<PAGE> 1
Filed pursuant to rule 424(b)(2)
Registration No. 333-35549
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 7, 1997)
$200,000,000
[ENRON CORP. LOGO]
ENRON CORP.
REMARKETED RESET NOTES DUE NOVEMBER 15, 2037
-------------------------
Enron Corp. (the "Company") is hereby offering (the "Offering")
$200,000,000 aggregate principal amount of Remarketed Reset Notes due November
15, 2037 (the "Notes").
During the period commencing November 12, 1997 and ending November 16, 1998
(the "Initial Spread Period"), the interest rate on the Notes will be reset
monthly, and will equal LIBOR plus the applicable Spread. The Spread during the
Initial Spread Period is .15%. After the Initial Spread Period, the character
and duration of the interest rate on the Notes will be determined by the
Remarketing Underwriter and agreed to by the Company on each applicable
Duration/Mode Determination Date and the Spread will be agreed to by the Company
and the Remarketing Underwriter on the corresponding Spread Determination Date.
Interest on the Notes during each Subsequent Spread Period shall be payable, as
applicable, either (i) at a floating interest rate (such Notes being in the
"Floating Rate Mode", and such interest rate being a "Floating Rate") or (ii) at
a fixed interest rate (such Notes being in the "Fixed Rate Mode" and such
interest rate being a "Fixed Rate"), in each case as determined by the
Remarketing Underwriter and the Company in accordance with a Remarketing
Agreement between the Remarketing Underwriter and the Company (the "Remarketing
Agreement").
(continued on next page)
-------------------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The Notes will be sold to the public at varying prices to be determined by
the Underwriter at the time of each sale. The net proceeds to the Company,
before deducting expenses payable by the Company (estimated to be $200,000, will
be 99.9% of the principal amount of the Notes sold and the aggregate net
proceeds will be $199,800,000. For further information with respect to the plan
of distribution and any discounts, commissions or profits on resales of Notes
that may be deemed underwriting discounts or commissions, see "Underwriting."
The Notes are offered by the Underwriter, subject to prior sale, when, as
and if issued by the Company and delivered to and accepted by the Underwriter,
subject to approval of certain legal matters by counsel for the Underwriter and
subject to certain other conditions. The Underwriter reserves the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Global Note will be made in book-entry form
through the facilities of DTC in New York, New York on or about November 12,
1997.
-------------------------
MERRILL LYNCH & CO.
-------------------------
The date of this Prospectus Supplement is November 6, 1997.
<PAGE> 2
(continued from previous page)
After the Initial Spread Period, the Spread applicable to each Subsequent
Spread Period will be determined on each subsequent Spread Determination Date
which precedes the beginning of the corresponding Subsequent Spread Period,
pursuant to agreement between the Company and the Remarketing Underwriter
(except as otherwise provided below), and the interest rate mode used for each
Subsequent Spread Period may be a Floating Rate Mode or a Fixed Rate Mode, at
the discretion of the Company and the Remarketing Underwriter. If the Company
and the Remarketing Underwriter are unable to agree on the Spread, the Company
is required unconditionally to repurchase and retire all of the Notes on the
Tender Date at a price equal to 100% of the principal amount thereof, together
with accrued interest to the Tender Date. After the Initial Spread Period, (i)
if the Notes are in the Floating Rate Mode, interest on the Notes will be
payable, as specified on the applicable Duration/Mode Determination Date, either
monthly, quarterly or semi-annually, or (ii) if the Notes are in the Fixed Rate
Mode, interest on the Notes will be payable, unless otherwise specified on the
applicable Duration/Mode Determination Date, semi-annually in arrears on each
May 15 and November 15 during the applicable Subsequent Spread Period. "Interest
Payment Dates" as used herein shall mean any date interest is paid on the Notes.
See "Description of the Notes."
The Notes are not redeemable prior to November 16, 1998. Thereafter, the
Notes may be redeemable, at the option of the Company, on such date, on each
Commencement Date and on those Interest Payment Dates that are specified as
redemption dates by the Company on the applicable Duration/Mode Determination
Date, in whole or in part, upon notice thereof given at any time during the 30
calendar day period ending on the tenth Business Day prior to the redemption
date (provided that notice of any partial redemption must be given to the
Noteholders at least 15 Business Days prior to the redemption date), in
accordance with the redemption type selected on the Duration/Mode Determination
Date. Unless previously redeemed, the Notes will mature on November 15, 2037.
See "Description of the Notes -- Redemption of the Notes."
The Notes will be represented by a single Global Note registered in the
name of The Depository Trust Company ("DTC") or its nominee. Beneficial interest
in the Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Except as described
herein, Notes in definitive form will not be issued.
If the Company and the Remarketing Underwriter agree on the Spread with
respect to any Subsequent Spread Period, each Note may be tendered to the
Remarketing Underwriter for purchase from the tendering Noteholder at 100% of
its principal amount and for remarketing by the Remarketing Underwriter on the
date immediately following the end of each Subsequent Spread Period (the "Tender
Date"). In the case of the Initial Spread Period, the Notes may be tendered on
November 16, 1998. Notice of a beneficial owner's election to tender to the
Remarketing Underwriter must be received by the Remarketing Underwriter during
the five Business Day period ending at 12:00 noon, New York City time, on the
fifth Business Day following the relevant Spread Determination Date. The
Remarketing Underwriter will attempt, on a best efforts basis, to remarket the
tendered Notes at a price equal to 100% of the aggregate principal amount so
tendered. There is no assurance that the Remarketing Underwriter will be able to
remarket the entire principal amount of Notes tendered in a remarketing. The
Remarketing Underwriter shall also have the option, but not the obligation, to
purchase any tendered Notes at such price. Additionally, the obligation of the
Remarketing Underwriter to purchase tendered Notes from the tendering
Noteholders will be subject to certain conditions and termination events
customary in the Company's public offerings. If the Remarketing Underwriter does
not purchase all tendered Notes on the relevant Tender Date, the Company is
required unconditionally on such date to repurchase and retire any tendered
Notes not remarketed or purchased by the Remarketing Underwriter on the Tender
Date at a price equal to 100% of the principal amount thereof, plus accrued
interest. No beneficial owner of any Note shall have any rights or claims
against the Company or the Remarketing Underwriter as a result of the
Remarketing Underwriter not purchasing such Notes. See "Description of the Notes
- -- Tender at Option of Beneficial Owners."
THE UNDERWRITER MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY. SUCH TRANSACTIONS MAY
INCLUDE STABILIZING TRANSACTIONS AND THE PURCHASE OF NOTES TO COVER SHORT
POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.
S-2
<PAGE> 3
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of June 30, 1997 and as adjusted to give effect to
the issuance of 50.5 million shares of the Company's common stock and the
assumption of $1.1 billion of debt in connection with the merger with Portland
General Corporation as of July 1, 1997, the issuance by Enron Oil & Gas Company
on September 29, 1997 of $100,000,000 aggregate principal amount of Notes due
2004, and the issuances by the Company (i) on July 29, 1997 of $200,000,000
aggregate principal amount of Notes due 2009,(ii) on August 7, 1997 of
$150,000,000 aggregate principal amount of Notes due 2002, (iii) on August 15,
1997 of $100,000,000 aggregate principal amount of Notes due 2004, (iv) on
October 23, 1997 of $100,000,000 aggregate principal amount of Notes due 2003
and (v) of the Notes offered hereby and the use of the proceeds therefrom. See
"Use of Proceeds."
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt
Notes payable............................................. $ -- $ 125
Current maturities of long-term debt...................... -- 96
------ -------
Total short-term debt............................. -- 221
------ -------
Long-term debt
Amount reclassified from short-term debt.................. 1,644 800
Enron:
Notes due 1998-2023 (6 3/4% to 10%).................... 1,396 1,396
Exchangeable notes due 1998 (6 1/4%)................... 228 228
Notes due 2009 (6.75%)................................. -- 200
Notes due 2002 (6.50%)................................. -- 150
Notes due 2004 (6.75%)................................. -- 100
Notes due 2003 (6 5/8%)................................ -- 100
Notes offered hereby................................... -- 200
Senior subordinated debentures due 2005-2012 (6.75% to
8.25%)................................................ 350 350
Subsidiary companies:
Notes due 1998-2023 (4.52% to 9.46%)................... 686 993
Notes due 1998-2031 (floating rates)................... 190 880
Other.................................................. 55 55
Unamortized debt discount and premium..................... (12) (15)
------ -------
Total long-term debt.............................. 4,537 5,437
------ -------
Minority interests.......................................... 770 770
------ -------
Company-obligated preferred securities of subsidiaries...... 964 995
------ -------
Shareholders' equity
Convertible preferred stock............................... 134 134
Common stock.............................................. 26 3,770
Additional paid-in capital................................ 1,881 --
Retained earnings......................................... 1,692 1,692
Cumulative foreign currency translation adjustment........ (129) (129)
Common stock held in treasury............................. (11) (11)
Other, including Flexible Equity Trust.................... (162) (162)
------ -------
Total shareholders' equity........................ 3,431 5,294
------ -------
Total capitalization.............................. $9,702 $12,717
====== =======
</TABLE>
S-3
<PAGE> 4
RECENT DEVELOPMENTS
On October 14, 1997, the Company announced revenues of $5.8 billion for the
quarter ended September 30, 1997, compared to revenues of $3.2 billion for the
third quarter of 1996. Net income in the third quarter of 1997 was $134 million,
compared to net income of $123 million for the third quarter of 1996.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby will be used
principally to repay short-term indebtedness. As of November 5, 1997, the
weighted average interest rate on the Company's outstanding short-term
indebtedness was approximately 5.72%.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1997 1996 1995 1994 1993 1992
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........ (1) 3.00 2.92 2.34 1.98 1.74
</TABLE>
- ---------------
(1) For the six months ended June 30, 1997, earnings were inadequate to cover
fixed charges by $305 million.
DESCRIPTION OF THE NOTES
The Notes constitute a separate series of securities (which are more fully
described in the accompanying Prospectus) to be issued pursuant to the indenture
identified therein (the "Indenture"). The terms of the Notes include those
provisions contained in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The following description of the particular terms of the Notes offered
hereby (referred to herein as the "Notes" and in the Prospectus as the "Debt
Securities") supplements, and to the extent inconsistent therewith, replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made. The
following summary is qualified in its entirety by reference to the Indenture
referred to in the Prospectus and to the Notes to be issued thereunder and to
the Remarketing Agreement and the Remarketing Underwriting Agreement (the forms
of which will be filed, pursuant to a Quarterly Report on Form 10-Q,
incorporated by reference into the Registration Statement of which the
Prospectus forms a part). Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Prospectus or the Indenture, as the
case may be.
GENERAL
The Notes will be limited to $200,000,000 in aggregate principal amount and
will mature on November 15, 2037. The Notes will be direct, unsecured
obligations of the Company and will rank equally with each other and with all
other unsecured and unsubordinated indebtedness of the Company from time to
time. The Notes will be issued only in fully registered, book-entry form. See
"-- Book-Entry System" below.
The Notes will not be subject to a sinking fund.
With certain exceptions and pursuant to certain requirements set forth in
the Indenture, the Company may discharge its obligations under the Indenture
with respect to the Notes as described under "Description of Debt
Securities -- Discharge of Indenture" in the Prospectus. Prospective investors
are urged to consult their own advisors as to the tax consequences of any such
action.
FLOATING RATE MODE
During the period commencing November 12, 1997 and ending November 16, 1998
(the "Initial Spread Period"), interest on the Notes will be payable monthly in
arrears, on the 15th day of each month
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<PAGE> 5
commencing December 15, 1997 (or, if not a Business Day (as defined below), on
the next succeeding Business Day (except as described below)), to the persons in
whose names the Notes are registered at the close of business on the applicable
record date (in the case of both Notes in the Floating Rate Mode or Fixed Rate
Mode the 15th calendar day, whether or not a Business Day, next preceding the
applicable Interest Payment Date) next preceding such Interest Payment Date.
During the Floating Rate Mode, interest on the Notes for each Subsequent Spread
Period will be payable either monthly, quarterly, or semi-annually, as specified
by the Company on each Duration/Mode Determination Date. Unless otherwise
specified on each Duration/Mode Determination Date in connection with Notes in
the Floating Rate Mode, interest will be payable, in the case of Notes which pay
(i) monthly, on the 15th day of each month; (ii) quarterly, on the 15th day of
each February, May, August, and November; and (iii) semi-annually, on the 15th
day of each May and November. During the Initial Spread Period and any
Subsequent Spread Period during which the Notes are in the Floating Rate Mode,
the interest rate on the Notes will be reset monthly, in the case of the Initial
Spread Period, and either monthly, quarterly or semi-annually in the case of any
Subsequent Spread Period, and the Notes will bear interest at a per annum rate
(computed on the basis of the actual number of days elapsed over a 360-day year)
equal to LIBOR (as defined below) for the applicable Interest Period (as defined
below), plus the applicable Spread (as defined below). Interest on the Notes
will accrue from and including each Interest Payment Date (or in the case of the
Initial Interest Period, November 12, 1997) to but excluding the next succeeding
Interest Payment Date or maturity date, as the case may be. The Initial Interest
Period will be the period from and including November 12, 1997 to but excluding
the first Interest Payment Date (December 15, 1997) (the "Initial Interest
Period"). Thereafter, each Interest Period during the Initial Spread Period or
any Subsequent Spread Period (as defined below) (each, an "Interest Period")
will be from and including the most recent Interest Payment Date on which
interest has been paid to but excluding the next Interest Payment Date. The
first day of an Interest Period is referred to herein as an "Interest Reset
Date."
The Spread applicable during the Initial Spread Period will be .15% (the
"Initial Spread"), and the interest rate mode used for the Initial Spread Period
will be the Floating Rate Mode. Thus, the interest rate per annum during the
Initial Interest Period will be equal to LIBOR, determined as of November 10,
1997, plus .15%. The interest rate per annum for each succeeding Interest Period
during the Initial Spread Period will equal LIBOR for such Interest Period plus
the Initial Spread. Thereafter, the Spread will be determined in the manner
described below for each subsequent Spread period (a "Subsequent Spread
Period"), which will be one or more periods of at least six months and not more
than 39 years (or any integral multiple of six months therein), designated by
the Company, commencing on a May 15 or November 15 (or as otherwise specified by
the Company and the Remarketing Underwriter on the applicable Duration/Mode
Determination Date in connection with the establishment of each Subsequent
Spread Period), as applicable (the "Commencement Date"), through and including
November 15, 2037 (no Subsequent Spread Period may end after November 15, 2037).
The first Commencement Date will be November 16, 1998.
If any Interest Payment Date (other than at maturity), redemption date,
Interest Reset Date, Duration/Mode Determination Date (as defined below), Spread
Determination Date (as defined below), Commencement Date or Tender Date (as
defined below) would otherwise be a day that is not a Business Day, such
Interest Payment Date, redemption date, Interest Reset Date, Duration/Mode
Determination Date, Spread Determination Date, Commencement Date or Tender Date
will be postponed to the next succeeding day that is a Business Day, except that
if such Business Day is in the next succeeding calendar month, such Interest
Payment Date, redemption date, Interest Reset Date, Commencement Date or Tender
Date shall be the next preceding Business Day.
LIBOR applicable for an Interest Period will be determined by the Rate
Agent (as defined under "Tender at Option of Beneficial Owners" below) as of the
second London Business Day (as defined below) preceding each Interest Reset Date
(the "LIBOR Determination Date") in accordance with the following provisions:
(i) LIBOR will be determined on the basis of the offered rates for
deposits in U.S. Dollars of the applicable Index Maturity of not less than
U.S. $1,000,000, commencing on the second London Business Day immediately
following such LIBOR Determination Date, which appears on Telerate Page
3750 (as
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<PAGE> 6
defined below) as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date. "Telerate Page 3750" means the display designated on
page "3750" on Dow Jones Markets Limited (or such other page as may replace
the 3750 page on that service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. Dollar deposits). If no rate
appears on Telerate Page 3750, LIBOR for such LIBOR Determination Date will
be determined in accordance with the provisions of paragraph (ii) below.
(ii) With respect to a LIBOR Determination Date on which no rate
appears on Telerate Page 3750 as of approximately 11:00 a.m., London time,
on such LIBOR Determination Date, the Rate Agent shall request the
principal London offices of each of four major reference banks in the
London interbank market selected by the Rate Agent to provide the Rate
Agent with a quotation of the rate at which deposits of the applicable
Index Maturity in U.S. Dollars, commencing on the second London Business
Day immediately following such LIBOR Determination Date, are offered by it
to prime banks in the London interbank market as of approximately 11:00
a.m., London time, on such LIBOR Determination Date and in a principal
amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. If at
least two such quotations are provided, LIBOR for such LIBOR Determination
Date will be the arithmetic mean of such quotations as calculated by the
Rate Agent. If fewer than two quotations are provided, LIBOR for such LIBOR
Determination Date will be the arithmetic mean of the rates quoted as of
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date by three major banks in The City of New York selected by the Rate
Agent (after consultation with the Company) for loans in U.S. Dollars to
leading European banks, of the applicable Index Maturity commencing on the
second London Business Day immediately following such LIBOR Determination
Date and in a principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
the Rate Agent are not quoting as mentioned in this sentence, LIBOR for
such LIBOR Determination Date will be LIBOR determined with respect to the
immediately preceding LIBOR Determination Date, or in the case of the first
LIBOR Determination Date, LIBOR for the Initial Interest Period.
The Index Maturity applicable to Notes in the Floating Rate Mode will
be, in the case of Notes paying (i) monthly, one month; (ii) quarterly,
three months; and (iii) semi-annually, six months.
FIXED RATE MODE
If the Notes are to be reset to the Fixed Rate Mode, as agreed to by the
Company and the Remarketing Underwriter on a Duration/Mode Determination Date,
then the applicable Fixed Rate for the corresponding Subsequent Spread Period
will be determined as of the sixth Business Day following the Spread
Determination Date (provided that such date is a Business Day; otherwise, as of
the next Business Day thereafter) (the "Fixed Rate Determination Date")
(provided, however, that in the case where the Notice Date also falls on the
Fixed Rate Determination Date, the Fixed Rate Determination Date will be the
following Business Day thereafter), in accordance with the following provisions:
the Fixed Rate will be a per annum rate and will be determined as of 12:00 noon
on such Fixed Rate Determination Date by adding the applicable Spread (as agreed
to by the Company and the Remarketing Underwriter on the preceding Spread
Determination Date) to the yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the applicable United States Treasury security, selected by the Rate
Agent after consultation with the Remarketing Underwriter, as having a maturity
comparable to the duration selected for the following Subsequent Spread Period,
which would be used in accordance with customary financial practice in pricing
new issues of corporate debt securities of comparable maturity to the duration
selected for the following Subsequent Spread Period.
Interest in the Fixed Rate Mode will be computed on the basis of a 360-day
year of twelve 30-day months. Such interest will be payable semi-annually in
arrears on the Interest Payment Dates (May 15 and November 15, unless otherwise
specified by the Company and the Remarketing Underwriter on the applicable
Duration/Mode Determination Date) at the applicable Fixed Rate, as determined by
the Company and the Remarketing Underwriter on the Fixed Rate Determination
Date, beginning on the Commencement Date and
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<PAGE> 7
for the duration of the relevant Subsequent Spread Period. Interest on the Notes
will accrue from and including each Interest Payment Date to but excluding the
next succeeding Interest Payment Date or maturity date, as the case may be. See
"-- Additional Terms of the Notes" for other provisions applicable to Notes in
the Fixed Rate Mode.
If any Interest Payment Date or any redemption date in the Fixed Rate Mode
falls on a day that is not a Business Day (in either case, other than any
Interest Payment Date or redemption date that falls on a Commencement Date, in
which case such date will be postponed to the next day that is a Business Day),
the related payment of principal and interest will be made on the next
succeeding Business Day as if it were made on the date such payment was due, and
no interest will accrue on the amounts so payable for the period from and after
such dates.
ADDITIONAL TERMS OF THE NOTES
The Spread that will be applicable during each Subsequent Spread Period
will be the percentage (a) recommended by the Remarketing Underwriter (as
defined under "Tender at Option of Beneficial Owners" below) so as to result in
a rate that, in the opinion of the Remarketing Underwriter, will enable tendered
Notes to be remarketed by the Remarketing Underwriter at 100% of the principal
amount thereof, as described under "-- Tender at Option of Beneficial Owners"
below, and (b) agreed to by the Company. The interest rate mode during each
Subsequent Spread Period shall be either the Floating Rate Mode or the Fixed
Rate Mode, as determined by the Company and the Remarketing Underwriter.
If the maturity date for the Notes falls on a day that is not a Business
Day, the related payment of principal and interest will be made on the next
succeeding Business Day as if it were made on the date such payment was due, and
no interest will accrue on the amounts so payable for the period from and after
such dates.
Unless notice of redemption of the Notes as a whole has been given, the
duration, redemption dates, redemption type (i.e., par, premium or make-whole,
including in the case of make-whole, Reinvestment Spread), redemption prices (if
applicable), Commencement Date, Interest Payment Dates and interest rate mode
(i.e., Fixed Rate Mode or Floating Rate Mode) (and any other relevant terms) for
each Subsequent Spread Period will be established by 3:00 p.m., New York City
time, on the tenth Business Day prior to the Commencement Date of each
Subsequent Spread Period (the "Duration/Mode Determination Date"). In addition,
the Spread for each Subsequent Spread Period will be established by 3:00 p.m.,
New York City time, on the eighth Business Day prior to the Commencement Date of
such Subsequent Spread Period (the "Spread Determination Date"). The Company
will request not later than seven nor more than 15 calendar days prior to any
Spread Determination Date, that DTC notify its Participants of such Spread
Determination Date and of the procedures that must be followed if any beneficial
owner of a Note wishes to tender such Note as described under "-- Tender at
Option of Beneficial Owners" below. This will be the only notice given by the
Company or the Remarketing Underwriter with respect to such Spread Determination
Date and procedures for tendering Notes. The term "Business Day" means any day
other than a Saturday or Sunday or a day on which banking institutions in The
City of New York are required or authorized to close and, in the case of Notes
in the Floating Rate Mode, that is also a London Business Day. The term "London
Business Day" means any day on which dealings in deposits in U.S. Dollars are
transacted in the London interbank market.
In the event that the Company and the Remarketing Underwriter do not agree
on the Spread for any Subsequent Spread Period, then the Company is required
unconditionally to repurchase and retire all of the Notes on the Tender Date at
a price equal to 100% of the principal amount thereof, together with accrued
interest to the Tender Date.
All percentages resulting from any calculation of any interest rate for the
Notes will be rounded, if necessary, to the nearest one hundred thousandth of a
percentage point, with five one millionths of a percentage point rounded upward
and all dollar amounts will be rounded to the nearest cent, with one-half cent
being rounded upward.
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<PAGE> 8
TENDER AT OPTION OF BENEFICIAL OWNERS
In the event the Company and the Remarketing Underwriter agree on the
Spread on the Spread Determination Date with respect to any Subsequent Spread
Period, the Company and the Remarketing Underwriter will enter into a
Remarketing Underwriting Agreement (the "Remarketing Underwriting Agreement") on
such Spread Determination Date, under which the Remarketing Underwriter will
agree, subject to the terms and conditions set forth therein, to purchase from
tendering Noteholders on the date immediately following the end of a Subsequent
Spread Period (the "Tender Date") all Notes with respect to which the
Remarketing Underwriter receives a Tender Notice as described below at 100% of
the principal amount thereof (the "Purchase Price"). In such event (except as
otherwise provided in the next succeeding paragraph), each beneficial owner of a
Note may, at such owner's option, upon giving notice as provided below (the
"Tender Notice"), tender such Note for purchase by the Remarketing Underwriter
on the Tender Date at the Purchase Price. The Purchase Price will be paid by the
Remarketing Underwriter in accordance with the standard procedures of DTC, which
currently provide for payments in same-day funds. Interest accrued on the Notes
with respect to the preceding interest period will be paid in the manner
described under "-- Book-Entry System" below and "-- Additional Terms of the
Notes" above. If such beneficial owner has an account at the Remarketing
Underwriter and tenders such Note through such account, such beneficial owner
will not be required to pay any fee or commission to the Remarketing
Underwriter. If such Note is tendered through a broker, dealer, commercial bank,
trust company or other institution, other than the Remarketing Underwriter, such
holder may be required to pay fees or commissions to such other institution. It
is currently anticipated that Notes so purchased by the Remarketing Underwriter
will be remarketed by it.
The Tender Notice must be received by the Remarketing Underwriter during
the period commencing on the calendar day following the Spread Determination
Date (or, if not a Business Day, on the next succeeding Business Day) and ending
at 12:00 p.m., New York City time, on the fifth Business Day following the
Spread Determination Date (or, if not a Business Day, on the next succeeding
Business Day) (the "Notice Date"). In order to ensure that a Tender Notice is
received on a particular day, the beneficial owner of Notes must direct his
broker or other designated Participant or Indirect Participant to give such
Tender Notice before the broker's cut-off time for accepting instructions for
that day. Different firms may have different cut-off times for accepting
instructions from their customers. Accordingly, beneficial owners should consult
the brokers or other Participants or Indirect Participants through which they
own their interests in the Notes for the cut-off times for such brokers, other
Participants or Indirect Participants. See "-- Book-Entry System" below. Except
as otherwise provided below, a Tender Notice shall be irrevocable. If a Tender
Notice is not received for any reason by the Remarketing Underwriter with
respect to any Note by 12:00 p.m., New York City time, on the Notice Date, the
beneficial owner of such Note shall be deemed to have elected not to tender such
Note for purchase by the Remarketing Underwriter, and the interest rate thereon
will be reset automatically to the new applicable interest rate on the
Commencement Date for the Subsequent Spread Period.
The Remarketing Underwriter will attempt, on a best efforts basis, to
remarket the tendered Notes at a price equal to 100% of the aggregate principal
amount so tendered. There is no assurance that the Remarketing Underwriter will
be able to remarket the entire principal amount of Notes tendered in a
remarketing. The Remarketing Underwriter shall also have the option, but not the
obligation, to purchase any tendered Notes at such price. The obligation of the
Remarketing Underwriter to purchase tendered Notes from the tendering
Noteholders will be subject to certain conditions and termination events
customary in the Company's public offerings, including a condition that no
material adverse change in the condition of the Company and its subsidiaries,
taken as a whole, shall have occurred since the Spread Determination Date. In
the event that the Remarketing Underwriter is unable to remarket some or all of
the tendered Notes and chooses not to purchase such tendered Notes, the Company
is obligated unconditionally to purchase and retire on the Tender Date the
remaining unsold tendered Notes at a price equal to 100% of the principal
amount, plus accrued interest, if any, to the applicable Tender Date.
No beneficial owner of any Note shall have any rights or claims under the
Remarketing Underwriting Agreement or against the Company or the Remarketing
Underwriter as a result of the Remarketing Underwriter's not purchasing such
Notes.
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If the Remarketing Underwriter does not purchase all Notes tendered for
purchase on any Tender Date, it will promptly notify the Company and the
Trustee.
The term "Remarketing Underwriter" means the nationally recognized
broker-dealer selected by the Company to act as Remarketing Underwriter. The
term "Rate Agent" means the entity selected by the Company as its agent to
determine (i) LIBOR and the interest rate on the Notes for any Interest Period
and/or (ii) the yield to maturity on the applicable United States Treasury
security that is used in connection with the determination of the applicable
Fixed Rate, and the ensuing applicable Fixed Rate. Pursuant to the Remarketing
Agreement, Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to act
as Remarketing Underwriter and Harris Trust and Savings Bank, the Trustee named
in the Indenture, has agreed to act as Rate Agent. The Company, in its sole
discretion, may change the Remarketing Underwriter and the Rate Agent for any
Subsequent Spread Period at any time on or prior to 3:00 p.m., New York City
time, on the Duration/Mode Determination Date relating thereto.
Each of the Rate Agent and the Remarketing Underwriter, in its individual
or any other capacity, may buy, sell, hold and deal in any of the Notes. Either
of such parties may exercise any vote or join in any action which any beneficial
owner of Notes may be entitled to exercise or take with like effect as if it did
not act in any capacity under the Remarketing Agreement. Either of such parties,
in its individual capacity, either as principal or agent, may also engage in or
have an interest in any financial or other transaction with the Company as
freely as if it did not act in any capacity under the Remarketing Agreement.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to November 16, 1998. On that date, on
each Commencement Date and on those Interest Payment Dates specified as
redemption dates by the Company on the Duration/Mode Determination Date in
connection with any Subsequent Spread Period, the Notes may be redeemed, at the
option of the Company, in whole or in part, upon notice thereof given at any
time during the 30-calendar-day period ending on the tenth Business Day prior to
the redemption date (provided that notice of any partial redemption must be
given at least 15 calendar days prior to the redemption date), in accordance
with the redemption type selected on the Duration/Mode Determination Date. In
the event that less than all of the outstanding Notes are to be redeemed, the
Notes to be redeemed shall be selected by such method as the Company shall deem
fair and appropriate. So long as the Global Note is held by DTC, the Company
will give notice to DTC, whose nominee is the record holder of all of the Notes,
and DTC will determine the principal amount to be redeemed from the account of
each Participant. This will be the only notice given by the Company or the
Remarketing Underwriter with respect to redemption of the Notes. A Participant
may determine to redeem from some beneficial owners (which may include a
Participant holding Notes for its own account) without redeeming from the
accounts of other beneficial owners. The Notes are also subject to redemption as
provided under "-- Tender at Option of Beneficial Owners" above.
The redemption type to be chosen by the Company and the Remarketing
Underwriter on the Duration/Mode Determination Date may be one of the following
as defined herein: (i) Par Redemption; (ii) Premium Redemption; or (iii)
Make-Whole Redemption. "Par Redemption" means redemption at a redemption price
equal to 100% of the principal amount thereof, plus accrued interest thereon, if
any, to the redemption date. "Premium Redemption" means redemption at a
redemption price or prices greater than 100% of the principal amount thereof,
plus accrued interest thereon, if any, to the redemption date, as determined on
the Duration/Mode Determination Date. "Make-Whole Redemption" means redemption
at a redemption price equal to the Make-Whole Amount (as defined below), if any,
with respect to such Notes. Unless otherwise specified by the Company on any
Duration/Mode Determination Date, the redemption type will be a Par Redemption.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note, an amount equal to the greater of (i) 100% of
their principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the applicable Treasury Yield plus the Reinvestment Spread,
plus accrued interest to the date of redemption.
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"Treasury Yield" means, with respect to any redemption date applicable to
the Notes, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means, with respect to the Notes, the United
States Treasury security selected by the Remarketing Underwriter as having a
maturity comparable to the remaining term of the Notes that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Comparable Treasury Price" means, with respect to any redemption date
applicable to the Notes, (i) the average of the applicable Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest of such applicable Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations. "Reference Treasury Dealer Quotations" means,
with respect to each Reference Treasury Dealer and any redemption date for the
Notes, the average, as determined by the Trustee, of the bid and asked prices
for the Comparable Treasury Issue for the Notes (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such
redemption date.
"Reference Treasury Dealer" means, with respect to the Notes offered
hereby, at least four primary U.S. Government securities dealers in New York
City as the Company or the Trustee shall select, which may include the
Remarketing Underwriter or an affiliate thereof.
"Reinvestment Spread" means, with respect to the Notes, a number, expressed
as a number of basis points or as a percentage, selected by the Company and
agreed to by the Remarketing Underwriter on the Duration/Mode Determination
Date.
BOOK-ENTRY SYSTEM
The Notes will be issuable only as registered securities and will be
represented by one certificate (the "Global Security") to be registered in the
name of the nominee of The Depository Trust Company ("DTC") or any successor
depositary (the "Depositary"). The Depositary will maintain the Notes in
denominations of $1,000 and integral multiples thereof through its book-entry
facilities. In accordance with its normal procedures, the Depositary will record
the interests of each Depositary participating firm ("Participant") in the
Notes, whether held for its own account or as a nominee for another person.
So long as the nominee of the Depositary is the registered owner of the
Notes, such nominee will be considered the sole owner or holder of the Notes for
all purposes under the Indenture and any applicable laws. Except as otherwise
provided below, a Beneficial Owner, as hereinafter defined, of interests in the
Notes will not be entitled to have the Notes represented by the Global Security
registered in their names, will not be entitled to receive a physical
certificate representing such ownership interest and will not be considered an
owner or holder of the Notes under the Indenture. A Beneficial Owner is the
person who has the right to sell, transfer or otherwise dispose of an interest
in the Notes and the right to receive the proceeds therefrom, as well as
interest, principal and premium (if any) payable in respect thereof. A
Beneficial Owner's interest in the Notes will be recorded, in integral multiples
of $1,000, on the records of the Participant that maintains such Beneficial
Owner's account for such purpose. In turn, the Participant's interest in such
Notes will be recorded, in integral multiples of $1,000, on the records of the
Depositary. Therefore, the Beneficial Owner must rely on the foregoing
arrangements to evidence its interest in the Notes. Beneficial ownership of the
Notes may be transferred only by compliance with the procedures of a Beneficial
Owner's Participant (e.g., brokerage firm) and the Depositary. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer or pledge beneficial interests in the Global Security.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account the DTC interests in the Global Security is
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<PAGE> 11
credited and only in respect of such portion of the aggregate principal amount
of Notes as to which such Participant or Participants has or have given such
direction. However, if there is an Event of Default under the Notes, DTC will
exchange the Global Security for certificated Notes, which it will distribute to
its Participants in accordance with its customary procedures.
The rights of ownership must be exercised through the Depositary and the
book-entry system. Notices that are to be given to registered owners by the
Company or the Trustee will be given only to the Depositary. It is expected that
the Depositary will forward the notices to the Participants by its usual
procedures, so that Participants may forward such notices to the Beneficial
Owners. Neither the Company nor the Trustee will have any responsibility or
obligation to assure that any notices are forwarded by the Depositary to any
Participant or by any Participant to the Beneficial Owners.
DTC has advised the Company and the Underwriter as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC was
created to hold securities of Participants and to facilitate the clearance and
settlement of securities transactions among Participants in such securities
through electronic book-entry changes in accounts of Participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the Underwriter),
banks, trust companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own DTC. Access to DTC's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participants, either directly or indirectly. Persons who are not Participants
may beneficially own securities held by DTC only through Participants. The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Settlement for the Notes will be made in immediately available funds. So
long as the Notes are subject to DTC's book-entry system, the Notes will trade
in DTC's Same-Day Funds Settlement system until maturity, and therefore DTC will
require that secondary trading activity in the Notes be settled in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (prospectively or retroactively) or possible differing
interpretations. The following discussion deals only with Notes held as capital
assets and does not purport to deal with persons in special tax situations, such
as financial institutions, banks, insurance companies, regulated investment
companies, dealers in securities or currencies, persons holding Notes as a hedge
against currency risks or as a position in a "straddle" for tax purposes, or
persons whose functional currency is not the United States dollar. It also does
not deal with holders other than original purchasers (except where otherwise
specifically noted). Persons considering the purchase of the Notes should
consult their own tax advisors concerning the application of United States
Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Notes arising
under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States or of any state thereof, (iii) an estate
the income of which is subject to United States Federal income taxation
regardless of its source, (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of the trust, or (v) any other person whose income or gain in respect
of a Note is effectively connected with the conduct of a
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United States trade or business. As used herein, the term "non-U.S. Holder"
means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. The Notes should constitute variable rate debt
instruments ("VRDI") and the interest payments received should be considered
"qualified stated interest" under section 1.1275-5 of the Treasury Regulations.
Based on this treatment, the interest received will be taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or received
(in accordance with the U.S. Holder's regular method of tax accounting).
Disposition of a Note. Based on the forgoing treatment, upon the sale,
exchange or retirement of a Note, a U.S. Holder generally will recognize taxable
gain or loss in an amount equal to the difference, if any, between the amount
realized upon the sale, exchange or retirement (other than amounts representing
accrued and unpaid interest which will be taxable as interest income) and such
U.S. Holder's adjusted tax basis in its Note. A U.S. Holder's adjusted tax basis
in a Note is generally equal to such U.S. Holder's initial investment in such
Note. In the case of a noncorporate U.S. Holder, any gain or loss recognized
upon the sale, exchange or retirement of a Note generally will be taxable at a
maximum rate of 20% if the U.S. Holder's holding period for the Note is more
than 18 months or at a maximum rate of 28% if such holding period is more than
one year but not more than 18 months.
Gain or Income Received by a Foreign Corporation. A foreign corporation
whose income or gain in respect of a Note is effectively connected with the
conduct of a United States trade or business, in addition to being subject to
regular U.S. income tax, may be subject to a branch profits tax equal to 30% of
its "effectively connected earnings and profits" within the meaning of the Code,
for the taxable year, as adjusted for certain items, unless it qualifies for a
lower rate or exemption under an applicable tax treaty (as modified by the
branch profits tax rules).
NON-U.S. HOLDERS
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on payments of principal, premium, if any, or interest on a Note,
or on any gain upon disposition or retirement of a Note, if (i) such non-U.S.
Holder does not own 10% or more of the shares of beneficial interest of the
Company and (ii) the last United States payor in the chain of payment (the
"Withholding Agent") has received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
signed by the beneficial owners of the Note under penalties of perjury
certifying that such owner is not a U.S. Holder and providing the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8 or
a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held though a securities clearing organization
or certain other financial institutions, the organization or institution may
provide a signed statement to the Withholding Agent. However, in such case, the
signed statement must be accompanied by a copy of the IRS Form W-8 or the
substitute form provided by the beneficial owner to the organization or
institution. Interest received or gain recognized by a non-U.S. Holder which
does not qualify for exemption from taxation will be subject to United States
Federal income tax and withholding tax a rate of 30% unless reduced or
eliminated by applicable tax treaty. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation related to holders thereof.
On October 6, 1997, the Internal Revenue Service (the "IRS") issued final
Treasury Regulations that revise the procedures for securing an exemption from
the 30% United States Federal withholding tax applicable to payments made after
December 31, 1998.
The Notes will not be includible in the estate of a non-U.S. Holder for
United States federal estate tax purposes unless the individual owns directly or
indirectly 10% or more of the shares of beneficial interest of the Company or,
at the time of such individual's death, payments in respect of the Notes would
have been effectively connected with the conduct by such individual of a trade
or business in the United States.
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BACKUP WITHHOLDING
Backup withholding of United States income tax at a rate of 31% may apply
to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note by (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated November 6, 1997, the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriter"), and the Underwriter has agreed
to purchase, the entire principal amount of the Notes.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is committed to purchase all of the Notes, if any are purchased.
The Underwriter has advised the Company that the Underwriter proposes to
offer the Notes from time to time for sale in negotiated transactions or
otherwise, at prices determined at the time of sale. The Underwriter may effect
such transactions by selling Notes to or through dealers and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter and any purchasers of Notes for whom they may
act as agent. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Notes may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of Notes by them may be deemed to be underwriting compensation.
The Notes are a new issue of securities with no established trading market.
The Company does not intend to apply for listing of the Notes on a national
securities exchange. The Company has been advised by the Underwriter that it
intends to make a market in the Notes as permitted by applicable laws and
regulations, but it is not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of or
any trading market for the Notes.
Until the distribution of the Notes is completed, rules of the Commission
may limit the ability of the Underwriter to bid for and purchase the Notes. As
an exception to these rules, the Underwriter is permitted to engage in certain
transactions that stabilize the price of the Notes. Such transactions consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price of
the Notes.
If the Underwriter creates a short position in the Notes in connection with
the offering, i.e., if it sells more of the Notes than are set forth on the
cover page of this Prospectus Supplement, the Underwriter may reduce that short
position by purchasing Notes in the open market.
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<PAGE> 14
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes. In addition, neither the
Company nor the Underwriter makes any representation that the Underwriter will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriter may be required to make in respect
thereof.
The Underwriter and its affiliates have provided investment banking
services to the Company, its subsidiaries or affiliates in the past, for which
they have received customary compensation and expense reimbursement, and may do
so again in the future.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by James V.
Derrick, Jr., Senior Vice President and General Counsel of the Company. Mr.
Derrick owns substantially less than 1% of the outstanding shares of Common
Stock of the Company. The validity of the Notes will be passed upon for the
Underwriter by Bracewell & Patterson, L.L.P. Bracewell & Patterson, L.L.P.
currently provides services to the Company and certain of its subsidiaries and
affiliates as outside counsel on matters unrelated to the issuance of the Notes.
S-14
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PROSPECTUS
[ENRON CORP. LOGO]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
------------------------
Enron Corp. ("Enron") may offer from time to time (i) secured or unsecured
debt securities ("Debt Securities") consisting of debentures, notes or other
secured or unsecured evidences of indebtedness in one or more series, and (ii)
shares of Preferred Stock, no par value ("Preferred Stock"), in one or more
series, which may be represented by depositary shares ("Depositary Shares")
evidenced by depositary receipts, or (iii) any combination of the foregoing, at
an aggregate initial public offering price not to exceed $1,000,000,000, at
prices and on terms to be determined at or prior to the time of sale. In
addition, Enron may offer from time to time up to 7.5 million shares of Enron
common stock, no par value ("Common Stock"), at prices and on terms to be
determined at or prior to the time of sale. Enron may offer from time to time
warrants to purchase up to 7.5 million shares of Common Stock ("Stock Warrants")
and Common Stock issuable upon exercise of Stock Warrants, 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 ("Offered Securities") will be set forth in an accompanying
Prospectus Supplement ("Prospectus Supplement"), together with the terms of the
offering of the Offered Securities, the initial price thereof and the net
proceeds from the sale thereof. The Prospectus Supplement will set forth with
regard to the particular Offered Securities, without limitation, the following:
(i) in the case of Debt Securities, the specific designation, aggregate
principal amount, authorized denomination, maturity, rate (which may be fixed or
variable) or method of calculation of interest and dates for payment thereof,
and any exchangeability, conversion, redemption, prepayment or sinking fund
provisions and any listing on a securities exchange, and (ii) in the case of
Preferred Stock, the designation, number of shares or fractional interests
therein, 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 listing on a securities exchange. If shares of
Preferred Stock are to be represented by Depositary Shares, the Prospectus
Supplement will set forth the fraction of a share of such Preferred Stock
represented by one Depositary Share. With regard to Stock Warrants, if any, the
Prospectus Supplement will contain a description of the Common Stock for which
each warrant is exercisable and the offering price, if any, exercise price,
duration, detachability, call provisions, and other principal terms of the
warrants.
Enron may sell the Offered Securities directly, through agents designated
from time to time or through underwriters or dealers. See "Plan of
Distribution." If any underwriters are involved in the sale of the Offered
Securities, the names of such underwriters and any applicable commissions and
discounts will be set forth in the related Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
------------------------
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 October 7, 1997.
<PAGE> 16
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
IN A PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ENRON.
NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER OF
ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
Enron is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the following Regional Offices of the Commission: Midwest
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Northeast Regional Office, 7 World Trade Center, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates or from the site maintained by the
Commission on the Internet World Wide Web at http://www.sec.gov. Enron's Common
Stock is listed on the New York, Midwest and Pacific Stock Exchanges. Reports,
proxy statements and other information concerning Enron can be inspected and
copied at the respective offices of these exchanges at 20 Broad Street, New
York, New York 10005; 120 South LaSalle Street, Chicago, Illinois 60603; and 301
Pine Street, San Francisco, California 94014.
This Prospectus constitutes a part of Registration Statements on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statements") filed with the Commission under the Securities Act of 1933 (the
"Securities Act") with respect to the Offered Securities. This Prospectus does
not contain all of the information set forth in such Registration Statements,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Reference is made to such Registration Statements and to the
exhibits relating thereto for further information with respect to Enron and the
Offered Securities. Any statements contained herein concerning the provisions of
any document filed as an exhibit to any of the Registration Statements or
otherwise filed with the Commission or incorporated by reference herein are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed for a more complete description of the matter involved. Each
such statement is qualified in its entirety by such reference.
2
<PAGE> 17
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Effective July 1, 1997, Enron Corp., a Delaware corporation ("Old Enron"),
was reincorporated in Oregon by means of a merger with and into Enron Oregon
Corp., an Oregon corporation, which changed its name to Enron Corp. upon
consummation of the merger. Unless the context otherwise requires, as used
herein the term "Enron" refers to Enron Corp., an Oregon corporation, and to Old
Enron, its predecessor Delaware corporation.
The following documents filed by Enron with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997;
(c) Current Reports on Form 8-K dated July 15, 1997, August 29, 1997
and September 17, 1997; and
(d) The description of Enron's capital stock set forth in Enron's
Registration Statement on Form 8-B filed on July 2, 1997.
The following documents filed by Old Enron with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Current Report on Form 8-K dated March 17, 1997;
(c) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; and
(d) Current Report on Form 8-K dated June 5, 1997.
Each document filed by Enron 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 Offered Securities pursuant hereto shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such document. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Enron will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to Secretary Division,
Enron Corp., at its principal executive offices, 1400 Smith Street, Houston,
Texas 77002 (telephone: 713-853-6161).
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<PAGE> 18
BUSINESS OF ENRON
Enron, an Oregon corporation, is an integrated natural gas and electricity
company headquartered in Houston, Texas. Essentially all of Enron's operations
are conducted through its subsidiaries and affiliates which are principally
engaged in the transportation and wholesale marketing of natural gas to markets
throughout the United States and internationally through approximately 36,000
miles of natural gas pipelines; the exploration for and production of natural
gas and crude oil in the United States and internationally; the production,
purchase, transportation and worldwide marketing of natural gas liquids and
refined petroleum products; the independent (i.e., non-utility) development,
promotion, construction and operation of power plants, natural gas liquids
facilities and pipelines in the United States and internationally; and the
non-price regulated purchasing and marketing of electricity and other energy
related commitments.
On July 1, 1997, Enron acquired Portland General Corporation, the parent
company of Portland General Electric Company ("PGE"), by means of a merger of
Portland General Corporation with and into Enron. As a result of the merger, PGE
is a subsidiary of Enron. PGE is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electricity in the State of
Oregon. PGE also sells energy to wholesale customers throughout the western
United States.
TRANSPORTATION AND OPERATION. Enron's operations include interstate
transmission of natural gas, construction, management and operation of natural
gas and natural gas liquids pipelines, liquids plants, clean fuel plants and
power facilities. Enron and its subsidiaries operate domestic interstate
pipelines extending from Texas to the Canadian border and across the southern
United States from Florida to California. Included in Enron's domestic
interstate natural gas pipeline operations are Northern Natural Gas Company
("Northern"), Transwestern Pipeline Company ("Transwestern"), and Florida Gas
Transmission Company ("Florida Gas") (indirectly 50% owned by Enron), and all
such pipelines are subject to the regulatory jurisdiction of the Federal Energy
Regulatory Commission. Each pipeline serves customers in a specific geographical
area: Northern, the upper Midwest; Transwestern, principally the California
market and pipeline interconnects on the east end of Transwestern's system; and
Florida Gas, the State of Florida. In addition, Enron holds a 13% interest in
Northern Border Partners, L.P., which owns a 70% interest in the Northern Border
Pipeline system. An Enron subsidiary operates the Northern Border Pipeline
system, which transports gas from western Canada to delivery points in the
midwestern United States.
DOMESTIC GAS AND POWER SERVICES. Through its wholly owned subsidiary Enron
Capital & Trade Resources Corp. and its affiliated companies ("ECT"), Enron
purchases natural gas, natural gas liquids, electricity and other energy
products through a variety of contractual arrangements, including both short-
term and long-term contracts, the arrangement of production payment and other
financing transactions, and other contractual arrangements. ECT markets these
energy products to local distribution companies, electric utilities,
cogenerators, and both commercial and industrial end-users. ECT also provides
price risk management services in connection with natural gas, natural gas
liquids and electricity transactions through both physical delivery and
financial arrangements.
ECT offers a broad range of non-price regulated natural gas merchant
services by tailoring a variety of supply and marketing options to its
customers' specific needs. ECT's strategy is to provide predictable pricing,
reliable delivery and low cost capital to its customers. ECT provides these
services through a variety of instruments, including forward contracts, swap
agreements and other contractual commitments.
Enron recently established Enron Energy Services ("EES") to pursue the
significant growth opportunities in anticipation of a fully competitive retail
natural gas and electricity market. As states begin to deregulate their natural
gas and electricity markets, and as these markets continue to converge, EES's
goal is to provide end-users with a broad range of energy choices at more
competitive prices. EES has participated in selected natural gas and electric
retail marketing pilot programs, including a state-wide electricity pilot in New
Hampshire, where individual customers are free to select the power provider of
their choice. EES will continue to participate in such programs.
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<PAGE> 19
INTERNATIONAL OPERATIONS AND DEVELOPMENT. Enron's international activities
principally involve the independent (non-utility) development, acquisition,
financing, promotion and operation of natural gas and power projects in emerging
markets, and the marketing of natural gas liquids and other liquid fuels.
Development projects are focused on power plants, gas processing and terminaling
facilities, and gas pipelines, while marketing activities center on fuels used
by or transported through such facilities. Enron's international activities
include management of direct and indirect ownership interests in and operation
of power plants in England, Germany, Guatemala, the Dominican Republic, the
Philippines and China; pipeline systems in Argentina and Colombia; retail gas
and propane sales in the Caribbean basin; processing of natural gas liquids at
Teesside, England; and marketing of natural gas liquids and other liquid fuels
worldwide. Enron is also involved in power, pipeline and liquefied natural gas
projects in varying stages of development in China, India, Puerto Rico, Italy,
Turkey, Qatar, Vietnam, Israel, Jordan, Bolivia, Brazil, Indonesia, Poland and
elsewhere.
EXPLORATION AND PRODUCTION. Substantially all of Enron's natural gas and
crude oil exploration and production operations are conducted by its subsidiary,
Enron Oil & Gas Company ("EOG"). EOG is engaged in the exploration for, and
development and production of, natural gas and crude oil primarily in major
producing basins in the United States, as well as in Canada, Trinidad, India
and, to a lesser extent, selected other international areas. At December 31,
1996, EOG had estimated net proved natural gas reserves of 3,675 billion cubic
feet, including 1,180 billion cubic feet of proved undeveloped methane reserves
in the Big Piney, Wyoming deep Paleozoic formations, and estimated net proved
crude oil, condensate and natural gas liquids reserves of 55 million barrels,
and at such date, approximately 74% of EOG's reserves (on a natural gas
equivalent basis) was located in the United States, 9% in Canada, 10% in
Trinidad, and 7% in India. Enron currently owns 53% of the outstanding common
stock of EOG.
Enron, an Oregon corporation, has its principal executive offices at 1400
Smith Street, Houston, Texas 77002, and its telephone number is 713-853-6161.
5
<PAGE> 20
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities will be added to
Enron's general funds and are expected to be used to retire existing
indebtedness and for general corporate purposes, except as may be stated in a
Prospectus Supplement.
RATIO OF ENRON'S EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.......... (1) 3.00 2.92 2.34 1.98 1.74
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................. (1) 2.58 2.49 2.13 1.88 1.64
</TABLE>
- ---------------
(1) For the six months ended June 30, 1997, earnings were inadequate to cover
fixed charges and combined fixed charges and preferred stock dividends by
$305 million and $371 million, respectively.
The ratios of earnings to fixed charges and preferred stock dividends are
based on continuing operations. "Earnings" represent the aggregate of (a) the
pre-tax income of Enron and its majority owned subsidiaries, (b) Enron's share
of pre-tax income of its 50% owned companies, (c) any income actually received
from less than 50% owned companies, and (d) fixed charges, net of interest
capitalized. "Fixed Charges" represent interest (whether expensed or
capitalized), amortization of debt discount and expense and that portion of
rentals considered to be representative of the interest factor. "Fixed Charges
and Preferred Stock Dividends" represent fixed charges (as described above) and
preferred stock dividend requirements of Enron and its majority owned
subsidiaries.
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<PAGE> 21
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate (the "Offered Debt Securities"). The particular
terms of the Offered Debt Securities and the extent, if any, to which such
general provisions may apply to the Offered Debt Securities will be described in
the Prospectus Supplement relating to such Offered Debt Securities.
The Offered Debt Securities will be secured or unsecured obligations of
Enron. Any such unsecured obligations will be issued under an Indenture (the
"Indenture") between Enron and Harris Trust and Savings Bank, as Trustee (the
"Trustee"), dated as of November 1, 1985, as supplemented. The following
statements are summaries of certain provisions contained in the Indenture, the
form of which is filed as an exhibit to the Registration Statements of which
this Prospectus is a part. Reference is hereby made to the Indenture for full
and complete statements of such terms and provisions, including the definitions
of certain terms used herein. Wherever reference is made in the following
statements to a particular section of the Indenture, such section shall be
deemed to be incorporated in such statements as a part thereof. If Offered Debt
Securities will be secured obligations of Enron, they will be issued under a
separate indenture, which will be described in the Prospectus Supplement
relating to such Offered Debt Securities.
GENERAL
The Indenture does not limit the aggregate principal amount of unsecured
debentures, notes or other evidences of indebtedness of Enron (the "Indenture
Securities") which may be issued thereunder from time to time in one or more
series by Enron, and Enron may in the future issue additional Indenture
Securities (in addition to the Offered Debt Securities) under the Indenture. At
August 31, 1997, an aggregate of $1,842,000,000 principal amount of Indenture
Securities of Enron was issued and outstanding under the Indenture. Reference is
made to the Prospectus Supplement for the following terms of the Offered Debt
Securities: (i) the title of the Offered Debt Securities; (ii) any limit upon
the aggregate principal amount of the Offered Debt Securities; (iii) the date or
dates on which the principal of the Offered Debt Securities is payable; (iv) the
rate or rates (which may be fixed or variable), or the method by which such rate
or rates shall be determined, at which the Offered Debt Securities shall bear
interest, if any, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the interest payment
dates on which such interest shall be payable and the regular record date for
the interest payable on any interest payment date; (v) the place or places where
the principal of (and premium, if any) and interest on Offered Debt Securities
shall be payable; (vi) the period or periods within which, the price or prices
at which and the terms and conditions upon which Offered Debt Securities may be
redeemed, in whole or in part, at the option of Enron, if Enron is to have that
option; (vii) the obligation, if any, and the option, if any, of Enron to
redeem, purchase or repay 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 at which and the terms and conditions
upon which Offered Debt Securities shall be redeemed, purchased or repaid in
whole or in part, pursuant to such obligation or option; (viii) any trustees,
paying agents, transfer agents or registrars with respect to Offered Debt
Securities; and (ix) any other terms of the Offered Debt Securities (which terms
shall not be inconsistent with the provisions of the Indenture). (Section 301.)
Enron will maintain in each place specified by it for payment of any series
of Offered Debt Securities an office or agency where Offered Debt Securities of
that series may be presented or surrendered for payment, where Offered Debt
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon Enron in respect of the
Offered Debt Securities of that series and the Indenture may be served.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or integral multiples thereof.
(Section 302.) No service charge will be made for any transfer or exchange of
7
<PAGE> 22
such Offered Debt Securities, but Enron may require payment of a sum sufficient
to cover any tax or other governmental charge payable in relation thereto.
(Section 305.)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Material federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof. (Section 101.)
LIMITATIONS ON MORTGAGES AND LIENS
The Indenture provides that so long as any of the Indenture Securities
issued under the Indenture (including the Offered Debt Securities) are
outstanding, Enron will not, and will not permit any Subsidiary (as defined in
the Indenture and herein) to, pledge, mortgage or hypothecate, or permit to
exist, except in favor of Enron or any Subsidiary, any mortgage, pledge or other
lien upon, any Principal Property (as defined in the Indenture and herein) at
any time owned by it, to secure any indebtedness (as defined in the Indenture),
unless effective provision is made whereby outstanding Indenture Securities
(including the Offered Debt Securities) will be equally and ratably secured with
any and all such indebtedness and with any other indebtedness similarly entitled
to be equally and ratably secured. This restriction does not apply to prevent
the creation or existence of: (a) mortgages, pledges, liens or encumbrances on
any property held or used by Enron or a Subsidiary in connection with the
exploration for, development of or production of, oil, gas, natural gas
(including liquified gas and storage gas), other hydrocarbons, helium, coal,
metals, minerals, steam, timber, geothermal or other natural resources or
synthetic fuels, such properties to include, but not be limited to, Enron's or a
Subsidiary's interest in any mineral fee interests, oil, gas or other mineral
leases, royalty, overriding royalty or net profits interests, production
payments and other similar interests, wellhead production equipment, tanks,
field gathering lines, leasehold or field separation and processing facilities,
compression facilities and other similar personal property and fixtures; (b)
mortgages, pledges, liens or encumbrances on oil, gas, natural gas (including
liquified gas and storage gas), other hydrocarbons, helium, coal, metals,
minerals, steam, timber, geothermal or other natural resources or synthetic
fuels produced or recovered from any property, an interest in which is owned or
leased by Enron or a Subsidiary; (c) mortgages, pledges, liens or encumbrances
(or certain extensions, renewals or refundings thereof) upon any property
acquired before or after the date of the Indenture, created at the time of
acquisition or within one year thereafter to secure all or a portion of the
purchase price thereof, or existing thereon at the date of acquisition, whether
or not assumed by Enron or a Subsidiary, provided that every such mortgage,
pledge, lien or encumbrance applies only to the property so acquired and fixed
improvements thereon; (d) mortgages, pledges, liens or encumbrances upon any
property acquired before or after the date of the Indenture by any corporation
that is or becomes a Subsidiary after the date of the Indenture ("Acquired
Entity"), provided that every such mortgage, pledge, lien or encumbrance (1)
shall either (i) exist prior to the time the Acquired Entity becomes a
Subsidiary or (ii) be created at the time the Acquired Entity becomes a
Subsidiary or within one year thereafter to secure all or a portion of the
acquisition price thereof and (2) shall only apply to those properties owned by
the Acquired Entity at the time it becomes a Subsidiary or thereafter acquired
by it from sources other than Enron or any other Subsidiary; (e) pledges of
current assets, in the ordinary course of business, to secure current
liabilities; (f) deposits to secure public or statutory obligations; (g) liens
to secure indebtedness other than Funded Debt (as defined in the Indenture and
herein); (h) mortgages, pledges, liens or encumbrances upon any office, data
processing or transportation equipment; (i) mortgages, pledges, liens or
encumbrances created or assumed by Enron or a 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 the acquisition or construction
of property to be used by Enron or a Subsidiary; (j) pledges or assignments of
accounts receivable or conditional sales contracts or chattel mortgages and
evidences of indebtedness secured thereby, received in connection with the sale
by Enron or a
8
<PAGE> 23
Subsidiary of goods or merchandise to customers; or (k) certain other liens or
encumbrances. (Section 1007.)
Notwithstanding the foregoing, Enron or a Subsidiary may issue, assume or
guarantee indebtedness secured by a mortgage which would otherwise be subject to
the foregoing restrictions in an aggregate amount which, together with all other
indebtedness of Enron or a Subsidiary secured by a mortgage which (if originally
issued, assumed or guaranteed at such time) would otherwise be subject to the
foregoing restrictions (not including secured indebtedness permitted under the
foregoing exceptions), does not at the time exceed 10% of the Consolidated Net
Tangible Assets (total assets less (a) total current liabilities, excluding
indebtedness due within 12 months, and (b) goodwill, patents and trademarks) of
Enron, as shown on the audited consolidated financial statements of Enron as of
the end of the fiscal year preceding the date of determination. (Section 1007.)
The holders of at least 50% in principal amount of the outstanding
Indenture Securities under the Indenture (including the Offered Debt Securities)
may waive compliance by Enron with the covenant contained in Section 1007 of the
Indenture (and certain other covenants of Enron). (Section 1009.)
The Indenture defines the term "Subsidiary" to mean a corporation all of
the voting shares (that is, shares entitled to vote for the election of
directors, but excluding shares entitled so to vote only upon the happening of
some contingency unless such contingency shall have occurred) of which shall be
owned by Enron or by one or more Subsidiaries or by Enron and one or more
Subsidiaries. The term "Principal Property" is defined to mean any oil or gas
pipeline, gas processing plant or chemical plant located in the United States,
except any such property, pipeline or plant that in the opinion of the Board of
Directors of Enron is not of material importance to the total business conducted
by Enron and its Subsidiaries. "Principal Property" does not include any oil or
gas property or the production or any proceeds of production from an oil or gas
producing property or the production or any proceeds of production of gas
processing plants or oil or gas or petroleum products in any pipeline. (Section
101.)
The term "indebtedness", as applied to Enron or any Subsidiary, is defined
to mean bonds, debentures, notes and other instruments representing obligations
created or assumed by any such corporation for the repayment of money borrowed
(other than unamortized debt discount or premium). All indebtedness secured by a
lien upon property owned by Enron or any Subsidiary and upon which indebtedness
any such corporation customarily pays interest, even though such corporation has
not assumed or become liable for the payment of such indebtedness, is also
deemed to be indebtedness of any such corporation. All indebtedness for money
borrowed incurred by other persons which is directly guaranteed as to payment of
principal by Enron or any Subsidiary is for all purposes of the Indenture deemed
to be indebtedness of any such corporation, but no other contingent obligation
of any such corporation in respect of indebtedness incurred by other persons is
for any purpose deemed indebtedness of such corporation. Indebtedness of Enron
or any Subsidiary does not include (i) amounts which are payable only out of all
or a portion of the oil, gas, natural gas, helium, coal, metals, minerals,
steam, timber or other natural resources produced, derived or extracted from
properties owned or developed by such corporation; (ii) any amount representing
capitalized lease obligations; (iii) any indebtedness incurred to finance oil,
gas, natural gas, helium, coal, metals, minerals, steam, timber, hydrocarbons or
geothermal or other natural resources or synthetic fuel exploration or
development, payable, with respect to principal and interest, solely out of the
proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons or geothermal or other natural resources or synthetic fuel
to be produced, sold and/or delivered by Enron or any Subsidiary; (iv) indirect
guarantees or other contingent obligations in connection with the indebtedness
of others, including agreements, contingent or otherwise, with such other
persons or with third persons with respect to, or to permit or ensure the
payment of, obligations of such other persons, including, without limitation,
agreements to purchase or repurchase obligations of such other persons,
agreements to advance or supply funds to or to invest in such other persons or
agreements to pay for property, products or services of such other persons
(whether or not conferred, delivered or rendered) and any demand charge,
throughput, take-or-pay, keep-well, make-whole, cash deficiency, maintenance of
working capital or earnings or similar agreements; and (v) any guarantees with
respect to lease or other similar periodic payments to be made by other persons.
(Section 101.)
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<PAGE> 24
The term "Funded Debt" as applied to any corporation means all indebtedness
incurred, created, assumed or guaranteed by such corporation, or upon which it
customarily pays interest charges, which matures, or is renewable by such
corporation to a date, more than one year after the date as of which Funded Debt
is being determined; provided, however, that the term "Funded Debt" shall not
include (i) indebtedness incurred in the ordinary course of business
representing borrowings, regardless of when payable, of such corporation from
time to time against, but not in excess of the face amount of, its installment
accounts receivable for the sale of appliances and equipment sold in the regular
course of business or (ii) advances for construction and security deposits
received by such corporation in the ordinary course of business. (Section 101.)
The foregoing limitations on mortgages, pledges and liens are intended to
limit other creditors of Enron from obtaining preference or priority over
holders of the Indenture Securities issued under the Indenture, but are not
intended to prevent other creditors from sharing equally and ratably and without
preference ("pari passu") over the holders of such Indenture Securities. While
such limitations on mortgages and liens do provide protection to the holders of
the Indenture Securities, there are a number of exceptions to such restrictions
which could result in certain assets of Enron and its Subsidiaries being
encumbered without equally and ratably securing the Indenture Securities issued
under the Indenture. Specifically, the restrictions apply only to pledges,
mortgages or liens upon "Principal Property" (as defined in the Indenture and
herein) to secure any "indebtedness" (as defined in the Indenture and herein),
unless effective provision is made whereby outstanding Securities will be
equally and ratably secured with any such indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. There are
certain exceptions to the definition of "indebtedness," which are enumerated in
the Indenture and herein. In addition, the restrictions do not apply to prevent
the creation or existence of mortgages, pledges, liens or encumbrances on
certain types of properties or pursuant to certain types of transactions, all as
enumerated in the Indenture and above. Also, up to 10% of Consolidated Net
Tangible Assets (as defined in the Indenture and herein) is not subject to the
mortgage and lien limitations contained in the Indenture.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Indenture Securities would not necessarily
afford holders of the Indenture Securities protection in the event of a highly
leveraged or other transaction involving Enron that may adversely affect
holders.
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture provides that, with the consent of
the holders of not less than 50% in principal amount of all outstanding
Indenture Securities (including, where applicable, the Offered Debt Securities)
affected thereby, Enron and the Trustee may enter into a supplemental indenture
for the purpose of adding to, changing or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of
Indenture Securities under the Indenture. Notwithstanding the foregoing, the
consent of the holder of each outstanding Indenture Security affected thereby
will be required to: (a) change the Stated Maturity (as defined in the
Indenture) of the principal of, or any installment of principal of or interest
on, any Indenture Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change any Place of Payment (as defined in the Indenture) where, or change the
coin or currency in which, any Indenture Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date, as defined in the Indenture); (b)
reduce the percentage in principal amount of the outstanding Indenture
Securities of any series, the consent of whose holders is required for any
supplemental indenture or for any waiver provided for in the Indenture; or (c)
with certain exceptions, modify any of the provisions of the sections of the
Indenture which concern waivers of past defaults, waivers of certain covenants
or consent to supplemental indentures, except to increase the percentage of
principal amount of Indenture Securities of any series, the holders of which are
required to effect such waiver or consent, or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each outstanding Indenture Security affected
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<PAGE> 25
thereby. The Indenture provides that a supplemental indenture which changes or
eliminates any covenant or other provision of the Indenture which has expressly
been included solely for the benefit of one or more particular series of
Indenture Securities, or which modifies the rights of the holders of Indenture
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under the Indenture of the holders of
Indenture Securities of any other series. (Section 902.)
EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
Under the Indenture, the term "Event of Default" with respect to any series
of Indenture Securities, means any one of the following events which shall have
occurred and is continuing: (a) default in the payment of any interest upon any
Indenture Security of that series when it becomes due and payable or default in
the payment of any mandatory sinking fund payment provided for by the terms of
any series of Indenture Securities, and continuance of such default for a period
of 30 days; (b) default in the payment of the principal of (or premium, if any,
on) any Indenture Security of that series at its maturity; (c) default in the
performance, or breach, of any covenant or warranty of Enron in the Indenture
(other than a covenant or warranty a default in the performance of which or the
breach of which is otherwise specifically dealt with in the Indenture or which
has been expressly included in the Indenture solely for the benefit of one or
more series of Indenture Securities other than that series), and continuance of
such default or breach for 60 days after there has been given to Enron by the
Trustee, or to Enron and the Trustee by the holders of at least 25% in principal
amount of all outstanding Indenture Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" under the Indenture; or (d) certain events involving
Enron in bankruptcy, receivership or other insolvency proceedings or an
assignment for the benefit of creditors. (Section 501.)
If an Event of Default described in clause (a) or (b) in the foregoing
paragraph has occurred and is continuing with respect to Indenture Securities of
any series, the Indenture provides that the Trustee or the holders of not less
than 25% in principal amount of the outstanding Indenture Securities of that
series may declare the principal amount of all of the Indenture Securities of
that series to be due and payable immediately, and upon any such declaration
such principal amount shall become immediately due and payable. If an Event of
Default described in clause (c) or (d) of the foregoing paragraph occurs and is
continuing, the Trustee or the holders of not less than 25% in principal amount
of all of the Indenture Securities then outstanding may declare the principal
amount of all of the Indenture Securities to be due and payable immediately, and
upon any such declaration such principal amount shall become immediately due and
payable. (Section 502.)
A default under other indebtedness of Enron is not an Event of Default
under the Indenture, and an Event of Default under one series of Indenture
Securities will not necessarily be an Event of Default under another series.
At any time after such a declaration of acceleration with respect to
Indenture Securities of any series (or of all series, as the case may be) has
been made and before judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in principal amount of the
outstanding Indenture Securities of that series (or of all series, as the case
may be) may rescind and annul such declaration and its consequences, if, subject
to certain conditions, all Events of Default with respect to Indenture
Securities of that series (or of all series, as the case may be), other than the
non-payment of the principal of the Indenture Securities due solely by such
declaration of acceleration, have been cured or waived and all payments due
(other than by acceleration) have been paid or deposited with the Trustee.
(Section 502.) With certain exceptions, the holders of not less than a majority
in principal amount of the outstanding Indenture Securities of any series, on
behalf of the holders of all the Indenture Securities of such series, may waive
any past default described in clause (a) or (b) of the first paragraph of this
heading "Events of Default and Rights Upon Default" (or, in the case of a
default described in clause (c) or (d) of such paragraph, the holders of a
majority in principal amount of all outstanding Indenture Securities may waive
any such past default), and its consequences, except a default (a) in the
payment of the principal of (or premium, if any) or interest on any Indenture
Security, or (b) in respect of a covenant or provision of the Indenture which
under the Indenture cannot be
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modified or amended without the consent of the holder of each outstanding
Indenture Security of such series affected. (Section 513.)
The holders of not less than a majority in principal amount of the
Indenture Securities of any series at the time outstanding are empowered under
the terms of the Indenture, subject to certain limitations, to 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. (Section
512.)
The Indenture further provides that no holder of an Indenture Security of
any series may enforce the Indenture except in the case of failure by the
Trustee to act for 60 days after notice of a continuing Event of Default with
respect to the Indenture Securities of that series and after request by the
holders of not less than 25% in principal amount of the outstanding Indenture
Securities of such series and the offer to the Trustee of reasonable indemnity,
but this provision will not prevent a holder of any Indenture Security from
enforcing the payment of the principal of, and interest on, such holder's
Indenture Security. (Sections 507 and 508.)
The Indenture requires that Enron deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officer's Certificate, stating whether to
the best knowledge of the signers thereof Enron is in default in the performance
and observance of certain of the terms of the Indenture and, if so, specifying
each such default and the nature and status thereof of which the signers may
have knowledge. (Section 1008.)
DISCHARGE OF INDENTURE
With certain exceptions, Enron may discharge its obligations under the
Indenture with respect to any series of Indenture Securities by (i) paying or
causing to be paid the principal of (and premium, if any) and interest on all
the Indenture Securities of such series outstanding, as and when the same shall
become due and payable; (ii) delivering to the Trustee all outstanding Indenture
Securities of such series for cancellation; or (iii) entering into an agreement
in form and substance satisfactory to Enron and the Trustee providing for the
creation of an escrow fund and depositing in trust with the Trustee, as escrow
agent of such fund, sufficient funds in cash and/or Eligible Obligations and/or
U.S. Government Obligations, maturing as to principal and interest in such
amounts and at such times as will be sufficient to pay at the Stated Maturity or
Redemption Date all such Indenture Securities of such series not previously
delivered to the Trustee for cancellation, including principal (and premium, if
any) and interest to the Stated Maturity or Redemption Date. (Section 401.)
The Indenture defines "Eligible Obligations" to mean interest bearing
obligations as a result of the deposit of which the Indenture Securities are
rated in the highest generic long-term debt rating category assigned to legally
defeased debt by one or more nationally recognized rating agencies. (Section
101.)
For federal income tax purposes, there is a substantial risk that a legal
defeasance of a series of Indenture Securities by the deposit of cash, Eligible
Obligations or U.S. Government Obligations in a trust would be characterized by
the Internal Revenue Service or a court as a taxable exchange by the holders of
the Indenture Securities of that series for either (i) an issue of obligations
of the defeasance trust or (ii) a direct interest in the cash and/or Eligible
Obligations and/or U.S. Government Obligations held in the defeasance trust. If
the defeasance were so characterized, then a holder of an Indenture Security of
the series defeased would be: (i) required to recognize gain or loss (which
would be capital gain or loss if the Indenture Securities were held as a capital
asset) at the time of the defeasance as if the Indenture Security had been sold
at such time for an amount equal to the amount of cash and the fair market value
of the Eligible Obligations and/or U.S. Government Obligations held in the
defeasance trust; (ii) required to include in income in each taxable year the
interest and any original issue discount or gain or loss attributable to either
such defeasance trust obligations or such securities, as the case may be; and
(iii) subject to the market discount provisions of the Internal Revenue Code as
they may pertain to such defeasance trust obligations or such securities. As a
result, a holder of an Indenture Security may be required to pay taxes on any
such gain or income even though such holder may not have received any cash
therefrom. Prospective investors are urged to consult their own advisors as to
the tax consequences
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of an actual or legal defeasance, including the applicability and effect of tax
laws other than federal income tax law.
CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture. Such bank
also acts as a depository of funds for, makes loans to, and performs other
services for, Enron in the normal course of business, including acting as
trustee under other indentures of Enron. The corporate trust office of the
Trustee is located at 311 West Monroe, Chicago, Illinois, 60690.
The Trustee may resign from its duties with respect to the Indenture at any
time or may be removed by Enron. If the Trustee resigns, is removed or becomes
incapable of acting as Trustee or a vacancy occurs in the office of the Trustee
for any reason, a successor Trustee shall be appointed in accordance with the
provisions of the Indenture. (Article Six.)
The Indenture contains the provisions required by the Trust Indenture Act
of 1939 with reference to the disqualification of the Trustee if it shall have
or acquire any "conflicting interest", as therein defined. (Section 608.) The
Indenture also contains certain limitations on the right of the Trustee, as a
creditor of Enron, to obtain payment of claims in certain cases, or to realize
on certain property received by it in respect of any such claims, as security or
otherwise. (Section 613.)
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DESCRIPTION OF ENRON CORP. CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
At August 31, 1997, the authorized capital stock of Enron was 616,500,000
shares, consisting of:
(a) 16,500,000 shares of Preferred Stock, no par value, of which:
(i) 1,338,168 shares of Cumulative Second Preferred Convertible Stock
were outstanding, and (ii) 35.568509 shares of 9.142% Perpetual Second
Preferred Stock were issued and held by an Enron subsidiary; and
(b) 600,000,000 shares of Common Stock, no par value (the "Common
Stock"), of which 298,533,747 shares were outstanding.
The following descriptions of certain of the provisions of the Amended and
Restated Articles of Incorporation of Enron (the "Enron Charter") and the Bylaws
of Enron ("Enron Bylaws") are summaries and do not purport to be complete, and
are qualified in their entirety by reference to the Enron Charter and the Enron
Bylaws filed as exhibits to this Registration Statement.
COMMON STOCK
Enron is authorized to issue up to 600,000,000 shares of Enron Common
Stock. The holders of Enron Common Stock are entitled to one vote for each share
on all matters submitted to a vote of shareholders and do not have cumulative
voting rights in the election of directors. The holders of Enron Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by
the Board of Directors of Enron out of legally available funds subject to the
rights of any preferred stock. In the event of liquidation, dissolution or
winding up of Enron, the holders of Enron Common Stock are entitled to share
ratably in all assets of Enron remaining after provision for payment of
liabilities and satisfaction of the liquidation preference of any shares of
Enron Preferred Stock that may be outstanding. The holders of Enron Common Stock
have no preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of Enron Common Stock are subject to those
of holders of Enron Preferred Stock, including any series of Enron Preferred
Stock issued in the future.
PREFERRED STOCK
The following is a general description of the terms of the Preferred Stock
of Enron. The particular terms of any series of Preferred Stock offered hereby
("Offered Preferred Stock") will be set forth in the Prospectus Supplement
relating thereto. The rights, preferences, privileges and restrictions,
including dividend rights, voting rights, terms of redemption and liquidation
preferences, of the Offered Preferred Stock of each series will be fixed or
designated pursuant to a certificate of designations adopted by the Board of
Directors or a duly authorized committee thereof. The description of Preferred
Stock set forth below and the description of the terms of a particular series of
Offered Preferred Stock that will be set forth in a Prospectus Supplement do not
purport to be complete and are qualified in their entirety by reference to the
certificate of designations relating to such series.
The Offered Preferred Stock shall rank in preference to the Common Stock as
to payment of dividends and as to distribution of assets of Enron upon the
liquidation, dissolution or winding up of Enron. Upon issuance against full
payment of the purchase price therefor, shares of Offered Preferred Stock will
be fully paid and nonassessable.
Enron is authorized to issue up to 16,500,000 shares of Preferred Stock. An
aggregate of 1,370,000 shares of Enron Preferred Stock are designated the
Cumulative Second Preferred Convertible Stock ("Enron Convertible Preferred
Stock"), and an aggregate of 35.568509 shares of Enron Preferred Stock are
designated the 9.142% Perpetual Second Preferred Stock ("Enron 9.142% Preferred
Stock").
In addition to the Enron Convertible Preferred Stock and the Enron 9.142%
Preferred Stock, the Enron Board of Directors has authority, without shareholder
approval (except to the extent that holders of
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any series of Enron Preferred Stock are entitled by their terms to class voting
rights), to issue shares of Enron Preferred Stock in one or more series and to
determine the number of shares, designations, dividend rights, conversion
rights, voting power, redemption rights, liquidation preferences and other terms
of any such series. The issuance of Enron Preferred Stock, while providing
desired flexibility in connection with possible acquisitions and other corporate
purposes, could adversely affect the voting power of holders of Enron Common
Stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation and could have the effect of delaying, deferring or
preventing a change in control of Enron.
ENRON CONVERTIBLE PREFERRED STOCK
The following summary of the terms of the Enron Convertible Preferred Stock
is qualified in its entirety by reference to the form of series designation for
the Enron Convertible Preferred Stock filed as an exhibit to this registration
statement.
The annual rate of dividends payable on shares of the Enron Convertible
Preferred Stock is the greater of $10.50 per share or the dividend amount
payable on the number of shares of Enron Common Stock into which one share of
Enron Convertible Preferred Stock are convertible (currently 13.652 shares,
subject to adjustment). Such dividends are payable quarterly on the first days
of January, April, July and October. These dividend rights are superior to the
dividend rights of the Enron Common Stock and rank equally with the dividend
rights on the Enron 9.142% Preferred Stock.
The amount payable on shares of the Enron Convertible Preferred Stock in
the event of any involuntary or voluntary liquidation, dissolution or winding up
of the affairs of Enron is $100 per share, together with accrued dividends to
the date of distribution or payment. The liquidation rights of the Enron
Convertible Preferred Stock are superior to the Enron Common Stock and rank
equally with the liquidation rights of the Enron 9.142% Preferred Stock. The
Enron Convertible Preferred Stock is redeemable at the option of Enron at any
time, in whole or in part, at a redemption price of $100 per share, together
with accrued dividends to the date of distribution or payment. Each share of
Enron Convertible Preferred Stock is convertible initially into 13.652 shares of
Enron Common Stock at any time at the option of the holder (which conversion
rate is and will be subject to certain adjustments).
Holders of Enron Convertible Preferred Stock are entitled to vote together
with the Enron Common Stock on all matters submitted to a vote of Enron
shareholders, with each share of Enron Convertible Preferred Stock having a
number of votes equal to the number of shares of Enron Common Stock into which
one share of Enron Convertible Preferred Stock is convertible. In addition,
holders of Enron Convertible Preferred Stock are entitled to certain class
voting rights, including (unless provision is made for redemption of such
shares) (a) the requirement for approval by the holders of at least two-thirds
of the Enron Convertible Preferred Stock (voting together with all other shares
of parity stock similarly affected) to effect (i) an amendment to the Enron
Charter or Bylaws that would affect adversely the voting powers, rights or
preferences of the holders of the Enron Convertible Preferred Stock or reduces
the time for any notice to which the holders of the Enron Convertible Preferred
Stock may be entitled, (ii) the authorization, creation or issuance of, or the
increase in the authorized amount of, any stock of any class or series or any
security convertible into stock of any class or series ranking prior to the
Enron Convertible Preferred Stock, (iii) the voluntary dissolution, liquidation
or winding up of the affairs of Enron, or the sale, lease or conveyance by Enron
of all or substantially all of its property or assets, or (iv) the purchase or
redemption (for sinking fund purposes or otherwise) of less than all of the
Enron Convertible Preferred Stock and other parity stock at the time outstanding
unless the full dividends on all shares of Enron Convertible Preferred Stock
then outstanding shall have been paid or declared and a sum sufficient for
payment thereof set apart, and (b) the requirement for approval by the holders
of at least a majority of the Enron Convertible Preferred Stock (voting together
with all other shares of parity stock similarly affected), to effect (i) the
authorization, creation or issuance of, or the increase in the authorized amount
of, any stock of any class or series or any security convertible into stock of
any class or series, ranking on a parity with the Enron Convertible Preferred
Stock, provided that no such consent shall be required for the authorization,
creation or issuance by Enron of a number of shares of one or more
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series of Preferred Stock ranking on parity with the Enron Convertible Preferred
Stock that, together with number of shares of Enron Convertible Preferred Stock
and other Preferred Stock ranking on parity with the Enron Convertible Preferred
Stock then outstanding, would equal 5,000,000, or (ii) the merger or
consolidation of Enron with or into any other corporation, unless the
corporation resulting from such merger or consolidation will have after such
merger or consolidation no class of stock and no other securities either
authorized or outstanding ranking prior to or on a parity with the Enron
Convertible Preferred Stock, except the same number of shares of stock and the
same amount of other securities with the same rights and preferences as the
stock and securities of Enron respectively authorized and outstanding
immediately preceding such merger or consolidation, and each holder of Enron
Convertible Preferred Stock immediately preceding such merger or consolidation
shall receive the same number of shares, with the same rights and preferences,
of the resulting corporation. In addition, if dividend payments on the Enron
Convertible Preferred Stock are in default in an amount equivalent to six
quarterly dividends on such shares, then the holders of the Enron Convertible
Preferred Stock (together with holders of any parity stock similarly affected)
shall have certain voting rights to elect two directors to Enron's Board of
Directors until such dividends have been paid or funds sufficient therefor
deposited in trust.
9.142% PREFERRED STOCK
The following summary of the terms of the Enron 9.142% Preferred Stock is
qualified in its entirety by reference to the form of series designation for the
Enron 9.142% Preferred Stock included as an exhibit to this registration
statement.
The annual rate of dividends payable on shares of the Enron 9.142%
Preferred Stock is $91,420 per share. Such dividends are payable quarterly on
the first days of January, April, July and October. These dividend rights are
superior to the dividend rights of the Enron Common Stock and rank equally with
the dividend rights on the Enron Convertible Preferred Stock.
The amount payable on shares of the Enron 9.142% Preferred Stock in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of Enron is $1,000,000 per share, together with accrued dividends.
The liquidation rights of the Enron 9.142% Preferred Stock are superior to the
Enron Common Stock and rank equally with the liquidation rights of the Enron
Convertible Preferred Stock.
The Enron 9.142% Preferred Stock is not redeemable at the option of Enron.
Pursuant to an agreement between Enron and its subsidiary, however, such
subsidiary will have the rights, exercisable at any time, in whole or in part,
for a 180-day period commencing January 31, 2004, to cause Enron to redeem 18
shares for $1,000,000 per share, together with accrued dividends.
The holders of Enron 9.142% Preferred Stock generally have no voting rights
but are entitled to certain class voting rights, including (unless provision is
made for redemption of such shares) (a) the requirement for approval by the
holders of at least two-thirds of the Enron 9.142% Preferred Stock (voting
together with the holders of all other shares of parity stock similarly
affected), to effect (i) an amendment to the Enron Charter or Bylaws that would
affect adversely the voting powers, rights or preferences of the holders of the
Enron 9.142% Preferred Stock or would reduce the time for any notice to which
the holders of the Enron 9.142% Preferred Stock may be entitled, (ii) the
authorization, creation or issuance of, or the increase in the authorized amount
of, any stock of any class or series or any security convertible into stock of
any class or series ranking prior to the Enron 9.142% Preferred Stock, (iii) the
voluntary dissolution, liquidation or winding up of the affairs of Enron, or the
sale, lease or conveyance by Enron of all or substantially all of its property
or assets, or (iv) the purchase or redemption (for sinking fund purposes or
otherwise) of less than all of the Enron 9.142% Preferred Stock and other parity
stock at the time outstanding unless the full dividends on all shares of Enron
9.142% Preferred Stock then outstanding shall have been paid or declared and a
sum sufficient for payment thereof set apart, and (b) the requirement for
approval by the holders of at least a majority of the Enron 9.142% Preferred
Stock (voting together with all other shares of parity stock similarly
affected), to effect (i) the
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authorization, creation or issuance of, or the increase in the authorized amount
of, any stock of any class or series or any security convertible into stock of
any class or series, ranking on a parity with the Enron 9.142% Preferred Stock,
provided that no such consent shall be required for the authorization, creation
or issuance by Enron of a number of shares of one or more series of Preferred
Stock ranking on parity with the Enron 9.142% Preferred Stock that, together
with number of shares of Enron 9.142% Preferred Stock and other Preferred Stock
ranking on parity with the Enron 9.142% Preferred Stock then outstanding, would
equal 5,000,000, or (ii) the merger or consolidation of Enron with or into any
other corporation, unless the corporation resulting from such merger or
consolidation will have after such merger or consolidation no class of stock and
no other securities either authorized or outstanding ranking prior to or on a
parity with the Enron 9.142% Preferred Stock, except the same number of shares
of stock and the same amount of other securities with the same rights and
preferences as the stock and securities of Enron respectively authorized and
outstanding immediately preceding such merger or consolidation, and each holder
of Enron 9.142% Preferred Stock immediately preceding such merger or
consolidation shall receive the same number of shares, with the same rights and
preferences, of the resulting corporation. In addition, if dividend payments on
the Enron 9.142% Preferred Stock are in default in an amount equivalent to six
quarterly dividends on such shares, then the holders of the Enron 9.142%
Preferred Stock (together with holders of any other parity stock similarly
affected) shall have certain voting rights to elect two directors to Enron's
Board of Directors until such dividends have been paid or funds sufficient
therefor deposited in trust.
CERTAIN PROVISIONS OF THE ENRON CHARTER AND BYLAWS
Fair Price Provision. The Enron Charter contains a "fair price" provision
which generally requires that certain mergers, business combinations and similar
transactions with a "Related Person" (generally the beneficial owner of at least
10 percent of Enron's voting stock) be approved by the holders of at least 80
percent of Enron's voting stock, unless (a) the transaction is approved by at
least 80 percent of the "Continuing Directors" of Enron, who constitute a
majority of the entire board, (b) the transaction occurs more than five years
after the last acquisition of Enron voting stock by the Related Person or (c)
certain "fair price" and procedural requirements are satisfied.
The Enron Charter defines "Business Transaction" as (a) any merger or
consolidation involving Enron or a subsidiary of Enron, (b) any sale, lease,
exchange, transfer or other disposition (in one transaction or a series of
transactions), including without limitation a mortgage or any other security
device, of all or any substantial part of the assets either of Enron or of a
subsidiary of Enron, (c) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets of an entity to Enron
or a subsidiary of Enron, (d) the issuance, sale, exchange, transfer or other
disposition by Enron or a subsidiary of Enron of any securities of Enron or any
subsidiary of Enron, (e) any recapitalization or reclassification of Enron's
securities (including without limitation, any reverse stock split) or other
transaction that would have the effect of increasing the voting power of a
Related Person, (f) any liquidation, spinoff, splitoff, splitup or dissolution
of Enron, and (g) any agreement, contract or other arrangement providing for any
of the transactions described in this definition of Business Transaction.
"Continuing Director" is defined to mean a director who either was a member of
the Board of Directors of Enron prior to the time such Related Person became a
Related Person or who subsequently became a director of Enron and whose
election, or nomination for election by Enron's shareholders, was approved by a
vote of at least 80 percent of the Continuing Directors then on the Board,
either by a specific vote or by approval of the proxy statement issued by Enron
on behalf of the Board of Directors in which such person is named as nominee for
director, without an objection to such nomination; provided, however, that in no
event shall a director be considered a "Continuing Director" if such director is
a Related Person and the Business Transaction to be voted upon is with such
Related Person or is one in which such Related Person otherwise has an interest
(except proportionately as a shareholder of Enron).
Advance Notice Requirements for Shareholder Proposals and Nominations. The
Enron Bylaws provide that for business to be properly brought before an annual
meeting of shareholders, it must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of
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the Board of Directors, (b) otherwise brought before the meeting by or at the
direction of the Board of Directors or (c) otherwise properly brought before the
meeting by a shareholder of Enron who is a shareholder of record at the time of
giving of notice hereinafter provided for, who shall be entitled to vote at such
meeting and who complies with the following notice procedures. In addition to
any other applicable requirements, for business to be brought before an annual
meeting by a shareholder of Enron, the shareholder must have given to the
Secretary of Enron timely notice in writing of the business to be brought before
an annual meeting of shareholders. To be timely, a shareholder's notice must be
delivered to or mailed and received at Enron's principal executive offices not
less than 120 days prior to the anniversary date of the proxy statement for the
previous year's annual meeting of the shareholders of Enron (or Old Enron, with
respect to the first such meeting after the Effective Time). A shareholder's
notice to the Secretary must set forth as to each matter the shareholder
proposes to bring before the annual meeting (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on Enron's books, of the shareholder proposing such business, (iii)
the acquisition date, the class and the number of shares of voting stock of
Enron which are owned beneficially by the shareholder, (iv) any material
interest of the shareholder in such business and (v) a representation that the
shareholder intends to appear in person or by proxy at the meeting to bring the
proposed business before the meeting. No business shall be conducted at an
annual meeting except in accordance with the procedures outlined above.
The Enron Bylaws provide that only persons who are nominated for election
as a director of Enron in accordance with the following procedures shall be
eligible for election as directors. Nominations of persons for election to
Enron's Board of Directors may be made at a meeting of shareholders (a) by or at
the direction of the Board of Directors or (b) by any shareholder of Enron who
is a shareholder of record at the time of giving of notice hereinafter provided
for, who shall be entitled to vote for the election of directors at the meeting
and who complies with the following notice procedures. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of Enron. To be timely, a
shareholder's notice must be delivered to or mailed and received at Enron's
principal executive offices, (i) with respect to an election to be held at an
annual meeting of shareholders of Enron, not less than 120 days prior to the
anniversary date of the proxy statement for the previous year's annual meeting
of the shareholders of Enron (or Old Enron, with respect to the first such
meeting after the Effective Time), and (ii) with respect to an election to be
held at a special meeting of shareholders of Enron for the election of
directors, not later than the close of business on the 10th day following the
date on which notice of the date of the meeting was mailed or public disclosure
of the date of the meeting was made, whichever first occurs. Such shareholder's
notice to the Secretary shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a director, all
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors, or is otherwise required,
pursuant to Regulation 14A under the Exchange Act (including the written consent
of such person to be named in the proxy statement as a nominee and to serve as a
director if elected); and (b) as to the shareholder giving the notice, (i) the
name and address, as they appear on Enron's books, of such shareholder, and (ii)
the class and number of shares of capital stock of Enron which are beneficially
owned by the shareholder.
CERTAIN ANTI-TAKEOVER PROVISIONS OF OREGON LAW
Business Combinations with Interested Shareholders. Enron is subject to the
provisions of Sections 60.825-60.845 of the Oregon Business Corporation Act
("OBCA"), which generally provide that any person who acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested shareholder") may
not engage in certain "business combinations" with the corporation for a period
of three years following the date the person became an interested stockholder,
unless (i) the board of directors has approved, prior to the date the person
became an interested shareholder, either the business combination or the
transaction that resulted in the person becoming an interested shareholder, (ii)
upon consummation of the transaction that resulted in the person becoming an
interested shareholder, that person owns at least 85% of the corporation's
voting stock outstanding at the time the
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transaction is commenced (excluding shares owned by persons who are both
directors and officers and shares owned by employee stock plans in which
participants do not have the right to determine whether shares will be tendered
in a tender or exchange offer), or (iii) on or subsequent to the date the person
became an interested shareholder, the business combination is approved by the
board of directors and authorized by the affirmative vote of at least 66 2/3% of
the outstanding voting stock not owned by the interested shareholder.
Control Share Statute. As is permitted by the OBCA, the Enron Charter
provides that Enron is not subject to the Oregon Control Share Act. The Oregon
Control Share Act restricts the ability of a shareholder of certain Oregon-based
corporations to vote shares of stock acquired in a transaction that causes the
acquiring person to control at least one-fifth, one-third or one-half of the
votes entitled to be cast in the election of directors, except as authorized by
a vote of the corporation's disinterested shareholders.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Enron may, at its option, elect to offer fractional interests in the
Offered Preferred Stock. In the event such option is exercised, Enron will offer
depositary shares ("Depositary Shares"), each of which will represent a fraction
(to be set forth in the Prospectus Supplement relating to a particular series of
Offered Preferred Stock) of a share of a particular series of Offered Preferred
Stock as described below.
The Offered Preferred Stock of any series represented by Depositary Shares
will be deposited under a deposit agreement (the "Deposit Agreement") between
Enron and a bank or trust company selected by Enron having its principal office
in the United States and having, alone or together with its affiliates, a
combined capital and surplus of at least $50,000,000 (the "Depositary"). Subject
to the terms of the Deposit Agreement, each registered holder of a Depositary
Share will be entitled, in proportion to the applicable fraction of a share of
Offered Preferred Stock represented by such Depositary Share, to all the rights
and preferences of the Offered Preferred Stock represented thereby (including
dividend, voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts ("Depositary
Receipts") issued pursuant to the Deposit Agreement. Depositary Receipts will be
distributed to those persons purchasing the fractional interests in Offered
Preferred Stock in accordance with the terms of the offering set forth in the
applicable Prospectus Supplement. A copy of the form of Deposit Agreement is
filed as an exhibit to the Registration Statements of which this Prospectus is a
part, and the following summary is qualified in its entirety by reference to
such exhibit.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all dividends or other cash distributions
received in respect of the Offered Preferred Stock to the record holders of
Depositary Shares relating to such Offered Preferred Stock in proportion to the
number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash or rights, preferences or
privileges upon the Offered Preferred Stock, the Depositary will distribute
property received by it to the record holders of Depositary Shares entitled
thereto in proportion to the number of such Depositary Shares owned by such
holders, unless the Depositary determines that such distribution cannot be made
proportionately among such holders or that it is not feasible to make such
distribution, in which case the Depositary may, with the approval of Enron, sell
such securities or property and distribute the net proceeds from such sale to
such holders or adopt such other method as it deems equitable and practicable
for effecting such distribution.
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WITHDRAWAL OF THE OFFERED PREFERRED STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Offered Preferred Stock or Depositary Shares
have previously been called for redemption), and upon payment of the charges
provided in the Deposit Agreement and subject to the terms thereof, the holder
of the Depositary Shares evidenced thereby is entitled to delivery at such
office to or upon his order the number of whole shares of Offered Preferred
Stock and any money or other property represented by such Depositary Shares. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Offered Preferred Stock to be withdrawn, the Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares. Holders of Offered Preferred Stock thus
withdrawn, and any subsequent holders of those shares, will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Shares therefor.
REDEMPTION OF DEPOSITARY SHARES
Upon redemption of Offered Preferred Stock represented by Depositary
Shares, the Depositary will redeem as of the same redemption date the number of
Depositary Shares representing Offered Preferred Stock so redeemed, provided
Enron shall have paid in full to the Depositary the redemption price of the
Offered Preferred Stock to be redeemed (which redemption price shall include an
amount equal to any accrued and unpaid dividends thereon to the date fixed for
redemption). The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price and any other amounts per share
payable with respect to the Offered Preferred Stock. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by the Depositary by lot or pro rata or by any other equitable
method, in each case as may be determined by Enron.
VOTING OF THE OFFERED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Offered
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for the Offered Preferred Stock) will
be entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of Offered Preferred Stock represented by such holder's
Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote
the number of shares of Offered Preferred Stock represented by such Depositary
Shares in accordance with such instructions, and Enron will agree to take all
reasonable action which may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting Offered
Preferred Stock (but, at its discretion, not from appearing at any meeting with
respect to such Offered Preferred Stock) to the extent it does not receive
specific instructions from the holders of Depositary Shares representing Offered
Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Enron and the Depositary. However, any amendment which materially and
adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding.
The Deposit Agreement may be terminated by Enron upon not less than 60
days' notice, whereupon the Depositary shall deliver or make available to each
holder of Depositary Receipts, upon surrender of the Depositary Receipts held by
such holder, such number of whole or fractional shares of Offered Preferred
Stock represented by such Depositary Receipts. The Deposit Agreement will
automatically terminate if (i) all outstanding Depositary Shares have been
redeemed, or (ii) there has been a final
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distribution in respect of the Offered Preferred Stock in connection with any
liquidation, dissolution or winding up of Enron and such distribution has been
made to the holders of Depositary Receipts.
CHARGES OF DEPOSITARY
Enron will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Depositary arrangements. Enron will pay
the fees and expenses of the Depositary in connection with the performance of
its duties under the Deposit Agreement, to the extent specified in the Deposit
Agreement. Holders of Depositary Receipts will pay transfer and other taxes and
governmental charges.
MISCELLANEOUS
Enron will forward to holders of Depositary Shares any reports and
communications that it sends to holders of Offered Preferred Stock.
Neither the Depositary nor Enron will be liable if it is prevented from or
delayed in, by law or any circumstances beyond its control, performing its
obligations under the Deposit Agreement. The obligations of Enron and the
Depositary under the Deposit Agreement will be limited to performing their
duties thereunder without negligence or willful misconduct, and Enron and the
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or any Offered Preferred Stock unless
satisfactory indemnity is furnished. Enron and the Depositary may rely on advice
of counsel or accountants, on information provided by holders of Depositary
Shares or other persons believed to be authorized or competent and on documents
believed to be genuine.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and
Enron, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from Enron.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Enron notice of its
election to do so, and Enron may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having, alone or together with its affiliates, a combined
capital and surplus of at least $50,000,000.
DESCRIPTION OF WARRANTS TO PURCHASE COMMON STOCK
The following statements with respect to the Stock Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement ("Stock
Warrant Agreement") to be entered into by Enron and a warrant agent to be
selected at the time of issue (the "Stock Warrant Agent"), and having the terms
described in the Prospectus Supplement relating thereto.
GENERAL
The Stock Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently or
together with any Offered Securities and may be attached to or separate from
such Offered Securities. If Stock Warrants are offered, the Prospectus
Supplement will describe the terms of the warrants, including the following: (1)
the offering price, if any; (2) the number of shares of Common Stock purchasable
upon exercise of one Stock Warrant and the initial price at which such shares
may be purchased upon exercise; (3) the date on which the right to exercise the
Stock Warrants shall commence and the date on which such right shall expire; and
(4) any other terms of the Stock Warrants. The shares of Common Stock issuable
upon
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<PAGE> 36
exercise of the Stock Warrants will, when issued in accordance with the Stock
Warrant Agreement, be fully paid and nonassessable.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering to the Stock Warrant Agent
the Stock Warrant Certificate signed by the warrantholder, or his duly
authorized agent, indicating the warrantholder's election to exercise all or a
portion of the Stock Warrants evidenced by the certificate. Surrendered Stock
Warrant Certificates shall be accompanied by payment of the aggregate exercise
price of the Stock Warrants to be exercised, as set forth in the Prospectus
Supplement, which payment may be made in the form of cash or a check equal to
the exercise price. Certificates evidencing duly exercised Stock Warrants shall
be delivered by the Stock Warrant Agent to the transfer agent for the Common
Stock. Upon receipt thereof, the transfer agent shall deliver or cause to be
delivered, to or upon the written order of the exercising warrantholder, a
certificate representing the number of shares of Common Stock purchased. If
fewer than all of the Stock Warrants evidenced by any certificate are exercised,
the Stock Warrant Agent shall deliver to the exercising warrantholder a new
Stock Warrant Certificate representing the unexercised Stock Warrants.
ANTIDILUTION PROVISIONS
The exercise price payable and the number of shares of Common Stock
purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including (1) the issuance of a stock dividend to
holders of Common Stock or a combination, subdivision or reclassification of
Common Stock; (2) the issuance of rights, warrants or options to all holders of
Enron's Common Stock entitling the holders thereof to purchase Common Stock for
an aggregate consideration per share less than the current market price per
share of Common Stock; or (3) any distribution by Enron to the holders of its
Common Stock of evidences of indebtedness of Enron or of assets (excluding cash
dividends or distributions payable out of consolidated earnings and earned
surplus and dividends or distributions referred to in (1) above). In lieu of
adjusting the number of shares of Common Stock purchasable upon exercise of each
Stock Warrant, Enron may elect to adjust the number of Stock Warrants. No
adjustment in the number of shares purchasable upon exercise of the Stock
Warrants will be required until cumulative adjustments require an adjustment of
at least 1% thereof. Enron may, at its option, reduce the exercise price at any
time. No fractional shares will be issued upon exercise of Stock Warrants, but
Enron will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of any consolidation, merger or sale or
conveyance of the property of Enron as an entirety or substantially as an
entirety, the holder of each outstanding Stock Warrant upon exercise thereof
shall have the right to the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Common Stock for which such Stock Warrant was exercisable immediately
prior thereto.
NO RIGHTS AS STOCKHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of Enron or any other matter or to exercise any rights whatsoever as
stockholders of Enron.
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PLAN OF DISTRIBUTION
Enron may sell the Offered Securities (i) through underwriters or dealers;
(ii) directly to purchasers; or (iii) through agents. The Prospectus Supplement
with respect to the Offered Securities will set forth the terms of the offering
of the Offered Securities, including the name or names of any underwriters or
agents, if required, the purchase price of the Offered Securities and the
proceeds to Enron from such sale, any delayed delivery arrangements, any
underwriting discounts and commissions and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
In connection with the sale of the Offered Securities, underwriters, brokers,
dealers or agents may be deemed to have received compensation from Enron in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of the Offered Securities for whom they may act as agent or to
whom they may sell as principal. Underwriters or agents may sell the Offered
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 Offered
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of Offered Securities will be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement relating thereto, the obligations of the underwriters to
purchase the Offered Securities will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all the Offered Securities if
any are purchased.
If dealers are utilized in the sale of Offered Securities, Enron will sell
such Offered Securities to the dealers as principals. The dealers may then
resell such Offered Securities to the public at varying prices to be determined
by such dealers at the time of resale. To the extent required, the names of
dealers or brokers acting as dealers and the terms of the transaction will be
set forth in the Prospectus Supplement relating thereto.
The Offered Securities may be sold directly by Enron or through agents
designated by Enron from time to time. Any agent acting as an underwriter in the
offer or sale of the Offered Securities in respect to which this Prospectus is
delivered will be named, and any commissions payable by Enron to such agent will
be set forth, in the Prospectus Supplement relating thereto. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, Enron will authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase Offered Securities from Enron at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement, and the
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
The Offered Securities (other than the Common Stock), when first issued,
will have no established trading market. Any underwriters or agents to or
through whom Offered Securities are sold for public offering and sale may make a
market in such Offered 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 such Offered Securities.
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Agents, dealers and underwriters may be entitled under agreements with
Enron to indemnification by Enron against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which such agents, dealers or underwriters may be required to make in
respect thereof. Agents, dealers and underwriters may be customers of, engage in
transactions with or perform services for Enron in the ordinary course of
business.
The Offered Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the Offered
Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities will be passed upon for Enron by
James V. Derrick, Jr., Esq., Senior Vice President and General Counsel of Enron.
Mr. Derrick owns substantially less than 1% of the outstanding shares of Common
Stock of Enron.
EXPERTS
The consolidated financial statements included in Enron's Current Report on
Form 8-K dated March 17, 1997 and consolidated financial statements and schedule
included in Enron's Annual Report on Form 10-K for the year ended December 31,
1996, incorporated by reference in this prospectus and elsewhere in the
registration statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The letter report of DeGolyer and MacNaughton, independent petroleum
consultants, included as an exhibit to Enron's Annual Report on Form 10-K for
the year ended December 31, 1996, and the estimates from the reports of that
firm appearing in such Annual Report, are incorporated by reference herein on
the authority of said firm as experts in petroleum engineering and in giving
such reports.
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- ------------------------------------------------------
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Capitalization....................... S-3
Recent Developments.................. S-4
Use of Proceeds...................... S-4
Ratio of Earnings to Fixed Charges... S-4
Description of the Notes............. S-4
Certain Federal Income Tax
Considerations..................... S-11
Underwriting......................... S-13
Validity of the Notes................ S-14
PROSPECTUS
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 3
Business of Enron.................... 4
Use of Proceeds...................... 6
Ratio of Enron's Earnings to Fixed
Charges and Earnings to Fixed
Charges and Preferred Stock
Dividends.......................... 6
Description of Debt Securities....... 7
Description of Enron Corp.
Capital Stock...................... 14
Description of Depositary Shares..... 19
Description of Warrants to Purchase
Common Stock....................... 21
Plan of Distribution................. 23
Validity of Securities............... 24
Experts.............................. 24
============================================
</TABLE>
- ------------------------------------------------------
------------------------------------------------------
$200,000,000
LOGO
ENRON CORP.
REMARKETED RESET NOTES
DUE NOVEMBER 15, 2037
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
NOVEMBER 6, 1997
======================================================
