<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1999
REGISTRATION NO. 333-70465
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
ENRON CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
OREGON 47-0255140
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
REX R. ROGERS
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
ENRON CORP.
1400 SMITH STREET, HOUSTON, TEXAS 77002
(713) 853-3069
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices and agent for service)
---------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined in
light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER SECURITY PRICE(5) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enron Corp. Debt Securities......... ) ) )
- ------------------------------------ ) ) )
Enron Corp. Preferred Stock......... ) $1,000,000,000(2) (3) ) $1,000,000,000 ) $278,000(6)
- ------------------------------------ ) ) )
Enron Corp. Depositary Shares(1).... ) ) )
- ---------------------------------------------------------------------------------------------------------------------------------
Enron Corp. Common Stock............ 13.8 million shares $64.375(4) $ 888,375,000 $246,969(7)
- ---------------------------------------------------------------------------------------------------------------------------------
Total...................... -- -- $1,888,375,000 $524,969
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</TABLE>
(1) The consideration for the Enron Corp. depositary shares is included in that
for the Enron Corp. preferred stock.
(2) Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to 7.5 million
shares of Enron Corp. common stock previously registered on Form S-3,
Registration No. 33-53877. The maximum aggregate offering price of
securities covered by such combined prospectus (in addition to the 7.5
million shares of Enron Corp. common stock previously registered and the
13.8 million shares of Enron Corp. common stock being registered hereby) is
$1,000,000,000. Without limitation as to class of securities, securities of
the classes listed in the above table (in addition to the shares of Enron
common stock) may be offered pursuant to such combined prospectus at a
maximum aggregate offering price of $1,000,000,000.
(3) The proposed maximum offering price per security is equal to (a) 100% of the
principal amount thereof in the case of Enron Corp. debt securities and (b)
the proposed maximum aggregate offering price divided by the number of
shares offered in the case of other securities.
(4) The proposed maximum offering price per share of Enron Corp. Common Stock is
based on the average of the high and low prices of Enron Common Stock as
reported on the New York Stock Exchange composite transaction reporting
system on February 2, 1999.
(5) Estimated solely for the purposes of calculating the registration fee.
(6) Previously paid.
(7) Paid herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO 7.5 MILLION SHARES
OF ENRON CORP. COMMON STOCK PREVIOUSLY REGISTERED ON REGISTRATION STATEMENT NO.
33-53877, WHICH WAS DECLARED EFFECTIVE ON JULY 14, 1994 (THE "PREVIOUSLY
REGISTERED SECURITIES"). THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE
AMENDMENT NO. 5 TO REGISTRATION STATEMENT NO. 33-53877, PURSUANT TO WHICH THE
TOTAL AMOUNT OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON
REGISTRATION STATEMENT NO. 33-53877 MAY BE OFFERED AND SOLD TOGETHER WITH THE
SECURITIES REGISTERED HEREUNDER THROUGH THE USE OF THE COMBINED PROSPECTUS
INCLUDED HEREIN. IN THE EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED
AND SOLD PRIOR TO THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT
OF SUCH PREVIOUSLY REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE
PROSPECTUS HEREUNDER.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
ADOPTION OF PREDECESSOR ISSUER'S REGISTRATION STATEMENT
Effective July 1, 1997, Enron Corp. (formerly Enron Oregon Corp.), an
Oregon corporation, became the successor issuer to the common stock and debt
securities of Enron Corp., a Delaware corporation. The succession transaction
was a reincorporation merger of Enron Corp., a Delaware corporation ("Old
Enron"), with and into the registrant ("Enron"), which, until the
reincorporation merger, was a wholly-owned subsidiary of Old Enron. As a result
of the reincorporation merger,
- each issued share of common stock of Old Enron was converted into one
share of common stock of the registrant,
- each issued and outstanding share of Cumulative Second Preferred
Convertible Stock of Old Enron was converted into one share of Cumulative
Second Preferred Convertible Stock of the registrant, and
- each issued and outstanding share of 9.142% Perpetual Second Preferred
Stock of Old Enron was converted into one share of 9.142% Perpetual
Second Preferred Stock of the registrant.
Immediately following the reincorporation merger, also on July 1, 1997, the
registrant acquired Portland General Corporation ("PGC") by means of the merger
of PGC with and into the registrant. Enron's Form 8-B Registration Statement
filed pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") was
declared effective on July 22, 1997.
Pursuant to Rule 429 under the Securities Act of 1933 (the "Securities
Act"), this Registration Statement contains a combined prospectus that also
relates to 7.5 million shares of Enron common stock previously registered on Old
Enron's Registration Statement No. 33-53877, which was declared effective on
July 14, 1994. This filing constitutes Post-Effective Amendment No. 5 to Old
Enron's Registration Statement No. 33-53877, and is filed pursuant to Rule
414(d) under the Securities Act. Post-Effective Amendments Nos. 2, 3 and 4 to
such Registration Statement No. 33-53877, which were also filed pursuant to Rule
414(d) under the Securities Act, were previously declared effective by the
Commission. Enron expressly adopts such Registration Statement No. 33-53877 as
its own for all purposes of the Securities Act and the Exchange Act.
INCLUSION OF BASE PROSPECTUS AND
PROSPECTUS SUPPLEMENT
This Registration Statement contains a base prospectus to be used in
connection with offerings by Enron Corp. of debt securities, preferred stock and
common stock. This Registration Statement also contains a form of Prospectus
Supplement to such base prospectus to be used in connection with a specific
offering by Enron of 12,000,000 shares of common stock and 1,800,000 shares
issuable pursuant to an over-allotment option.
<PAGE> 3
The information contained in this prospectus supplement is not complete and may
be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
supplement is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 3, 1999
PRELIMINARY PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY , 1999
12,000,000 Shares
[ENRON LOGO]
Common Stock
------------------
We are selling common stock. Our common stock is listed on the New York, Chicago
and Pacific Stock Exchanges where it trades under the symbol ENE. On February 2,
1999, the last reported sales price of the common stock on the New York Stock
Exchange was $64 13/16 per share.
The underwriters have an option to purchase a maximum of 1,800,000 additional
shares to cover
over-allotments of shares.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS ENRON CORP.
-------- ------------- -----------
<S> <C> <C> <C>
Per Share............................................ $ $ $
Total................................................ $ $ $
</TABLE>
Delivery of the shares will be made on or about February , 1999, against
payment in immediately available funds.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
CREDIT SUISSE FIRST BOSTON DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PRUDENTIAL SECURITIES SALOMON SMITH BARNEY SCHRODER & CO. INC.
Prospectus Supplement dated February , 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Page
----
CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS......... S-3
RECENT DEVELOPMENTS.................. S-4
USE OF PROCEEDS...................... S-5
PRICE RANGE OF COMMON STOCK AND
DIVIDENDS.......................... S-5
CAPITALIZATION....................... S-6
SELECTED CONSOLIDATED FINANCIAL
DATA............................... S-7
UNDERWRITING......................... S-8
NOTICE TO CANADIAN RESIDENTS......... S-9
VALIDITY OF COMMON STOCK............. S-10
PROSPECTUS
Page
----
WHERE YOU CAN FIND MORE
INFORMATION........................ 2
BUSINESS OF ENRON.................... 3
USE OF PROCEEDS...................... 4
RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS.......... 5
DESCRIPTION OF DEBT SECURITIES....... 5
DESCRIPTION OF CAPITAL STOCK......... 12
DESCRIPTION OF DEPOSITARY SHARES..... 21
PLAN OF DISTRIBUTION................. 23
VALIDITY OF SECURITIES............... 24
EXPERTS.............................. 24
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
S-2
<PAGE> 5
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents
incorporated by reference contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical facts
so contained in or incorporated by reference, including, without limitation,
statements regarding our future financial position, business strategy, budgets,
reserve estimates, projected costs and plans and objectives of management for
future operations, are forward-looking statements. Although we believe our
expectations reflected in such forward-looking statements are based on
reasonable assumptions, no assurance can be given that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the expectations reflected in the forward-looking
statements include, among other things:
- political developments in foreign countries,
- the ability to penetrate new retail natural gas and electricity markets
in the United States and in foreign jurisdictions,
- the timing and extent of deregulation of energy markets in the United
States and in foreign jurisdictions,
- other regulatory developments in the United States and in foreign
countries, including tax legislation and regulations,
- the extent of efforts by governments to privatize natural gas and
electric utilities and other industries,
- the timing and extent of changes in commodity prices for crude oil,
natural gas, electricity, foreign currencies and interest rates,
- the extent of success in acquiring oil and gas properties and
discovering, developing, producing and marketing reserves,
- the timing and success of efforts to develop international power,
pipeline, water and other infrastructure projects,
- the ability of counterparties to financial risk management instruments
and other contracts with us to meet their financial commitments to us,
- our success in implementing our Year 2000 Plan, the effectiveness of such
Year 2000 Plan, and the Year 2000 readiness of third parties, and
- our ability to access the capital markets and equity markets during the
periods covered by the forward-looking statements, which will depend on
general market conditions and our ability to maintain or increase the
credit ratings for our unsecured senior long-term debt obligations.
We undertake no obligation to update or revise our forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed herein might not occur.
S-3
<PAGE> 6
RECENT DEVELOPMENTS
On January 19, 1999, we announced earnings results for the year ended
December 31, 1998. For 1998, our core businesses generated after-tax earnings of
$2.25 per diluted share, compared to $1.98 for 1997. The retail energy services
business segment incurred an after-tax loss of $0.24 per diluted share for both
1998 and 1997. During 1998, we reported a non-recurring gain of $0.13 per
diluted share on the sale of shares of Enron Oil & Gas Company and a charge of
$0.12 to reflect losses on contracted MTBE production. In 1997 we reported a
gain of $0.21 on the sale of 7% of Enron Energy Services and non-recurring
losses totaling $1.63. Our total diluted earnings per share were $2.02 in 1998
and $0.32 in 1997, and total net income was $703 million in 1998 and $105
million in 1997. Revenues were $31.3 billion in 1998 and $20.3 billion in 1997.
Our consolidated results of operations include the core businesses, the
retail energy services business and items impacting comparability of operations.
Core businesses include Exploration and Production (Enron Oil & Gas Company),
Transportation and Distribution (Gas Pipeline Group and Portland General) and
Wholesale Energy Operations and Services (Enron Capital & Trade Resources and
Enron International). Income before interest, minority interests and income
taxes ("IBIT") for each segment is as follows (in millions, except per share
amounts):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1998 1997
------ ------
(UNAUDITED)
<S> <C> <C>
IBIT
Exploration and Production.................................. $ 128 $ 183
Transportation and Distribution:
Gas Pipeline Group........................................ 351 364
Portland General.......................................... 286 114
Wholesale Energy Operations and Services.................... 968 654
Corporate and Other......................................... 7 (31)
------ ------
Total Core Businesses............................. 1,740 1,284
Retail Energy Services:
Results................................................... (119) (107)
Gain on sale of 7% of Enron Energy Services shares........ -- 61
Items impacting comparability:
Gains on sales of Enron Oil & Gas Company common stock.... 22 --
Charge to reflect losses on contracted MTBE production.... (61) (100)
Charge to reflect impact of amended J-Block gas
contract............................................... -- (675)
Gains on sales of liquids and gathering assets............ -- 102
------ ------
Total IBIT........................................ 1,582 565
Interest and Related Charges, net........................... 550 401
Dividends on Company-Obligated Preferred Securities of
Subsidiaries.............................................. 77 69
Minority Interests.......................................... 77 80
Income Tax Expense (Benefit)................................ 175 (90)
------ ------
Net Income.................................................. 703 105
Preferred Stock Dividends................................... 17 17
------ ------
Earnings on Common Stock.................................... $ 686 $ 88
====== ======
Earnings Per Share of Common Stock:
Basic..................................................... $ 2.14 $ 0.32
====== ======
Diluted................................................... $ 2.02 $ 0.32
====== ======
Average Number of Common Shares Used:
Basic..................................................... 321 272
====== ======
Diluted................................................... 348 277
====== ======
</TABLE>
S-4
<PAGE> 7
USE OF PROCEEDS
We expect the net proceeds from this sale of common stock to be
approximately $ million ($ million if the over-allotment option is exercised
in full), after deducting underwriting discounts and commissions and estimated
expenses. Such proceeds will be used to fund capital investments and for other
general corporate purposes. Pending this use, the proceeds will be used to repay
short-term indebtedness. As of February , 1999, the weighted average interest
rate on such outstanding short-term indebtedness was approximately %.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The following table presents the high and low sales prices for our common
stock as reported on the New York Stock Exchange composite transactions
reporting system and dividends paid per share for the calendar quarters
indicated. Our common stock is also listed for trading on the Chicago Stock
Exchange and the Pacific Stock Exchange, as well as the London Stock Exchange
and the Frankfurt Stock Exchange.
<TABLE>
<CAPTION>
Price Range
------------
High Low Dividend
---- --- --------
<S> <C> <C> <C>
1997
First Quarter............................................ 45 1/8 37 7/8 .2250
Second Quarter........................................... 42 3/8 35 5/8 .2250
Third Quarter............................................ 42 35 .2250
Fourth Quarter........................................... 41 15/16 35 15/16 .2375
1998
First Quarter............................................ 48 38 1/8 .2375
Second Quarter........................................... 54 5/16 45 9/16 .2375
Third Quarter............................................ 58 7/16 40 5/8 .2375
Fourth Quarter........................................... 58 3/4 49 1/2 .2500
1999
First Quarter (through February 2, 1999)................. 67 3/8 57 1/2 .2500
</TABLE>
On February 2, 1999, the last reported sales price for the common stock on
the New York Stock Exchange was $64 13/16 per share.
Although we expect to continue to pay dividends on our common stock, future
dividend payments will depend on our results of operations, cash flow,
anticipated capital requirements and such other factors as our Board of
Directors deems relevant.
S-5
<PAGE> 8
CAPITALIZATION
The following table sets forth our unaudited summary consolidated
capitalization as of September 30, 1998 and as adjusted to give effect to the
issuance of 12,000,000 shares of common stock offered hereby, and the
application of the net proceeds therefrom, assuming such transaction occurred on
September 30, 1998. See "Use of Proceeds." The table should be read in
conjunction with our consolidated financial statements and notes thereto and
other financial data incorporated by reference herein. See "Where You Can Find
More Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
As of September 30, 1998
-------------------------
Actual As Adjusted
-------- -------------
(In millions)
<S> <C> <C>
Short-term debt............................................. $ 1,102 $
------- -------
Long-term debt
Enron Corp................................................ 4,077 4,077
Subsidiary companies...................................... 2,687 2,687
Amount reclassified from short-term debt.................. 1,732 1,732
Unamortized debt discount and premium..................... (21) (21)
------- -------
Total long-term debt(a)........................... 8,475 8,475
------- -------
Minority interests(a)....................................... 1,142 1,142
------- -------
Company-obligated preferred securities of subsidiaries...... 993 993
------- -------
Shareholders' equity
Convertible preferred stock............................... 132 132
Common equity(b).......................................... 6,819
------- -------
Total shareholders' equity(c)..................... 6,951
------- -------
Total capitalization............................ $18,663 $
======= =======
</TABLE>
- ---------------
(a) At December 31, 1998, total debt outstanding was approximately $7 billion
and minority interest was approximately $2 billion. The change from
September 30, 1998 reflects the net effect of several fourth quarter 1998
transactions, including the acquisition of Wessex Water Plc ("Wessex") and
the financial restructuring of our ownership interest in Wessex and Elektro
Eletricidade e Servicos S.A. (thereby reducing our interest in both
companies), the sale of a minority interest in a subsidiary, the sales and
monetization of certain assets, the issuance of $425,000,000 aggregate
principal amount of notes by us or our subsidiaries, and the satisfaction of
$228,000,000 Exchangeable Notes through the delivery of shares of Enron Oil
& Gas Company common stock held by us, as well as the effect of ordinary
results of operations.
(b) We expect to issue approximately 3.8 million shares of common stock in
connection with the acquisition of certain assets in February 1999.
(c) We have investments in entities whose functional currency is denominated in
Brazilian Reals. Subsequent to December 31, 1998, the exchange rate for
Brazilian Reals to the U.S. dollar has declined. As a result, we anticipate
recording a foreign currency translation adjustment, reducing shareholders'
equity, in the first quarter of 1999. Based on a recent exchange rate, the
equity reduction would be approximately $600 million.
S-6
<PAGE> 9
SELECTED CONSOLIDATED FINANCIAL DATA
Our consolidated financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included in our Annual Report on Form 10-K for the year ended
December 31, 1997 and our Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, are incorporated by reference herein. You should read the
following in conjunction with our consolidated financial statements and notes
thereto and other financial data incorporated by reference herein. See "Where
You Can Find More Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
Nine months ended
September 30, Years ended December 31,
------------------- -----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- --------- ------- ------- ------- ------- -------
(unaudited)
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues....................................... $23,558 $14,401 $20,273 $13,289 $ 9,189 $ 8,984 $ 7,986
Costs and expenses
Cost of gas, electricity and other
products................................... 20,103 12,270 17,311 10,478 6,733 6,517 5,567
Operating expenses........................... 1,621 999 1,406 1,421 1,218 1,124 1,146
Oil and gas exploration expenses............. 94 68 102 89 79 84 76
Depreciation, depletion and amortization..... 587 418 600 474 432 441 458
Taxes, other than income taxes............... 153 114 164 137 109 102 108
Contract restructuring charge................ -- 675 675 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total costs and expenses.............. 22,558 14,544 20,258 12,599 8,571 8,268 7,355
------- ------- ------- ------- ------- ------- -------
Operating income (loss)........................ 1,000 (143) 15 690 618 716 631
Other income and deductions
Equity in earnings of unconsolidated
subsidiaries............................... 161 138 216 215 86 112 73
Gains on sales of assets and investments..... 3 122 186 274 467 37 122
Other, net................................... 57 75 148 59 (6) 79 (28)
------- ------- ------- ------- ------- ------- -------
Income before interest, minority interests and
income taxes................................. 1,221 192 565 1,238 1,165 944 798
Interest and related charges, net.............. 398 271 401 274 284 273 300
Dividends on company-obligated preferred
securities of subsidiaries................... 58 50 69 34 32 20 2
Minority interests............................. 60 58 80 75 44 31 28
Income tax expense (benefit)................... 178 (123) (90) 271 285 167 135
------- ------- ------- ------- ------- ------- -------
Net income (loss).............................. 527 (64) 105 584 520 453 333
Preferred stock dividends...................... 13 13 17 16 16 15 17
------- ------- ------- ------- ------- ------- -------
Earnings (loss) on common stock................ 514 (77) $ 88 $ 568 $ 504 $ 438 $ 316
======= ======= ======= ======= ======= ======= =======
Basic earnings (loss) per common share......... $ 1.62 $ (0.29) $ 0.32 $ 2.31 $ 2.07 $ 1.80 $ 1.32
======= ======= ======= ======= ======= ======= =======
Diluted earnings (loss) per common share....... $ 1.53 $ (0.29) $ 0.32 $ 2.16 $ 1.94 $ 1.70 $ 1.25
======= ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA:
Total assets................................... $29,749 $22,810 $23,422 $16,137 $13,239 $11,966 $11,504
Short and long-term debt....................... 9,577 6,931 6,254 3,349 3,065 2,805 2,661
Minority interests............................. 1,142 767 1,147 755 549 290 196
Company-obligated preferred securities of
subsidiaries................................. 993 993 993 592 377 377 214
Shareholders' equity........................... 6,951 5,039 5,618 3,723 3,165 2,880 2,623
</TABLE>
S-7
<PAGE> 10
UNDERWRITING
Under the terms and conditions contained in an underwriting agreement dated
, , we have agreed to sell to the underwriters named below, for
whom Credit Suisse First Boston Corporation is acting as representative, the
following respective number of shares:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Credit Suisse First Boston Corporation......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Lehman Brothers Inc.........................................
Merrill Lynch, Pierce Fenner & Smith Incorporated...........
Morgan Stanley & Co. Incorporated...........................
Prudential Securities Incorporated..........................
Salomon Smith Barney Inc....................................
Schroder & Co. Inc..........................................
----------
Total............................................. 12,000,000
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares, if any are purchased, other than those shares covered
by the over-allotment option described below. The underwriting agreement also
provides that if an underwriter defaults, the purchase commitments of non-
defaulting underwriters may be increased or the offering may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 1,800,000 additional shares of common stock at the initial
public offering price less the underwriting discounts and commissions, solely to
cover over-allotments.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus supplement and to
selling group members at that price, less a concession of $ per share. The
underwriters and selling group members may allow a concession of $ per share
to certain other broker/dealers. After the initial public offering, the public
offering price and concession and the discount to dealers may be changed by the
representative.
We estimate that our out of pocket expenses for this offering will be
approximately $ .
We have agreed to indemnify the underwriters against certain liabilities
under the Securities Act, or contribute to payments which the underwriters may
be required to make in respect thereof.
We also have agreed, subject to certain exceptions, not to (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of common stock or any securities convertible into or exercisable or
exchangeable for common stock, (2) enter into any swap or other arrangement that
transfers all or a portion of the economic consequences associated with the
ownership of any common stock (regardless of whether any of the transactions
described in clause (1) or (2) is to be settled by the delivery of common stock,
in cash or otherwise) or (3) file any registration statement with respect to the
registration of any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock, in each case for a period of 90
days after the date of this prospectus supplement, without the prior written
consent of Credit Suisse First Boston Corporation.
The representative may engage in over-allotment, stabilizing transactions,
syndicate short covering transactions and penalty bids in accordance with
Regulation M under the Securities Exchange Act of 1934. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchase of shares of the common stock
in the open market after distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the representative to reclaim a
selling concession from a syndicate member when the shares of common stock
originally sold by such syndicate member are purchased in a syndicate covering
transaction to
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cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the common stock
to be higher than it would otherwise be in the absence of such transactions.
These transactions may be effected on the New York Stock Exchange or otherwise
and, if commenced, may be discontinued at any time.
In the ordinary course of their business, the underwriters or their
affiliates have engaged in or provided investment and/or commercial banking and
financial advisory services to us, our subsidiaries or affiliates, for which
they have received customary compensation and expense reimbursement, and may do
so again in the future. In particular, Enron Corp. has engaged Credit Suisse
First Boston Corporation to act as its financial advisor with respect to
exploring a possible transaction involving its interest in Enron Oil & Gas
Company.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the shares of common stock in Canada is being made only
on a private placement basis exempt from the requirement that we prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of shares of common stock are effected. Accordingly, any resale of
the shares of common stock in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the shares of common stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of shares of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (1) such purchaser is entitled under
applicable provincial securities laws to purchase such shares of common stock
without the benefit of a prospectus qualified under such securities laws, (2)
where required by law, that such purchaser is purchasing as principal and not as
agent, and (3) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of shares of common stock to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any shares of common stock acquired by such purchaser pursuant to this offering.
Such
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report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #95/17, a copy of which may be obtained from us. Only one such
report must be filed in respect of shares of common stock acquired on the same
date and under the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of shares of common stock should consult their own
legal and tax advisors with respect to the tax consequences of an investment in
the shares of common stock in their particular circumstances and with respect to
the eligibility of the shares of common stock for investment by the purchaser
under relevant Canadian Legislation.
VALIDITY OF COMMON STOCK
The validity of the common stock will be passed upon for us by James V.
Derrick, Jr., Esq., our Senior Vice President and General Counsel. Mr. Derrick
owns substantially less than 1% of our outstanding shares of common stock.
Certain legal matters will be passed upon for us by Vinson & Elkins L.L.P. The
validity of the common stock will be passed upon for the underwriters by
Bracewell & Patterson, L.L.P. Bracewell & Patterson, L.L.P. currently provides
services to us and certain of our subsidiaries and affiliates as outside counsel
on matters unrelated to the issuance of the common stock.
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<PAGE> 13
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 3, 1999
PROSPECTUS
[ENRON LOGO]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
ENRON CORP.
1400 Smith Street
Houston, Texas 77002
(713) 853-6161
---------------------
We will provide specific terms of these securities in supplements to this
prospectus. This prospectus may not be used to consummate sales of these
securities unless accompanied by a prospectus supplement.
---------------------
Neither the SEC nor any state securities commission has approved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
---------------------
February , 1999
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 2
Business of Enron........................................... 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Dividends..................... 5
Description of Debt Securities.............................. 5
Description of Capital Stock................................ 12
Description of Depositary Shares............................ 21
Plan of Distribution........................................ 23
Validity of Securities...................................... 24
Experts..................................................... 24
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
Reports, proxy statements and other information concerning Enron can also
be inspected and copied at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005, the offices of the Midwest Stock
Exchange at 120 South LaSalle Street, Chicago, Illinois 60603, and the offices
of the Pacific Stock Exchange at 301 Pine Street, San Francisco, California
94014.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities.
- Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
- Current Reports on Form 8-K filed March 19, 1998, October 16, 1998 (as
amended by Form 8-K/A filed on November 6, 1998) and January 26, 1999;
and
- The description of Enron's capital stock set forth in Enron's
Registration Statement on Form 8-B filed on July 2, 1997.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Secretary Division, Enron Corp.
1400 Smith Street
Houston, Texas 77002
(713) 853-6161
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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<PAGE> 15
BUSINESS OF ENRON
Enron is an integrated natural gas and electricity company headquartered in
Houston, Texas. Enron's operations are conducted through its subsidiaries and
affiliates which are principally engaged in the exploration for and production
of natural gas and crude oil in the United States and internationally; the
transportation of natural gas through pipelines to markets throughout the United
States; the generation and transmission of electricity to markets in the
northwestern United States; the marketing of natural gas, electricity and other
commodities and related risk management and finance services worldwide; and the
development, construction and operation of power plants, pipelines and other
energy related assets worldwide.
CORE BUSINESSES
Exploration and Production
Enron's natural gas and crude oil exploration and production operations are
conducted by Enron Oil & Gas Company ("EOG"). Enron currently owns a majority of
the outstanding common stock of EOG. EOG is an independent (non-integrated) oil
and gas company engaged in the exploration for, and development, production and
marketing of, natural gas and crude oil primarily in major producing basins in
the United States, as well as in Canada, Trinidad and India. At December 31,
1998, EOG's estimated net proved reserves were 5.9 trillion cubic feet
equivalent. At such date, approximately 53% of EOG's reserves (on a natural gas
equivalent basis) were located in the United States, 9% in Canada, 18% in
Trinidad, 18% in India and 2% in other countries. EOG's reserves were 89%
natural gas and 11% crude oil and other. As previously reported in December
1998, Enron received an unsolicited indication of interest from a third party
with respect to exploring a possible transaction pursuant to which the third
party would acquire Enron's shares of EOG common stock and offer to acquire the
remaining shares of outstanding EOG common stock. Although Enron currently
intends to actively explore alternative transactions for its EOG common stock
including the unsolicited indication of interest, there can be no assurance that
any such transaction will be pursued or, if pursued, will be consummated.
Transportation and Distribution
Enron's transportation and distribution business is comprised of Enron's
North American interstate natural gas transportation systems and its electricity
transmission and distribution operations in Oregon.
Interstate Transmission of Natural Gas. 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). Northern,
Transwestern and Florida Gas are interstate pipelines and 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 the Transwestern system; and Florida Gas, the
State of Florida. In addition, Enron holds an 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.
Electricity Transmission and Distribution Operations. Enron's electric
utility operations are conducted through its wholly-owned subsidiary, Portland
General Electric Company ("PGE"). PGE is 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.
PGE's Oregon service area is approximately 3,170 square miles. At December 31,
1998, PGE served approximately 704,000 customers.
Wholesale Energy Operations and Services
Enron's wholesale energy operations and services business operates in North
America, Europe and evolving energy markets in developing countries. Activities
are conducted primarily by Enron Capital & Trade Resources and Enron
International. These businesses provide integrated energy-related products and
services
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to wholesale customers worldwide. Wholesale energy operations and services can
be categorized into two business lines: (a) Commodity Sales and Services and (b)
Energy Assets and Investments.
Commodity Sales and Services. The commodity sales and services operations
include the purchase, sale, marketing and delivery of natural gas, electricity,
liquids and other commodities, restructuring of existing long-term contracts and
the management of Enron's commodity portfolios. In addition, Enron provides risk
management products and services to energy customers that hedge movements in
price and location-based price differentials. Enron's risk management products
and services are designed to provide stability to customers in markets impacted
by commodity price volatility. Also included in this business is the management
of certain operating assets that directly relate to this business, including
domestic intrastate pipelines and storage facilities.
Energy Assets and Investments. In the energy assets and investments
business, Enron manages and operates a large portfolio of energy assets and
offers financing alternatives to customers. Activities include developing,
constructing, owning and operating energy infrastructure not directly tied to
commodity marketing, including power plants and pipelines. Enron also provides
capital to energy customers seeking debt or equity financing.
RETAIL ENERGY SERVICES
Enron Energy Services is a nationwide provider of energy outsource products
to U.S. business customers. This includes sales of natural gas and electricity
and energy management services directly to commercial and light industrial
customers, as well as investments in related businesses. Enron Energy Services
provides end-users with a broad range of energy products and services at
competitive prices.
NEW BUSINESS
Azurix
In July 1998, Enron formed Azurix Corp. to pursue opportunities in the
global water business. As a key step in establishing this new business, Azurix
Europe, an indirect, wholly owned subsidiary of Azurix Corp., acquired all of
the outstanding ordinary share capital of Wessex Water Plc ("Wessex"), a water
and wastewater services company based in southwestern England. In December 1998,
as part of restructuring the financing for the Wessex acquisition, Enron became
a 50% indirect owner of Azurix Corp.
USE OF PROCEEDS
The net proceeds from the sale of the offered securities will be added to
our general funds and will be used to repay debt and for general corporate
purposes. Other uses may be stated in a prospectus supplement.
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<PAGE> 17
RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ---------------------------------
1998 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............ 2.19 1.02 3.00 2.92 2.34 1.98
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................... 2.13 (a) 2.85 2.76 2.25 1.89
</TABLE>
- ---------------
(a) For the year ended December 31, 1997, earnings were inadequate to cover
combined fixed charges and preferred stock dividends by $6 million.
The ratios of earnings to fixed charges and preferred stock dividends are
based on continuing operations. "Earnings" is determined by adding:
- the pre-tax income of Enron and its majority owned subsidiaries,
- Enron's share of pre-tax income of its 50% owned companies,
- any income actually received from less than 50% owned companies, and
- fixed charges, net of interest capitalized.
"Fixed Charges" represent (1) interest (whether expensed or capitalized), (2)
amortization of debt discount and expense and (3) 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.
DESCRIPTION OF DEBT SECURITIES
The following description highlights the general terms and provisions of
the debt securities. When debt securities are offered in the future, the
prospectus supplement will explain the particular terms of those securities and
the extent to which these general provisions may apply.
The debt securities will be secured or unsecured obligations of Enron. Any
unsecured obligations will be issued under an "Indenture" between Enron and
Harris Trust and Savings Bank, as Trustee, dated as of November 1, 1985, as
supplemented. Any secured obligations will be issued under a separate indenture,
which will be described in the prospectus supplement relating to those debt
securities.
We have summarized selected provisions of the Indenture below. The summary
is not complete. The form of the Indenture has been filed as an exhibit to the
registration statements and you should read the Indenture for any provisions
that may be important to you. In the summary below, we have included references
to section numbers of the Indenture so that you can easily locate these
provisions. Capitalized terms used in the summary have the meanings specified in
the Indenture.
GENERAL
The Indenture does not limit the principal amount of unsecured debentures,
notes or other obligations of Enron (the "Indenture Securities") which we may
issue from time to time in one or more series, and we may issue additional
Indenture Securities (in addition to the debt securities) in the future under
the Indenture. At February 1, 1999, we had approximately $3,542,200,000
principal amount of Indenture Securities issued and outstanding under the
Indenture.
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<PAGE> 18
A prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- The title of the debt securities;
- The total principal amount of the debt securities;
- The date on which the principal of the debt securities is payable;
- The interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
- The place where the principal of (and premium, if any) and interest on
debt securities will be payable;
- Any optional redemption periods and the terms of that option;
- Any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the debt securities;
- Any trustees, paying agents, transfer agents or registrars with respect
to debt securities; and
- Any other terms of the debt securities. (Section 301.)
LIMITATIONS ON MORTGAGES AND LIENS
The Indenture provides that so long as any of the Indenture Securities
(including the debt securities) are outstanding, Enron will not, and will not
permit any Subsidiary 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 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 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:
- 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;
- 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;
- 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;
- 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 (a) exist prior to the time the Acquired Entity becomes a
Subsidiary or (b) 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
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<PAGE> 19
the time it becomes a Subsidiary or thereafter acquired by it from
sources other than Enron or any other Subsidiary;
- Pledges of current assets, in the ordinary course of business, to secure
current liabilities;
- Deposits to secure public or statutory obligations;
- Liens to secure indebtedness other than Funded Debt (as defined in the
Indenture and herein);
- Mortgages, pledges, liens or encumbrances upon any office, data
processing or transportation equipment;
- 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;
- 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 Subsidiary of
goods or merchandise to customers; or
- 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 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.)
"Subsidiary" is defined 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
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(1) 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; (2) any amount representing capitalized lease obligations; (3)
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; (4) 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 (5) any guarantees with respect to lease or other similar periodic payments
to be made by other persons. (Section 101.)
"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 (1) 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 (2) 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 Enron and the Trustee
may modify the Indenture or the rights of the holders of Indenture Securities if
they have the consent of the holders of at least 50% in principal amount of all
outstanding Indenture Securities affected thereby. However, no modification of
the principal or interest payment terms, no modification of provisions
concerning waivers of past defaults or waivers of certain covenants, and no
modification reducing the percentage required for any modifications, is
effective against any holder without its consent. (Section 902.)
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EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
"Event of Default" means any one of the following with respect to any
series of Indenture Securities:
(a) failure to pay interest on any Indenture Security of that series
for 30 days;
(b) failure to deposit any sinking fund payment for 30 days;
(c) failure to pay the principal or any premium on any Indenture
Security of that series when due;
(d) failure to perform any other covenant in the Indenture for 60 days
after being given written notice by the Trustee or the holders of at least
25% in principal amount of all outstanding Indenture Securities; or
(e) certain events in bankruptcy, receivership or other insolvency
proceedings or an assignment for the benefit of creditors. (Section 501.)
An Event of Default for a particular series of Indenture Securities does
not necessarily constitute an Event of Default for any other series of Indenture
Securities issued under the Indenture. A default under other indebtedness of
Enron is not an Event of Default under the Indenture.
If an Event of Default for any series of Indenture Securities occurs and
continues, the Trustee or the holders of at least 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. If an Event of Default described in clause (d) or (e) of the
foregoing paragraph occurs and is continuing, the Trustee or the holders of at
least 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. (Section 502.) If this happens, subject to
certain conditions, the holders of a majority of the aggregate 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. 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), (b) or (c) of the first paragraph under this subheading
(or, in the case of a default described in clause (d) or (e) 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 (1) in the payment of the principal of (or premium, if any) or interest
on any Indenture Security, or (2) in respect of a covenant or provision of the
Indenture which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Indenture Security of such series
affected. (Section 513.)
DISCHARGE OF INDENTURE; DEFEASANCE
With certain exceptions, we will be discharged from our obligations under
the Indenture with respect to any series of Indenture Securities by either
paying or causing to be paid the principal of, premium, if any, and interest on
all of the Indenture Securities of such series outstanding, as and when the same
shall become due and payable, or delivering to the Trustee all outstanding
Indenture Securities of such series for cancellation. (Section 401.)
In addition, we will be discharged if at any time we defease the Indenture
Securities of a series by depositing in escrow or trust with the Trustee
sufficient cash and/or Government Obligations and/or Eligible Obligations to pay
the principal of, premium, if any, and interest on the Indenture Securities of
that series to the stated maturity date or a redemption date for the Indenture
Securities of that series. If that happens, payment of the Indenture Securities
of such series may not be accelerated because of an event specified as a default
or Event of Default with respect to such Indenture Securities, and the holders
of the Indenture
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Securities of such series will not be entitled to the benefits of the Indenture,
except for registration of transfer and exchange of Indenture Securities and
replacement of lost, stolen or mutilated Indenture Securities.
The Indenture defines "Eligible Securities" 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 defeased
debt by one or more nationally recognized rating agencies.
Under Federal income tax law as of the date of this prospectus, a discharge
may be treated as an exchange of the related debt securities. Each holder might
be required to recognize gain or loss equal to the difference between the
holder's cost or other tax basis for the debt securities and the value of the
holder's interest in the trust. Holders might be required to include as income a
different amount than would be includable without the discharge. Prospective
investors are urged to consult their own advisors as to the tax consequences of
a discharge, including the applicability and effect of tax laws other than
Federal income tax law.
FORM, DENOMINATION AND REGISTRATION; BOOK ENTRY ONLY SYSTEM
Unless otherwise indicated in a prospectus supplement, the debt securities
will be issued only in fully registered form, without coupons, in denominations
of $1,000 or integral multiples thereof. (Section 302.) You will not have to pay
a service charge to transfer or exchange debt securities, but we may require you
to pay for taxes or other governmental charges due upon a transfer or exchange.
(Section 305.)
Unless otherwise indicated in a prospectus supplement, each series of
Indenture Securities will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") or any successor depositary (the "Depositary") and will be
represented by one or more Global Notes registered in the name of Cede & Co., as
nominee of DTC. The interests of beneficial owners in the Global Notes will be
represented through financial institutions acting on their behalf as direct or
indirect participants in DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of these ownership interests will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Indenture Securities of that series represented by
such Global Note for all purposes of the Indenture, the Indenture Securities of
that series and applicable law. In addition, no beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures (in addition to those under the Indenture).
Payments on Indenture Securities represented by Global Notes will be made
to DTC or its nominee, as the registered owner thereof. Neither we, the Trustee,
any underwriter nor any paying agent will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in Global Notes, for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
action taken or omitted to be taken by the Depositary or any participant.
We expect that DTC or its nominee will credit participants' accounts on the
payable date with payments in respect of a Global Note in amounts proportionate
to their respective beneficial interest in the principal amount of such Global
Note as shown on the records of DTC or its nominee, unless DTC has reason to
believe that it will not receive payment on the payable date. We also expect
that payments by participants to owners of beneficial interests in such Global
Note held through such participants will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in "street name." Such payments will be the
responsibility of such participants.
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Transfers between participants in DTC will be effected in accordance with
DTC rules. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in a Global Note to such persons may be impaired. Because
DTC can only act on behalf of participants, who in turn act on behalf of others,
such as securities brokers and dealers, banks and trust companies ("indirect
participants"), the ability of a person having a beneficial interest in a Global
Note to pledge such interest to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interest, may be
impaired by the lack of a physical certificate of such interest.
We believe it is the policy of DTC to take any action permitted to be taken
by a holder of Indenture Securities of a series only at the direction of one or
more participants to whose account interests in Global Notes are credited and
only in respect of such portion of the aggregate principal amount of the
Indenture Securities of a series as to which such participant or participants
has or have given such direction.
If (1) the Depositary notifies us that it is unwilling or unable to
continue as Depositary or if the Depositary ceases to be eligible under the
Indenture and a successor depositary is not appointed by us within 90 days or
(2) an event of default with respect to a series of Indenture Securities shall
have occurred and be continuing, the respective Global Notes representing the
affected series of Indenture Securities will be exchanged for Indenture
Securities in definitive form of like tenor and of an equal aggregate principal
amount, in authorized denominations. Such definitive Indenture Securities shall
be registered in such name or names as the Depositary shall instruct the
Trustee. Such instructions will most likely be based upon directions received by
the Depositary from participants with respect to ownership of beneficial
interests in Global Notes.
DTC has advised us 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 Exchange Act. DTC holds securities that its participants deposit with
DTC and facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants, including those who may act as underwriters of our
Indenture Securities, and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as indirect
participants that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
DTC has further advised us that management of DTC is aware that some
computer applications, systems, and the like for processing data that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its participants and
other members of the financial community that it has developed and is
implementing a program so that its systems, as the same relate to the timely
payment of distributions (including principal and interest payments) to security
holders, book-entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which DTC reports is complete. Additionally, DTC's
plan includes a testing phase, which DTC expects to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as the DTC's direct and indirect participants and third party vendors from
whom DTC licenses software and hardware, and third party vendors on whom DTC
relies for information or the provision of services, including telecommunication
and electrical utility service providers, among others. DTC has informed the
industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (1) impress upon them the importance
of such services being Year 2000 compliant; and (2) determine the extent of
their efforts for Year 2000 remediation (and, as
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<PAGE> 24
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in Global Notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we, the Trustee, any
underwriter nor any paying agent will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture. The bank
also may act as a depository of funds for, make loans to, and perform 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 holders of a majority in principal amount of the outstanding securities
issued under the Indenture will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that if an Event
of Default occurs (and it is not cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of such person's own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of securities issued under the Indenture,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense, and then only to the
extent required by the terms of the Indenture. 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.)
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
At January 29, 1999, 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:
- 1,319,597 shares of Cumulative Second Preferred Convertible Stock
were outstanding;
- 35.568509 shares of 9.142% Perpetual Second Preferred Stock were
issued and are held by an Enron subsidiary;
- 250,000 shares of Series A Junior Voting Convertible Preferred
Stock were issued and held by an Enron subsidiary;
- 204,800 shares of Mandatorily Convertible Single Reset Preferred
Stock, Series A, were issued and held by an Enron subsidiary; and
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- 83,000 shares of Mandatorily Convertible Single Reset Preferred
Stock, Series B, were issued and held by an Enron subsidiary;
(b) 600,000,000 shares of common stock, of which 332,354,383 shares
were outstanding.
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 our preferred stock.
If we offer preferred stock, the specific designations and rights will be
described in the prospectus supplement and a description will be filed with the
SEC.
The 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 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"), an aggregate of 35.568509 shares of Enron preferred stock are
designated the 9.142% Perpetual Second Preferred Stock ("Enron 9.142% Preferred
Stock"), an aggregate of 250,000 shares of Enron preferred stock are designated
the Series A Junior Voting Convertible Preferred Stock ("Enron Junior
Convertible Preferred Stock"), an aggregate of 204,800 shares of Enron preferred
stock are designated the Mandatorily Convertible Single Reset Preferred Stock,
Series A ("Enron Mandatorily Convertible Preferred Stock, Series A") and 83,000
shares of Enron preferred stock are designated the Mandatorily Convertible
Single Reset Preferred Stock, Series B ("Enron Mandatorily Convertible Preferred
Stock, Series B" and together with the Enron Mandatorily Convertible Preferred
Stock, Series A, the "Enron Mandatorily Convertible Preferred Stock").
In addition to the Enron Convertible Preferred Stock, the Enron 9.142%
Preferred Stock, the Enron Junior Convertible Preferred Stock and the Enron
Mandatorily Convertible Preferred Stock, the Enron Board of Directors has
authority, without shareholder approval (except to the extent that holders of
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.
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ENRON CONVERTIBLE PREFERRED STOCK
We have summarized the terms of the Enron Convertible Preferred Stock
below. The summary is not complete. The form of series designation for the Enron
Convertible Preferred Stock has been filed as an exhibit to this registration
statement, and you should read the form for any terms that may be important to
you.
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 is 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, the Enron Junior Convertible
Preferred Stock and the Enron Mandatorily Convertible Preferred 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, the Enron
Junior Convertible Preferred Stock and the Enron Mandatorily Convertible
Preferred 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 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:
- 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 that would
reduce the time for any notice to which the holders of the Enron
Convertible Preferred Stock may be entitled,
- 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,
- 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
- 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:
- 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,
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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 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
- 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 be able to elect two directors to
Enron's Board of Directors until such dividends have been paid or funds
sufficient therefor deposited in trust. If we fail to pay dividends when due on
this preferred stock, the terms of this preferred stock will prohibit us from
paying dividends on junior stock, including Enron common stock, and prohibit us
and our subsidiaries from acquiring junior stock, including Enron common stock,
subject to certain exceptions.
9.142% PREFERRED STOCK
We have summarized the terms of the Enron 9.142% Preferred Stock below. The
summary is not complete. The form of series designation for the Enron 9.142%
Preferred Stock has been filed as an exhibit to this registration statement, and
you should read the form for any terms that may be important to you.
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, the Enron Junior
Convertible Preferred Stock and the Enron Mandatorily Convertible Preferred
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 those
of the Enron common stock, the Enron Junior Convertible Preferred Stock and the
Enron Mandatorily Convertible Preferred 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:
- 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
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time for any notice to which the holders of the Enron 9.142%
Preferred Stock may be entitled,
- 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,
- 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
- 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:
- 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 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
- 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 be able to elect two directors to
Enron's Board of Directors until such dividends have been paid or funds
sufficient therefor deposited in trust. If we fail to pay dividends when due on
this preferred stock, the terms of this preferred stock will prohibit us from
paying dividends on junior stock, including Enron common stock, and prohibit us
and our subsidiaries from acquiring junior stock, including Enron common stock,
subject to certain exceptions.
ENRON JUNIOR CONVERTIBLE PREFERRED STOCK
We have summarized the terms of the Enron Junior Convertible Preferred
Stock below. The summary is not complete. The form of the statement of
resolutions establishing the Enron Junior Convertible Preferred Stock has been
filed as an exhibit to this registration statement, and you should read the form
for any terms that may be important to you.
The annual rate of dividends payable on shares of the Enron Junior
Convertible Preferred Stock is a floating rate based on the rates at which
deposits in United States dollars are offered in the London interbank market
plus .85%. Dividends are payable quarterly and are cumulative. The amount
payable on shares of the Enron Junior Convertible Preferred Stock in the event
of any liquidation, dissolution or winding up of the affairs of Enron is $4,000
per share, together with accrued dividends. The dividend and liquidation rights
of the
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Enron Junior Convertible Preferred Stock are superior to the dividend and
liquidation rights of the Enron common stock, but rank junior to the dividend
and liquidation rights of all other outstanding series of Enron preferred stock.
The Enron Junior Convertible Preferred Stock is not redeemable at the option of
Enron. Each share of Enron Junior Convertible Preferred Stock is convertible
initially into 100 shares of Enron common stock (which conversion rate is
subject to certain adjustments).
The holders of Enron Junior Convertible Preferred Stock generally have no
voting rights but are entitled to certain class voting rights, including the
requirement for approval by the holders of at least a majority of the Enron
Junior Convertible Preferred Stock (voting together with all other shares of
parity stock similarly affected) to effect:
- an amendment to the Enron Charter that would adversely affect the voting
powers, rights or preferences of the holders of the Enron Junior
Convertible Preferred Stock,
- the sale, lease or conveyance by Enron of all or substantially all of its
assets, or
- the merger or consolidation of Enron with or into any other corporation,
unless each holder of Enron Junior Convertible Preferred Stock
immediately preceding such merger or consolidation shall receive the same
number of shares, with substantially the same rights and preferences, of
the surviving corporation.
In addition, if full cumulative dividends are not paid for six consecutive
quarterly periods, the holders of the Enron Junior Convertible Preferred Stock
(together with the holders of any parity stock similarly affected) will have the
right to elect two directors to Enron's Board of Directors until all dividends
in arrears have been paid or funds sufficient therefor deposited in trust. If we
fail to pay dividends when due on this preferred stock, the terms of this
preferred stock will prohibit us from paying dividends on junior stock,
including Enron common stock, and prohibit us and our subsidiaries from
acquiring junior stock, including Enron common stock, subject to certain
exceptions.
ENRON MANDATORILY CONVERTIBLE PREFERRED STOCK
We have summarized the terms of the Enron Mandatorily Convertible Preferred
Stock, Series A and Series B, below. The summary is not complete. The terms of
the Series A and the Series B are generally the same except as discussed below.
The forms of the statement of resolutions establishing both series of the Enron
Mandatorily Convertible Preferred Stock have been filed as exhibits to this
registration statement, and you should read the forms for any terms that may be
important to you.
The shares of each of the two series of the Enron Mandatorily Convertible
Preferred Stock were deposited under deposit agreements, and the related
depositary shares were then deposited into trusts of which we are the beneficial
owner. The depositary shares are to be sold by the trusts only if a default
occurs under certain of our debt obligations or under certain debt obligations
that were incurred in connection with our investment in Wessex Water Plc and
Elektro-Eletricidade e Servicos S.A. (the "Obligations") or our credit ratings
fall below investment grade and, in the case of Series A, our common stock price
falls below $37.84, subject to certain adjustments. The date that the depositary
shares are sold by the trust, or under certain circumstances the date the
depositary shares were to have been sold but were unable to be sold, is the Rate
Reset Date, and the market price of Enron common stock on the day such sale is
priced is the Reset Price, subject to certain adjustments. If the Obligations,
which generally mature on or before December 2001, are timely repaid in full, we
expect the Enron Mandatorily Convertible Preferred Stock will be retired and
canceled.
No dividends are payable on the Enron Mandatorily Convertible Preferred
Stock prior to the applicable Rate Reset Date. After a Rate Reset Date, the
annual rate of dividends payable is $350 per share plus an amount which is
intended to approximate the dividend yield on the Enron common stock as of the
Rate Reset Date. Such dividends are payable quarterly and are cumulative. The
amount payable on shares of Enron Mandatorily Convertible Preferred Stock in the
event of any liquidation, dissolution or winding up of the affairs of Enron is
$5,000 per share, together with accrued dividends to the date of payment. These
dividend
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<PAGE> 30
and liquidation rights are superior to the dividend and liquidation rights of
the Enron common stock and the Enron Junior Convertible Preferred Stock, but
rank junior to the dividend and liquidation rights of the Enron Convertible
Preferred Stock and Enron 9.142% Preferred Stock.
The Enron Mandatorily Convertible Preferred Stock is not redeemable after
the Rate Reset Date. The Enron Mandatorily Convertible Preferred Stock will be
converted into Enron common stock on the third anniversary of the Rate Reset
Date. The number of shares issuable per share of Enron Mandatorily Convertible
Preferred Stock on conversion will equal the liquidation preference ($5,000)
divided by the conversion price. The conversion price will be between 100% to
110% of the applicable Reset Price (subject to certain adjustments) depending on
the market price of Enron common stock at the time of conversion. After the Rate
Reset Date and prior to the third anniversary of the Rate Reset Date, the
holders of the Enron Mandatorily Convertible Preferred Stock will be entitled to
convert such shares into Enron common stock based on a conversion price of 110%
of the Reset Price (subject to certain adjustments).
The holders of each series of Enron Mandatorily Convertible Preferred Stock
generally have no voting rights, but are entitled to certain class voting
rights, including the requirement for approval by the holders of at least a
majority of each series to effect:
- an amendment to the Enron Charter that would adversely affect the powers,
rights or preferences of the holders of such series of Enron Mandatorily
Convertible Preferred Stock,
- the authorization or issuance of capital stock ranking senior to the
Enron Mandatorily Convertible Preferred Stock, or
- the merger or statutory exchange in which holders of the Enron
Mandatorily Convertible Preferred Stock do not receive a similar
preferred stock in the surviving entity, subject to certain exceptions.
If the Obligations are not paid when due, the holders of each series of
Enron Mandatorily Convertible Preferred Stock will have the right to elect two
directors to Enron's Board of Directors until such debt is paid or certain other
events occur. In addition, if full cumulative dividends are not paid for six
consecutive quarterly periods, the holders of the Enron Mandatorily Convertible
Preferred Stock (together with the holders of any parity stock similarly
affected) will have the right to elect two directors to Enron's Board of
Directors until all dividends in arrears have been paid. If we fail to pay
dividends when due on Enron Mandatorily Convertible Preferred Stock, the terms
of the Enron Mandatorily Convertible Preferred Stock will prohibit us from
paying dividends on junior stock, including Enron common stock, and prohibit us
and our subsidiaries from acquiring junior stock, including Enron common stock,
subject to certain exceptions.
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.
"Business Transaction" means (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
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<PAGE> 31
agreement, contract or other arrangement providing for any of the transactions
described in this definition of Business Transaction.
"Continuing Director" means 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 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,
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<PAGE> 32
(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 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.
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<PAGE> 33
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may choose to offer fractional interests in the preferred stock. If so,
we will offer depositary shares, each of which will represent a fraction (to be
set forth in the prospectus supplement relating to a particular series of
preferred stock) of a share of a particular series of preferred stock as
described below.
The preferred stock of any series represented by depositary shares will be
deposited under a 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 preferred stock represented
by such depositary share, to all the rights and preferences of the preferred
stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional interests in preferred stock in
accordance with the terms of the offering set forth in the applicable prospectus
supplement.
We have summarized the terms of the depositary shares below. The summary is
not complete. 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 you should
read the exhibit for any terms that may be important to you.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all dividends or other cash distributions
received in respect of the preferred stock to the record holders of depositary
shares relating to such 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 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.
WITHDRAWAL OF THE PREFERRED STOCK
Upon surrender of the depositary receipts at the corporate trust office of
the Depositary (unless the related 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 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 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 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 preferred stock represented by depositary shares, the
Depositary will redeem as of the same redemption date the number of depositary
shares representing preferred stock so redeemed, provided Enron shall have paid
in full to the Depositary the redemption price of the preferred stock to be
redeemed (which redemption price shall include an amount equal to any accrued
and unpaid dividends thereon to the
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<PAGE> 34
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 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 PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the 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 preferred stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of preferred stock represented by such holder's depositary shares.
The Depositary will endeavor, insofar as practicable, to vote the number of
shares of 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 preferred stock (but, at its
discretion, not from appearing at any meeting with respect to such preferred
stock) to the extent it does not receive specific instructions from the holders
of depositary shares representing 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 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 distribution in respect of the
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 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 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.
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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.
PLAN OF DISTRIBUTION
We may sell the offered securities (a) through agents; (b) through
underwriters or dealers; (c) directly to one or more purchasers; or (d) pursuant
to delayed delivery contracts or forward contracts.
BY AGENTS
Offered securities may be sold through agents designated by us. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
BY UNDERWRITERS
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. The underwriters will be obligated to purchase
all the securities of the series offered if any of the securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
DIRECT SALES
Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved.
DELAYED DELIVERY CONTRACTS OR FORWARD CONTRACTS
If indicated in the prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers to purchase offered securities from us
at the public offering price set forth in the prospectus supplement pursuant to
delayed delivery contracts or forward contracts providing for payment or
delivery on a specified date in the future at prices determined as described in
the prospectus supplement. 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.
GENERAL INFORMATION
The offered securities (other than common stock, which is traded on the New
York Stock Exchange under the symbol "ENE"), 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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<PAGE> 36
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.
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act of
1933, and any discounts or commissions received by them from us and any profit
on the resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Act. Any underwriters or agents will be
identified and their compensation described in a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act of 1933, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents or their affiliates may engage in
transactions with, or perform services for, us or our subsidiaries in the
ordinary course of their businesses.
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 19, 1998 and consolidated financial statements and schedule
included in Enron's Annual Report on Form 10-K for the year ended December 31,
1997, 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 consolidated financial statements of Wessex Water Plc as at March 31,
1998 and 1997, and for the years ended March 31, 1998 and 1997, included in
Enron's Current Report on Form 8K/A filed on November 6, 1998, incorporated by
reference in this prospectus, have been audited by Coopers & Lybrand, chartered
accountants, as indicated in their report 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, 1997, 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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[ENRON LOGO]
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth those expenses to be incurred by Enron in
connection with the issuance and distribution of the securities being
registered. Except for the Securities and Exchange Commission registration fee,
all amounts shown are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $524,969
Accounting Fees and Expenses................................ 50,000
Legal Fees and Expenses..................................... 50,000
Fees and Expenses of Transfer Agent, Trustee and
Depositary................................................ 15,000
Blue Sky Fees and Expenses, Including Counsel Fees.......... 25,000
Listing Fees................................................ 20,000
Printing and Engraving Expenses............................. 150,000
Miscellaneous............................................... 65,031
--------
Total............................................. $900,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Enron Charter contains provisions under which Enron will indemnify, to
the fullest extent permitted by law, persons who are made a party to an action
or proceeding by virtue of the fact that the individual is or was a director,
officer, or, in certain circumstances, an employee or agent, of Enron or another
corporation at Enron's request. The Oregon Business Corporation Act generally
permits such indemnification to the extent that the individual acted in good
faith and in a manner which he reasonably believed to be in the best interest of
or not opposed to the corporation or, with respect to criminal matters, if the
individual had no reasonable cause to believe his or her conduct was unlawful.
In addition, the Enron Charter contains a provision that eliminates the personal
liability of a director to the corporation or its shareholders for monetary
damages for conduct as a director, except for liability of a director (i) for
breach of the duty of loyalty, (ii) for actions or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
the payment of improper dividends or redemptions, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Form of Underwriting Agreement filed as Exhibit 1 hereto, under certain
specified circumstances, provides for indemnification by the Underwriters of the
directors, officers and controlling persons of Enron.
Enron has purchased liability insurance policies covering the directors and
officers of Enron to provide protection where Enron cannot legally indemnify a
director or officer and where a claim arises under the Employee Retirement
Income Security Act of 1974 against a director or officer based on an alleged
breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
*1.01 -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1.01 to Enron Registration Statement on Form
S-3 -- File No. 333-35549)
*1.02 -- Form of Underwriting Agreement -- Equity Securities
(Exhibit 1.02 to Enron Registration Statement on Form
S-3 -- File No. 333-35549)
*1.03 -- Enron Corp. Underwriting Agreement Standard Provisions,
dated as of September 15, 1997 (Exhibit 1.03 to Enron
Registration Statement on Form S-3 -- File No. 333-35549)
</TABLE>
II-1
<PAGE> 39
<TABLE>
<C> <S>
*2 -- Amended and Restated Agreement and Plan of Merger dated
as of July 20, 1996 and amended and restated as of
September 24, 1996 among Enron, Enron Oregon Corp. and
PGC, as amended by the First Amendment thereto dated
April 14, 1997 (Annex A to the Proxy Statement/Prospectus
included in Enron's Registration Statement on Form
S-4 -- File No. 333-13791).
*3.01 -- Amended and Restated Articles of Incorporation of Enron
(Annex E to the Proxy Statement/Prospectus included in
Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.02 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(Exhibit 3.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.03 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(Exhibit 3.03 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.04 -- Bylaws of Enron (Exhibit 3.04 to Post-Effective Amendment
No. 1 to Enron's Registration Statement on Form
S-3 -- File No. 33-60417).
*3.05 -- Form of Series Designation for the Enron Convertible
Preferred Stock (Annex F to the Proxy
Statement/Prospectus included in Enron's Registration
Statement on Form S-4 -- File No. 333-13791).
*3.06 -- Form of Series Designation for the Enron 9.142% Preferred
Stock (Annex G to the Proxy Statement/Prospectus included
in Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.07 -- Form of Series Designation for the Enron Series A Junior
Voting Convertible Preferred Stock (Exhibit 3.07 to
Enron's Registration Statement on Form S-3 -- File No.
333-44133).
*3.08 -- Statement of Resolutions Establishing A Series of
Preferred Stock of Enron Corp. -- Mandatorily Convertible
Single Reset Preferred Stock, Series A (Exhibit 4.01 to
Enron's Form 8-K filed on January 26, 1999).
*3.09 -- Statement of Resolutions Establishing A Series of
Preferred Stock of Enron Corp. -- Mandatorily Convertible
Single Reset Preferred Stock, Series B (Exhibit 4.02 to
Enron's Form 8-K filed on January 26, 1999).
*4.01 -- Indenture dated as of November 1, 1985, between Old Enron
and Harris Trust and Savings Bank, as supplemented and as
amended by the First Supplemental Indenture dated as of
December 1, 1995 (Form T-3 Application for Qualification
of Indentures under the Trust Indenture Act of 1939, File
No. 22-14390, filed October 24, 1985; Exhibit 4(b) to Old
Enron's Form S-3 Registration Statement No. 33-64057
filed on November 8, 1995). There have not been filed as
exhibits to this registration statement other debt
instruments defining the rights of holders of long-term
debt of Enron, none of which relates to authorized
indebtedness that exceeds 10% of the consolidated assets
of Enron and its subsidiaries. Enron hereby agrees to
furnish a copy of any such instrument to the Commission
upon request.
*4.02 -- Supplemental Indenture, dated as of May 8, 1997, by and
among Enron Corp., Enron Oregon Corp. and Harris Trust
and Savings Bank, as Trustee (Exhibit 4.02 to
Post-Effective Amendment No. 1 to Enron's Registration
Statement on Form S-3 -- File No. 33-60417).
*4.03 -- Form of Supplemental Indenture, dated as of September 1,
1997, between Enron Corp. and Harris Trust and Savings
Bank, as Trustee. (Exhibit 4.03 to Enron Registration
Statement on Form S-3 -- File No. 333-35549).
</TABLE>
II-2
<PAGE> 40
<TABLE>
<C> <S>
*4.04 -- Form of Deposit Agreement between Enron and the
Depositary (Exhibit 4(b) to Old Enron Registration
Statement No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Senior Vice
President and General Counsel of Enron, as to validity of
debt securities, preferred stock, depositary shares,
common stock and stock warrants.
**12 -- Computation of Enron's Ratios of Earnings to Fixed
Charges and Preferred Stock Dividends.
23.01 -- Consent of Arthur Andersen LLP.
**23.02 -- Consent of DeGolyer and MacNaughton.
23.03 -- The consent of James V. Derrick, Jr., Esq., is contained
in his opinion filed as Exhibit 5 hereto.
**23.04 -- Consent of Coopers & Lybrand
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Harris Trust and Savings Bank.
</TABLE>
- ---------------
* Incorporated by reference as indicated.
** Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrant, Enron Corp., hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to each Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of each Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statements;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statements
or any material change to such information in the Registration
Statements;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statements;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Enron's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE> 41
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement or
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston and State of Texas, on the 3rd day of
February, 1999.
ENRON CORP.
(Registrant)
By: /s/ RICHARD A. CAUSEY
----------------------------------
Richard A. Causey
Senior Vice President and Chief
Accounting, Information and
Administrative Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities with Enron Corp. indicated and on the 3rd day of February, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S> <C>
/s/ KENNETH L. LAY Chairman of the Board, Chief Executive
------------------------------------------------------ Officer and Director (Principal
(Kenneth L. Lay) Executive Officer)
/s/ RICHARD A. CAUSEY Senior Vice President and Chief
------------------------------------------------------ Accounting, Information and
(Richard A. Causey) Administrative Officer (Principal
Accounting Officer)
/s/ ANDREW S. FASTOW Senior Vice President and Chief Financial
------------------------------------------------------ Officer (Principal Financial Officer)
(Andrew S. Fastow)
ROBERT A. BELFER* Director
------------------------------------------------------
(Robert A. Belfer)
NORMAN P. BLAKE, JR.* Director
------------------------------------------------------
Norman P. Blake, Jr.
RONNIE C. CHAN* Director
------------------------------------------------------
(Ronnie C. Chan)
JOHN H. DUNCAN* Director
------------------------------------------------------
(John H. Duncan)
JOE H. FOY* Director
------------------------------------------------------
(Joe H. Foy)*
WENDY L. GRAMM* Director
------------------------------------------------------
(Wendy L. Gramm)*
</TABLE>
II-5
<PAGE> 43
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S> <C>
KEN L. HARRISON* Director and Vice Chairman
------------------------------------------------------
(Ken L. Harrison)*
ROBERT K. JAEDICKE* Director
------------------------------------------------------
(Robert K. Jaedicke)
CHARLES A. LEMAISTRE* Director
------------------------------------------------------
(Charles A. LeMaistre)
JEROME J. MEYER* Director
------------------------------------------------------
(Jerome J. Meyer)
JEFFREY K. SKILLING* Director and President and Chief
------------------------------------------------------ Operating Officer
(Jeffrey K. Skilling)
JOHN A. URQUHART* Director
------------------------------------------------------
(John A. Urquhart)
JOHN WAKEHAM* Director
------------------------------------------------------
(John Wakeham)
CHARLS E. WALKER* Director
------------------------------------------------------
(Charls E. Walker)
HERBERT S. WINOKUR, JR.* Director
------------------------------------------------------
(Herbert S. Winokur, Jr.)
*By: /s/ PEGGY B. MENCHACA
-------------------------------------------------
Peggy B. Menchaca
(Attorney-in-fact for persons indicated)
</TABLE>
II-6
<PAGE> 44
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*1.01 -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1.01 to Enron Registration Statement on Form
S-3 -- File No. 333-35549).
*1.02 -- Form of Underwriting Agreement -- Equity Securities
(Exhibit 1.02 to Enron Registration Statement on Form
S-3 -- File No. 333-35549).
*1.03 -- Enron Corp. Underwriting Agreement Standard Provisions,
dated as of September 15, 1997 (Exhibit 1.03 to Enron
Registration Statement on Form S-3 -- File No.
333-35549).
*2 -- Amended and Restated Agreement and Plan of Merger dated
as of July 20, 1996 and amended and restated as of
September 24, 1996 among Enron, Enron Oregon Corp. and
PGC, as amended by the First Amendment thereto dated
April 14, 1997 (Annex A to the Proxy Statement/Prospectus
included in Enron's Registration Statement on Form
S-4 -- File No. 333-13791).
*3.01 -- Amended and Restated Articles of Incorporation of Enron
(Annex E to the Proxy Statement/Prospectus included in
Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.02 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(Exhibit 3.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.03 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(Exhibit 3.03 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.04 -- Bylaws of Enron (Exhibit 3.04 to Post-Effective Amendment
No. 1 to Enron's Registration Statement on Form
S-3 -- File No. 33-60417).
*3.05 -- Form of Series Designation for the Enron Convertible
Preferred Stock (Annex F to the Proxy
Statement/Prospectus included in Enron's Registration
Statement on Form S-4 -- File No. 333-13791).
*3.06 -- Form of Series Designation for the Enron 9.142% Preferred
Stock (Annex G to the Proxy Statement/Prospectus included
in Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.07 -- Form of Series Designation for the Enron Series A Junior
Voting Convertible Preferred Stock (Exhibit 3.07 to
Enron's Registration Statement on Form S-3 -- File No.
333-44133).
*3.08 -- Statement of Resolutions Establishing A Series of
Preferred Stock of Enron Corp. -- Mandatorily Convertible
Single Reset Preferred Stock, Series A (Exhibit 4.01 to
Enron's Form 8-K filed on January 26, 1999).
*3.09 -- Statement of Resolutions Establishing A Series of
Preferred Stock of Enron Corp. -- Mandatorily Convertible
Single Reset Preferred Stock, Series B (Exhibit 4.02 to
Enron's Form 8-K filed on January 26, 1999).
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*4.01 -- Indenture dated as of November 1, 1985, between Old Enron
and Harris Trust and Savings Bank, as supplemented and as
amended by the First Supplemental Indenture dated as of
December 1, 1995 (Form T-3 Application for Qualification
of Indentures under the Trust Indenture Act of 1939, File
No. 22-14390, filed October 24, 1985; Exhibit 4(b) to Old
Enron's Form S-3 Registration Statement No. 33-64057
filed on November 8, 1995). There have not been filed as
exhibits to this registration statement other debt
instruments defining the rights of holders of long-term
debt of Enron, none of which relates to authorized
indebtedness that exceeds 10% of the consolidated assets
of Enron and its subsidiaries. Enron hereby agrees to
furnish a copy of any such instrument to the Commission
upon request.
*4.02 -- Supplemental Indenture, dated as of May 8, 1997, by and
among Enron Corp., Enron Oregon Corp. and Harris Trust
and Savings Bank, as Trustee (Exhibit 4.02 to
Post-Effective Amendment No. 1 to Enron's Registration
Statement on Form S-3 -- File No. 33-60417).
*4.03 -- Form of Supplemental Indenture, dated as of September 1,
1997, between Enron Corp. and Harris Trust and Savings
Bank, as Trustee. (Exhibit 4.03 to Enron Registration
Statement on Form S-3 -- File No. 333-35549).
*4.04 -- Form of Deposit Agreement between Enron and the
Depositary (Exhibit 4(b) to Old Enron Registration
Statement No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Senior Vice
President and General Counsel of Enron, as to validity of
debt securities, preferred stock, depositary shares,
common stock and stock warrants.
**12 -- Computation of Enron's Ratios of Earnings to Fixed
Charges and Preferred Stock Dividends.
23.01 -- Consent of Arthur Andersen LLP.
**23.02 -- Consent of DeGolyer and MacNaughton.
23.03 -- The consent of James V. Derrick, Jr., Esq., is contained
in his opinion filed as Exhibit 5 hereto.
**23.04 -- Consent of Coopers & Lybrand.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Harris Trust and Savings Bank.
</TABLE>
- ---------------
* Incorporated by reference as indicated.
** Previously filed.
<PAGE> 1
EXHIBIT 5
February 2, 1999
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
As Senior Vice President and General Counsel of Enron Corp., an Oregon
corporation ("Enron"), I am familiar with Amendment No. 1 to Registration
Statement No. 333-70465 of Enron on Form S-3 and Post-Effective Amendment No. 5
to Registration Statement No. 33-53877 (collectively, the "Registration
Statement") relating to the proposed offering from time to time of (i) up to an
aggregate amount of $1,000,000,000 of Enron Debt Securities, Enron Preferred
Stock and Depositary Shares, and (ii) up to 21.3 million shares of Enron Common
Stock, no par value (the Debt Securities, Preferred Stock, Depositary Shares and
Common Stock collectively referred to herein as the "Securities"). In connection
therewith, I have examined, among other things, a copy of the Amended and
Restated Articles of Incorporation and Bylaws of Enron, the corporate
proceedings taken to date with respect to the authorization, issuance and sale
of the Securities, a copy of the Indenture dated as of November 1, 1985, as
supplemented (the "Indenture"), between Enron and Harris Trust and Savings Bank,
Trustee, and the forms of certain other agreements to be entered into by Enron,
and I have performed such other investigations as I have considered appropriate
as the basis for the opinions expressed herein. Capitalized terms used but not
defined herein are used as defined in the Registration Statement.
Based on the foregoing, I am of the opinion that:
(1) Enron is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oregon.
(2) The Debt Securities of Enron have been validly authorized for
issuance, and (subject to the Registration Statement becoming effective and any
applicable state securities or Blue Sky laws being complied with), when the
terms thereof and their issue and sale have been duly established, upon issuance
and delivery thereof as set forth in the Registration Statement, and upon
receipt by Enron of the purchase price thereof, the Debt Securities will be
validly issued and will be binding obligations of Enron.
(3) When (a) the terms of the series of Preferred Stock and their issue
and sale have been duly established, and (if applicable) a deposit agreement has
been duly authorized, executed and delivered by Enron and a Depositary, in each
case in conformity with Enron's Amended and Restated Articles of Incorporation
and Oregon law, (b) a certificate of designations with respect to such series of
the Preferred Stock has been duly filed with the Secretary of State of the State
of Oregon, (c) the
<PAGE> 2
Enron Corp.
February 2, 1999
Page 2
- ------------------
Registration Statement has become effective and any applicable state securities
or Blue Sky laws have been complied with, (d) the shares of such series have
been issued, and (if applicable) Depositary Receipts have been delivered as set
forth in the Registration Statement, and (e) Enron has received the purchase
price of such shares in accordance with the terms of their issue and sale, the
shares of such series of Preferred Stock and (if applicable) the related
Depositary Shares will be validly issued, fully paid and nonassessable.
(4) The issuance of the Common Stock to be issued by Enron has been duly
authorized, and (subject to the Registration Statement becoming effective and
applicable Blue Sky laws being complied with), when the terms of their issue and
sale have been duly established, upon the issuance and delivery thereof as set
forth in the Registration Statement, and upon the receipt by Enron of the
purchase price thereof, the Common Stock will be validly issued, fully paid and
nonassessable.
I am a member of the bar of the State of Texas. The opinion set forth
above is limited in all respects to the laws of the State of Texas, the Oregon
Business Corporation Act and federal law.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to me under the caption "Validity
of Securities" in the Prospectus constituting part of the Registration Statement
and to the filing of this opinion as an exhibit thereto. By giving such consent
I do not admit that I am an expert with respect to any part of the Registration
Statement, including this exhibit, within the meaning of the term "expert" as
used in the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission issued thereunder.
Very truly yours,
/s/ JAMES V. DERRICK, JR.
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our reports dated
February 23, 1998 included in Enron Corp.'s Form 8-K dated March 19, 1998 and
Form 10-K for the year ended December 31, 1997 and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
February 2, 1999
