31, 1996
Operating activities
Interest on Junior Subordinated Debentures $ 6,183,681
Investing activities
Purchase of Junior Subordinated Debentures (160,009,000)
Financing activities
Issue of Preferred Securities 160,000,000
Issue of Common Securities 9,000
Distributions on Preferred Securities (6,183,333)
Distributions on Common Securities (348)
-------------
153,825,319
-------------
Change in cash --
Cash, beginning of period --
-------------
Cash, end of period $ --
=============
<PAGE>
TransCanada Capital
Notes to Unaudited Financial Statements
December 31, 1996
1. The Trust
TransCanada Capital (the "Trust") is a statutory business trust formed
under the laws of the State of Delaware on June 11, 1996 pursuant to (i) a
declaration of trust ("Declaration") executed by the initial trustees
thereof, none of which is affiliated with TransCanada PipeLines Limited,
and (ii) the filing of a certificate of trust with the Secretary of State
of the State of Delaware. An organization exempt from United States federal
income taxation under Section 501(c) of the Code, directly or indirectly,
owns all of the common securities of the Trust, which common securities
represent an aggregate liquidation amount approximately equal to 0.01% of
the total capital of the Trust. The Trust exists for the exclusive purposes
of (i) issuing trust securities representing undivided beneficial interests
in the assets of the Trust, (ii) using the gross proceeds from the offering
of the trust securities to purchase Junior Subordinated Debentures of
TransCanada PipeLines Limited ("TCPL") and (iii) engaging in only those
other activities necessary or incidental thereto.
2. Junior Subordinated Debentures
On July 23, 1996, TransCanada Capital purchased $160,009,000 of Junior
Subordinated Debentures from TCPL. The Junior Subordinated Debentures bear
interest at 8.75% and mature on July 24, 2045.
TCPL has the right to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment date on the Junior
Subordinated Debentures at any time and from time to time, subject to
certain conditions, for a period of up to 20 consecutive quarters (each
such period, an "Extension Period"). During each such Extension Period,
distributions on the trust securities shall be deferred (but such
distributions will continue to accrue but will not compound). TCPL may not
defer interest payments on the Junior Subordinated Debentures if there is
accrued and unpaid interest on the Junior Subordinated Debentures arising
from a prior, completed Extension Period. There could be multiple Extension
Periods of varying lengths, each of up to 20 consecutive quarters
throughout the term of the Junior Subordinated Debentures.
<PAGE>
TransCanada Capital
Notes to Unaudited Financial Statements
December 31, 1996
2. Junior Subordinated Debentures (continued)
The Junior Subordinated Debentures are redeemable in cash by TCPL, in whole
or in part, at any time on or after July 23, 2001, or at any time, in whole
but not in part, following, in each case under certain circumstances, the
occurrence of (i) a Redemption Tax Event, as defined, or (ii) a
Distribution Tax Event, as defined, and, in each of the foregoing cases, at
an amount equal to 100% of the principal amount of the Junior Subordinated
Debentures to be redeemed, plus accrued and unpaid interest thereon. If
TCPL redeems Junior Subordinated Debentures, the Trust must redeem trust
securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so redeemed at $25
per trust security plus accrued and unpaid distributions thereon to the
date fixed for redemption.
3. Redeemable Preferred Securities
TransCanada Capital issued the Redeemable Preferred Securities ("Preferred
Securities") on July 23, 1996. Holders of the Preferred Securities are
entitled to receive cash distributions in U.S. dollars at an annual rate of
8.75% of the liquidation amount of $25 per Preferred Security, accruing
from the date of original issuance and payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing
September 30, 1996. Upon an event of default under the Declaration, the
holders of the Preferred Securities will have a preference over the holders
of the common securities with respect to payments in respect of
distributions and payments upon redemption, liquidation and otherwise.
The distribution rate and the distribution payment dates and other payment
dates for the Preferred Securities correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated
Debentures which, together with the Trust's rights under the Debenture
Purchase Agreement between TCPL and the Trust, dated July 11, 1996 (the
"Purchase Agreement"), pursuant to which the Trust purchased the Junior
Subordinated Debentures, are the only assets of the Trust. As a result, if
TCPL does not make principal or interest payments on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make
distributions on the Preferred Securities. The obligations of TCPL under
the Junior Subordinated Debentures are subordinate and junior in right of
payment to all present and future senior indebtedness of TCPL. Such
obligations are also effectively subordinate to claims of creditors of
TCPL's subsidiaries and of the joint ventures and partnerships to which
TCPL is a party. There are no terms in the Preferred Securities or the
Junior Subordinated Debentures that limit the ability of TCPL or its
subsidiaries or joint ventures and partnerships to which it is a party to
incur additional indebtedness, including indebtedness that ranks senior to
the Junior Subordinated Debentures.
<PAGE>
TransCanada Capital
Notes to Unaudited Financial Statements
December 31, 1996
4. Financial Instruments
The fair value of the Junior Subordinated Debentures was $166.4 million at
December 31, 1996. The fair value of the Preferred Securities was $166.4
million at December 31, 1996.
5. Economic Dependence
TransCanada Capital's only assets are the Junior Subordinated Debentures
and its rights under the Purchase Agreement with TCPL and, as such, the
Trust is economically dependent on TCPL.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 160,009,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
160,000,000
0
<COMMON> 9,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 160,009,000
<SALES> 0
<TOTAL-REVENUES> 6,183,681
<CGS> 0
<TOTAL-COSTS> 6,183,681
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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