<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-66141
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 23, 1999)
$700,000,000
[WILLIAMS LOGO]
THE WILLIAMS COMPANIES, INC.
7.625% NOTES DUE 2019
---------------------
Interest on the notes is payable semi-annually on January 15 and July 15 of each
year, beginning on January 15, 2000. We may redeem some or all of the notes, at
any time, at a price equal to 100% of the principal amount of the notes plus a
make-whole premium, as set forth in this prospectus supplement. The notes have
no sinking fund provisions. The notes will mature on July 15, 2019.
---------------------
<TABLE>
<CAPTION>
PUBLIC UNDERWRITING PROCEEDS,
OFFERING PRICE DISCOUNT BEFORE EXPENSES
-------------- ------------ ---------------
<S> <C> <C> <C>
Per note.................................... 99.075% 0.875% 98.200%
Total....................................... $693,525,000 $6,125,000 $687,400,000
</TABLE>
Interest on the notes will accrue from July 26, 1999 to the date of delivery.
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 related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery, in book-entry form only,
through The Depository Trust Company, on or about July 26, 1999.
---------------------
<TABLE>
<S> <C> <C>
(JOINT LEAD/JOINT BOOK MANAGERS) (JOINT LEAD MANAGER)
Lehman Brothers Merrill Lynch & CO. Salomon Smith Barney
</TABLE>
(Co-Managers)
Banc of America Securities LLC Chase Securities Inc.
Banc One Capital Markets, Inc. CIBC World Markets Credit Lyonnais Securities
Nesbitt Burns Securities Inc. RBC Dominion Securities Corporation Scotia Capital
Markets
---------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 21, 1999.
<PAGE> 2
You should rely only on the information contained or incorporated by
reference in this prospectus supplement or the attached prospectus. No one has
been authorized to provide you with different information. You should not assume
that the information contained in this prospectus supplement or the attached
prospectus is accurate as of any date other than the date on the front cover of
the document. We are not making an offer of these notes in any state where the
offer is not permitted.
----------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Organization Chart......................................... S-3
Incorporation of Certain Documents by Reference............ S-4
Use of Proceeds............................................ S-4
Description of Notes....................................... S-4
Underwriting............................................... S-7
Legal Matters.............................................. S-8
PROSPECTUS
Where You Can Find More Information........................ 2
Incorporation of Certain Documents by Reference............ 2
Reports to Holders of Debt Securities...................... 2
The Williams Companies, Inc. .............................. 3
Use of Proceeds............................................ 5
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements.............................. 5
Description of Debt Securities............................. 6
Limitations on Issuance of Bearer Debt Securities.......... 14
Description of Preferred Stock............................. 15
Plan of Distribution....................................... 18
Experts.................................................... 19
Legal Matters.............................................. 19
</TABLE>
S-2
<PAGE> 3
ORGANIZATION CHART
Williams is divided into two components: subsidiaries owning and operating
regulated interstate natural gas pipelines and other subsidiaries engaged in
primarily non-regulated businesses. The following chart shows Williams'
principal subsidiaries. Williams expects to complete the merger of Williams
Holdings of Delaware, Inc. into Williams during the third quarter of 1999.
ORG CHART
S-3
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents incorporated by reference in the prospectus
dated April 23, 1999, our Current Report on Form 8-K filed on April 29, 1999,
and our Quarterly Report on Form 10-Q for quarter ended March 31, 1999, filed on
May 14, 1999, are incorporated by reference herein.
USE OF PROCEEDS
Our net proceeds from the sale of our notes are estimated at $686,900,000
after the deduction of the underwriting discount and of the estimated expenses
payable by us. We intend to use the net proceeds of this offering for general
corporate purposes, including the repayment of outstanding debt.
DESCRIPTION OF NOTES
The following description of the particular terms of our 7.625% notes due
2019 should be read in conjunction with the statements under "Description of
Debt Securities" in the prospectus dated April 23, 1999. If this summary differs
in any way from the "Description of Debt Securities" in the prospectus, you
should rely on this summary. This summary of the notes is qualified in its
entirety by reference to the senior indenture referred to in the prospectus.
GENERAL
Our notes will be limited to $700,000,000 in aggregate principal amount.
Our notes will be issued in denominations of $1,000 and integral multiples of
$1,000, will bear interest from July 26, 1999, at the annual rate set forth on
the cover page of this prospectus supplement, and will mature on July 15, 2019.
Interest will be payable semi-annually on January 15 and July 15, commencing
January 15, 2000, to the holders of record of our notes on the preceding January
1 and July 1 respectively. Our notes will be issued in book-entry form. See
"Description of Debt Securities -- Registered Global Securities" in the
prospectus.
Our notes have no sinking fund provisions.
REDEMPTION
Our notes will be redeemable as a whole or in part, at our option, at any
time at a redemption price equal to the greater of (1) 100% of the principal
amount of the notes to be redeemed and (2) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate as defined below, plus 25 basis
points, plus accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by us.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and
S-4
<PAGE> 5
designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or
(2) if such release (or any successor release) is not published or does not
contain such prices on such business day, (A) the average of the Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if we obtain fewer
than four such Reference Treasury Dealer Quotations, the average of all such
Quotations. "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
us, of the bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in writing to us by
such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means each of Lehman Brothers Inc., Merrill,
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. and
their respective successors and, at our option, additional primary U.S.
Government securities dealers ("Primary Treasury Dealers"); provided, however,
that if any of the foregoing shall cease to be a Primary Treasury Dealer, we
shall substitute another nationally recognized investment banking firm that is a
Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the notes or portions thereof
called for redemption.
BOOK-ENTRY SYSTEM
Our notes will be issued in the form of one or more global notes (the
"Global Notes") in the aggregate principal amount of the notes, which will be
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"). Such Global Notes will be deposited with DTC and may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any nominee to a successor of DTC or a
nominee of such successor.
DTC has advised us and the underwriters as follows:
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" under the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its
participants deposit with DTC and facilitates the settlement of
transactions among its participants in such securities, through electronic
computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
DTC's participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own DTC.
Access to the DTC system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Purchases of notes under the DTC system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership of interest of each actual purchaser of notes (a "beneficial owner")
is in turn to be recorded on the direct and indirect participants' records.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct and indirect participant through which the beneficial
owner entered into the transaction. Transfers of ownership interests in the
notes are to be accomplished by entries made on the books of participants acting
on behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in the notes, except in the event that
use of the book-entry system for the notes is discontinued.
S-5
<PAGE> 6
To facilitate subsequent transfers, all notes deposited by participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the notes; DTC's records reflect only the identity of the
direct participants to whose accounts such notes are credited, which may or may
not be the beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Notes. Under its usual procedures DTC mails an Omnibus Proxy to Issuer as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
Global Notes are credited on the record date (identified in the listing attached
to the Omnibus Proxy).
Principal and interest payments on the Global Notes will be made to DTC. We
expect that DTC, upon receipt of any payment of principal or interest in respect
of a Global Note, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Note as shown on DTC's records. We also expect
that payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participant and not of DTC, us or the
Trustee, subject to any statutory or regulatory requirements as may be in effect
from time to time.
DTC may discontinue providing its service as securities depositary with
respect to the notes at any time by giving reasonable notice to us or the
Trustee. In addition, we may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depositary). Under
such circumstances, if a successor securities depositary is not obtained, note
certificates in fully registered form are required to be printed and delivered
to beneficial owners of the Global Notes representing such notes.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable (including DTC),
but we take no responsibility for the accuracy of such information.
Neither we, the Trustee nor the underwriters will have any responsibility
or obligation to participants, or the persons for whom they act as nominees,
with respect to the accuracy of the records of DTC, its nominee or any
participant with respect to any ownership interest in the notes, or payments to,
or the providing of notice to participants or beneficial owners.
The notes will trade in DTC's Same-day Funds Settlement System and
secondary market trading activity in the notes will, therefore, settle in
immediately available funds. All applicable payments of principal and interest
on the notes issued as Global Notes will be made by us in immediately available
funds.
For other terms of the notes, see "Description of Debt Securities" in the
accompanying prospectus.
DEFEASANCE
The notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Debt
Securities -- Discharge, Defeasance and Covenant Defeasance" in the prospectus.
S-6
<PAGE> 7
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the notes, we have agreed to sell to the underwriters listed below,
and each of the underwriters have severally agreed to purchase, the aggregate
principal amount of the notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Lehman Brothers Inc......................................... $175,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 175,000,000
Salomon Smith Barney Inc. .................................. 140,000,000
Banc of America Securities LLC.............................. 63,000,000
Chase Securities Inc........................................ 63,000,000
Banc One Capital Markets, Inc. ............................. 14,000,000
CIBC World Markets Corp..................................... 14,000,000
Credit Lyonnais Securities (USA) Inc. ...................... 14,000,000
Nesbitt Burns Securities Inc................................ 14,000,000
RBC Dominion Securities Corporation......................... 14,000,000
Scotia Capital Markets (USA) Inc. .......................... 14,000,000
------------
Total............................................. $700,000,000
============
</TABLE>
The several underwriters have agreed, subject to the terms and conditions
included in the underwriting agreement, to purchase all of the notes being sold
pursuant to such agreement if any of the notes being sold pursuant to such
agreement are purchased.
The underwriters propose to offer the notes to the public at the public
offering prices set forth on the cover page of this prospectus supplement and to
certain dealers at such price less a concession not in excess of 0.50% of the
principal amount of the notes. The underwriters may allow, and such dealers may
reallow, a concession to certain other dealers not in excess of 0.25% of the
principal amount of the notes. After the public offering of the notes, the
public offering price and such concessions may be changed.
The underwriters and their affiliates have in the past and may in the
future provide investment banking, general financing and banking or other
services to us and our affiliates. Certain affiliates of the underwriters are
lenders under our revolving credit facility and will receive a portion of the
amount repaid under this facility from the net proceeds of the offering.
We have agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
and to contribute to payments which the underwriters might be required to make
in respect of any of those liabilities.
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the notes. Such transactions may include overallotment, stabilizing transactions
and syndicate covering transactions. Overallotment involves sales in excess of
the offering size, which creates a short position for the underwriters.
Stabilizing transactions permit bids to purchase the notes in the open market
for the purpose of preventing or retarding a decline in the market price of the
notes which the offering is in progress. Syndicate covering transactions involve
purchases of the notes in the open market after the distribution has been
completed in order to cover short positions. Such stabilizing transactions and
syndicate covering transactions may cause the prices of the notes to be higher
than they would otherwise be in the absence of such transactions. Such
activities, if commenced, may be discontinued at any time.
The notes are a new series of securities with no established trading
market. We have been advised by the underwriters that they presently intend to
make a market in the notes are the consummation of the notes offering, although
they are under no obligation to do so and may discontinue any market-making
activities at any time without any notice. No assurance can be given as to the
liquidity of the trading
S-7
<PAGE> 8
market for the notes or that an active public market for the notes will develop.
If an active public trading market for the notes does not develop, the market
price and liquidity of the notes may be adversely affected.
We estimate that we will spend $500,000 for fees and expenses associated
with the offering of the notes.
LEGAL MATTERS
Certain legal matters in connection with the notes will be passed upon for
us by William G. von Glahn, Senior Vice President and General Counsel of the
Company, and for the underwriters by Davis Polk & Wardwell, New York, New York.
Mr. von Glahn beneficially owns approximately 146,919 shares of our common stock
and also has exercisable options to purchase an additional 90,504 shares of our
common stock. Pursuant to its By-Laws and an indemnity agreement, we are
required to indemnify Mr. von Glahn to the fullest extent permitted by Delaware
law against any expenses actually and reasonably incurred by him in connection
with any action, suit or proceeding in which he is made party by reason of his
being an officer of our company. We also maintain directors' and officers'
liability insurance under which Mr. von Glahn is insured against certain
expenses and liabilities.
S-8
<PAGE> 9
PROSPECTUS
THE WILLIAMS COMPANIES, INC.
$975,000,000
DEBT SECURITIES AND
PREFERRED STOCK
---------------------
We will provide the specific terms of each series or issue of securities in
supplements to this prospectus. You should read this prospectus and the
supplements carefully before you invest.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this prospectus is April 23, 1999
<PAGE> 10
WHERE YOU CAN FIND MORE INFORMATION
Williams has filed with the Securities and Exchange Commission in
Washington, D.C., a registration statement on Form S-3 under the Securities Act
for the securities offered in this prospectus. Williams has not included certain
portions of the registration statement in this prospectus, as permitted by the
Commission's rules and regulations. For further information, you should refer to
the registration statement and its exhibits. Williams is subject to the
informational requirements of the Exchange Act, and therefore files reports and
other information with the Commission.
You may inspect and copy the registration statement and its exhibits, as
well as such reports and other information which Williams files with the
Commission, at the public reference facilities of the Commission at its
principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and its regional offices at Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048. You can obtain information on the
operation of the Commission's public reference facilities by calling
1-800-SEC-0330. Information filed by Williams is also available at the
Commission's worldwide web site at http://www.sec.gov. You can also obtain these
materials at set rates from the Public Reference Section of the Commission at
its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549.
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS AND ITS SUPPLEMENT(S). WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Williams is incorporating by reference its annual report on Form 10-K for
the fiscal year ended December 31, 1998, and its current reports on Form 8-K
dated January 26, 1999, March 1, 1999, and March 24, 1999.
All documents which Williams files pursuant to Section 13, 14 or 15(d) of
the Exchange Act after the date of this prospectus and prior to the termination
of this offering shall be deemed to be incorporated by reference in this
prospectus and to be a part of this prospectus from the date of filing of such
documents. Any statement contained in a document incorporated by reference in
this prospectus shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement in this prospectus or in any
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or replaces such statement.
Williams will provide without charge to each person to whom a copy of this
prospectus has been delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this prospectus
incorporates. You should direct written or oral requests for such copies to: The
Williams Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172, Attention:
Corporate Secretary, telephone (918) 573-2000.
REPORTS TO HOLDERS OF DEBT SECURITIES
Williams is not required to furnish annual and quarterly reports to holders
of debt securities. Williams' annual report on Form 10-K containing audited
financial statements will be provided to holders of debt securities upon
request.
---------------------
2
<PAGE> 11
THE WILLIAMS COMPANIES, INC.
Williams is a holding company headquartered in Tulsa, Oklahoma. Through its
operating subsidiaries, Williams engages in natural gas sales and transportation
and related activities, including
- Gathering natural gas from the field where it is produced and processing
and treating the natural gas for delivery into main transmission lines of
pipeline systems
- Transportation, storage, and loading into barges, rail cars, or trucks of
natural gas liquids, anhydrous ammonia, crude oil and petroleum products
- Hydrocarbon exploration and production
- Ethanol production and marketing
- Crude oil refining
- Natural gas liquids storage
- Marketing and trading of energy commodities, including natural gas,
electricity, natural gas liquids, crude oil, petroleum products and other
energy commodities
- Motor fuel and merchandise marketing through convenience stores
- Entering into agreements with customers to allow them to predict the
price of their energy needs and to avoid the impact of fluctuating energy
commodity prices
Williams' communications subsidiaries offer communications technology and
services, including
- Data, voice and video services and products
- Advertising distribution services
- Video and multimedia services for the broadcast industry
- Enhanced facsimile and video-conferencing services
- Voice and data equipment, including telephones and related computer
systems located on customers' premises
- Network integration, including products and services to enable various
network systems to communicate with each other, and network management
services
Williams was originally incorporated under the laws of the State of Nevada
in 1949 and was reincorporated under the laws of the State of Delaware in 1987.
Williams maintains its principal executive offices at One Williams Center,
Tulsa, Oklahoma 74172, telephone (918) 573-2000.
3
<PAGE> 12
ORGANIZATION CHART
Williams is divided into two components: subsidiaries owning and operating
regulated interstate natural gas pipelines and other subsidiaries engaged in
primarily non-regulated businesses. The following chart shows Williams'
principal subsidiaries.
ORG CHART
4
<PAGE> 13
WILLIAMS DEPENDS ON PAYMENTS FROM ITS SUBSIDIARIES
The debt securities or preferred stock offered by a prospectus supplement
will represent obligations of, or an investment in, Williams exclusively.
Williams is a holding company and conducts substantially all of its operations
through subsidiaries. Williams performs management, legal, financial, tax,
consulting, administrative and other services for its subsidiaries. Williams'
principal sources of cash are external financings, dividends and advances from
its subsidiaries, investments, payments by subsidiaries for services rendered
and interest payments from subsidiaries on cash advances. The amount of
dividends available to Williams from subsidiaries largely depends upon each
subsidiary's earnings and operating capital requirements. The terms of some of
Williams' subsidiaries' borrowing arrangements limit the transfer of funds to
Williams. In addition, the ability of Williams' subsidiaries to make any
payments to Williams will depend on the subsidiaries' earnings, business and tax
considerations and legal restrictions.
CLAIMS OF HOLDERS OF DEBT SECURITIES AND PREFERRED STOCK RANK JUNIOR TO THOSE OF
CREDITORS OF WILLIAMS' SUBSIDIARIES
As a result of the holding company structure, the debt securities and
preferred stock will effectively rank junior to all existing and future debt,
trade payables and other liabilities of Williams' subsidiaries. Any right of
Williams and its creditors to participate in the assets of any of Williams'
subsidiaries upon any liquidation or reorganization of any such subsidiary will
be subject to the prior claims of that subsidiary's creditors, including trade
creditors, except to the extent that Williams may itself be a creditor of such
subsidiary.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement,
Williams will use the net proceeds from the sale of the securities for general
corporate purposes, including repayment of outstanding debt. Williams
anticipates that it will raise additional funds from time to time through debt
financings, including borrowings under its bank credit agreements.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following table represents Williams' consolidated ratio of earnings to
combined fixed charges and preferred stock dividend requirements for the periods
shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- --------------------------------
1998 1997 1996 1995 1994
- --------------------------------
<S> <C> <C> <C> <C>
1.39 2.32 2.58 2.15 2.21
</TABLE>
For current information on the Ratio of Earnings to Fixed Charges, please see
Williams' most recent Form 10-K. See "Where You Can Find More Information."
5
<PAGE> 14
DESCRIPTION OF DEBT SECURITIES
The debt securities will constitute either senior or subordinated debt of
Williams. Williams will issue debt securities that will be senior debt under the
senior debt indenture between Williams and First National Bank of Chicago, as
Trustee. Williams will issue debt securities that will be subordinated debt
under the subordinated debt indenture between Williams and First National Bank
of Chicago, as trustee. This prospectus refers to the senior debt indenture and
the subordinated debt indenture individually as the indenture and collectively
as the indentures. This prospectus refers to First National Bank of Chicago as
the trustee. Williams has filed the forms of the indentures as exhibits to the
registration statement.
THE FOLLOWING SUMMARIES OF CERTAIN PROVISIONS OF THE INDENTURES AND THE
DEBT SECURITIES ARE NOT COMPLETE AND THESE SUMMARIES ARE SUBJECT TO THE DETAILED
PROVISIONS OF THE APPLICABLE INDENTURE. FOR A FULL DESCRIPTION OF THESE
PROVISIONS, INCLUDING THE DEFINITIONS OF CERTAIN TERMS USED IN THIS PROSPECTUS,
AND FOR OTHER INFORMATION REGARDING THE DEBT SECURITIES, SEE THE INDENTURES.
Numerical references in parentheses below are to sections in the applicable
indenture. Wherever this prospectus refers to particular sections or defined
terms of the applicable indenture, these sections or defined terms are
incorporated by reference in this prospectus as part of the statement made, and
the statement is qualified in its entirety by such reference. The indentures are
substantially identical, except for the provisions relating to subordination and
Williams' limitation on liens. See "-- Subordinated Debt" and "-- Certain
Covenants of Williams." Neither indenture contains any covenant or provision
which affords debt holders protection in the event of a highly leveraged
transaction.
CERTAIN DEFINITIONS
Certain terms in Article One of the senior debt indenture are summarized as
follows:
"Consolidated Funded Indebtedness" means the aggregate of all outstanding
Funded Indebtedness of Williams and its consolidated Subsidiaries, determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Net Tangible Assets" means the total assets appearing on a
consolidated balance sheet of Williams and its consolidated subsidiaries less,
in general:
- intangible assets;
- current and accrued liabilities (other than Consolidated Funded
Indebtedness and capitalized rentals or leases), deferred credits,
deferred gains and deferred income;
- reserves;
- advances to finance oil or natural gas exploration and development to the
extent that the indebtedness related thereto is excluded from Funded
Indebtedness;
- an amount equal to the amount excluded from Funded Indebtedness
representing "production payment" financing of oil or natural gas
exploration and development; and
- minority stockholder interests.
"Funded Indebtedness" means any indebtedness which matures more than one
year after the date the amount of Funded Indebtedness is being determined, less
any such indebtedness as will be retired by any deposit or payment required to
be made within one year from such date under any prepayment provision, sinking
fund, purchase fund or otherwise. Funded Indebtedness does not, however, include
indebtedness of Williams or any of its subsidiaries incurred to finance
outstanding advances to others to finance oil or natural gas exploration and
development, to the extent that the latter are not in default in their
obligations to Williams or such subsidiary. Funded Indebtedness also does not
include indebtedness of Williams or any of its subsidiaries incurred to finance
oil or natural gas exploration and development through what is commonly referred
to as a "production payment" to the extent that Williams or any of its
subsidiaries have not guaranteed the repayment of the production payment.
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You should note that the term "subsidiary," as used in this section
describing the debt securities, refers only to a corporation in which Williams,
or another subsidiary or subsidiaries of Williams, owns at least a majority of
the outstanding securities which have voting power.
GENERAL TERMS OF THE DEBT SECURITIES
Neither of the indentures limits the amount of debt securities, debentures,
notes or other evidences of indebtedness that Williams or any of its
subsidiaries may issue. The debt securities will be unsecured senior or
subordinated obligations of Williams. Williams' subsidiaries own all of the
operating assets of Williams and its subsidiaries. Therefore, Williams' rights
and the rights of Williams' creditors, including holders of debt securities, to
participate in the assets of any subsidiary upon the subsidiary's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that Williams may itself be a creditor with
recognized claims against the subsidiary. The ability of Williams to pay
principal of and interest on the debt securities is, to a large extent,
dependent upon dividends or other payments from its subsidiaries.
The indentures provide that Williams may issue debt securities from time to
time in one or more series and that Williams may denominate the debt securities
and make them payable in foreign currencies. The relevant prospectus supplement
will describe special United States federal income tax considerations applicable
to any debt securities denominated and payable in a foreign currency.
TERMS YOU WILL FIND IN THE PROSPECTUS SUPPLEMENT
The prospectus supplement will provide information relating to the debt
securities and the following terms of the debt securities, to the extent such
terms are applicable to the debt securities described in a particular prospectus
supplement:
- classification as senior or subordinated debt securities;
- ranking of the specific series of debt securities relative to other
outstanding indebtedness, including subsidiaries' debt;
- if the debt securities are subordinated, the aggregate amount of
outstanding indebtedness, as of a recent date, that is senior to the
subordinated securities, and any limitation on the issuance of additional
senior indebtedness;
- the specific designation, aggregate principal amount, purchase price and
denomination of such debt securities;
- currency or units based on or relating to currencies in which such debt
securities are denominated and/or in which principal, premium, if any,
and/or any interest will or may be payable;
- any date of maturity;
- interest rate or rates, if any or the method by which such rate will be
determined;
- the dates on which any such interest will be payable;
- the place or places where the principal of and interest, if any, on the
debt securities will be payable;
- any redemption or sinking fund provisions;
- whether the debt securities will be issuable in registered or bearer form
or both and, if debt securities in bearer form are issuable, restrictions
applicable to the exchange of one form for another and to the offer, sale
and delivery of debt securities in bearer form;
- any applicable United States federal income tax consequences, including
whether and under what circumstances Williams will pay additional amounts
on debt securities held by a person who is not a U.S. Person, as defined
in the prospectus supplement, in respect of any tax, assessment or
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governmental charge withheld or deducted, and if so, whether Williams
will have the option to redeem such debt securities rather than pay such
additional amounts; and
- any other specific terms of the debt securities, including any additional
events of default or covenants with respect to such debt securities.
Holders of debt securities may present debt securities for exchange in the
manner, at the places and subject to the restrictions set forth in the debt
securities and the prospectus supplement. Holders of registered debt securities
may present debt securities for transfer in the manner, at the places and
subject to the restrictions set forth in the debt securities and the prospectus
supplement. Williams will provide such services without charge, other than any
tax or other governmental charge payable in connection therewith, but subject to
the limitations provided in the applicable indenture. Debt securities in bearer
form and the coupons, if any, appertaining thereto will be transferable by
delivery.
INTEREST RATE
Debt securities that bear interest will do so at a fixed rate or a floating
rate. Williams will sell at a discount below stated principal amount any debt
securities which bear no interest or which bear interest at a rate that at the
time of issuance which is below the prevailing market rate.
The relevant prospectus supplement will describe the special United States
federal income tax considerations applicable to:
- any discounted debt securities; or
- certain debt securities issued at par which are treated as having been
issued at a discount for United States federal income tax purposes.
REGISTERED GLOBAL SECURITIES
Williams may issue registered debt securities of a series in the form of
one or more fully registered global securities. Williams will deposit the
registered global security with a depositary or with a nominee for a depositary
identified in the prospectus supplement relating to such series. Williams will
then issue one or more registered global securities in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding registered debt securities of the series to be represented by the
registered global security or securities. Unless and until it is exchanged in
whole or in part for debt securities in definitive registered form, a registered
global security may not be transferred, except as a whole in three cases:
- by the depositary for the registered global security to a nominee of the
depositary;
- by a nominee of the depositary to the depositary or another nominee of
the depositary; or
- by the depositary or any nominee to a successor of the depositary or a
nominee of the successor.
The prospectus supplement relating to a series of debt securities will
describe the specific terms of the depositary arrangement concerning any portion
of the debt securities to be represented by a registered global security.
Williams anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a registered global security, the depositary for the
registered global security will credit, on its book-entry registration and
transfer system, the principal amounts of the debt securities represented by the
registered global security to the accounts of persons that have accounts with
this depositary. These persons are referred to as "participants." Any
underwriters or agents participating in the distribution of debt securities
represented by the registered global security will designate the accounts to be
credited. Only participants or persons that hold interests through participants
will be able to beneficially own interests in a registered global security. The
depositary for a global security will maintain records of beneficial ownership
interests in a registered global security for participants. Participants or
persons that hold through participants will maintain records of beneficial
ownership interests in a global security for
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persons other than participants. These records will be the only means to
transfer beneficial ownership in a registered global security.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of a registered global security, the depositary or its
nominee will be considered the sole owner or holder of the debt securities
represented by the registered global security for all purposes under the
applicable indenture. Except as set forth below, owners of beneficial interests
in a registered global security
- may not have the debt securities represented by a registered global
security registered in their names;
- will not receive or be entitled to receive physical delivery of debt
securities represented by a registered global security in definitive
form; and
- will not be considered the owners or holders of debt securities
represented by a registered global security under the applicable
indenture.
PAYMENT OF INTEREST AND PRINCIPAL
Williams will make principal, premium, if any, and interest payments on
debt securities represented by a registered global security registered in the
name of a depositary or its nominee to the depositary or its nominee as the
registered owner of the registered global security. None of Williams, the
trustees or any paying agent for debt securities represented by a registered
global security will have any responsibility or liability for
- any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in such registered global security; or
- maintaining, supervising or reviewing any records relating to beneficial
ownership interests.
Williams expects that the depositary, upon receipt of any payment of
principal, premium or interest, will immediately credit participants' accounts
with payments in amounts proportionate to their beneficial interests in the
principal amount of a registered global security as shown on the depositary's
records. Williams also expects that payments by participants to owners of
beneficial interests in a registered global security held through participants
will be governed by standing instructions and customary practices. This is
currently the case with the securities held for the accounts of customers
registered in "street names." Williams also expects that such payout will be the
responsibility of participants.
Williams will issue debt securities in definitive form in exchange for the
registered global security if:
- the depositary for any debt securities represented by a registered global
security is at any time unwilling or unable to continue as depositary;
and
- Williams does not appoint a successor depositary within ninety days.
In addition, Williams may at any time determine not to have any of the debt
securities of a series represented by one or more registered global securities.
In such event, Williams will issue debt securities of this series in definitive
form in exchange for all of the registered global security or securities
representing these debt securities.
SENIOR DEBT
Williams will issue under the senior debt indenture the debt securities and
any coupons that will constitute part of the senior debt of Williams. These
senior debt securities will rank equally and pari passu with all other unsecured
and unsubordinated debt of Williams.
SUBORDINATED DEBT
Williams will issue under the subordinated debt indenture the debt
securities and any coupons that will constitute part of the subordinated debt of
Williams. These subordinated debt securities will be
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subordinate and junior in right of payment, to the extent and in the manner set
forth in the subordinated debt indenture, to all "senior indebtedness" of
Williams. The subordinated debt indenture defines "senior indebtedness" as
obligations of, or guaranteed or assumed by, Williams for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments, and
amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligation. "Senior indebtedness" does not include nonrecourse
obligations, the subordinated debt securities or any other obligations
specifically designated as being subordinate in right of payment to senior
indebtedness. See subordinated debt indenture, section 1.1.
In general, the holders of all senior indebtedness are first entitled to
receive payment of the full amount unpaid on senior indebtedness before the
holders of any of the subordinated debt securities or coupons are entitled to
receive a payment on account of the principal or interest on the indebtedness
evidenced by the subordinated debt securities in certain events. These events
include:
- any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings which concern
Williams or a substantial part of its property;
- a default having occurred for the payment of principal, premium, if any,
or interest on or other monetary amounts due and payable on any senior
indebtedness or any other default having occurred concerning any senior
indebtedness, which permits the holder or holders of any senior
indebtedness to accelerate the maturity of any senior indebtedness with
notice or lapse of time, or both. Such an event of default must have
continued beyond the period of grace, if any, provided for such event of
default, and such an event of default shall not have been cured or waived
or shall not have ceased to exist; or
- the principal of, and accrued interest on, any series of the subordinated
debt securities having been declared due and payable upon an event of
default pursuant to section 5.1 of the subordinated debt indenture. This
declaration must not have been rescinded and annulled as provided in the
subordinated debt indenture.
If this prospectus is being delivered in connection with a series of
subordinated debt securities, the accompanying prospectus supplement or the
information incorporated in this prospectus by reference will set forth the
approximate amount of senior indebtedness outstanding as of the end of the most
recent fiscal quarter.
CERTAIN COVENANTS OF WILLIAMS
Liens. The senior debt indenture refers to any instrument securing
indebtedness, such as a mortgage, pledge, lien, security interest or encumbrance
on any property of Williams, as a "mortgage." The senior debt indenture further
provides that, subject to certain exceptions, Williams will not, nor will it
permit any subsidiary to, issue, assume or guarantee any indebtedness secured by
a mortgage unless Williams provides equal and proportionate security for the
senior debt securities Williams issues under the senior debt indenture. Among
these exceptions are
- certain purchase money mortgages;
- certain preexisting mortgages on any property acquired or constructed by
Williams or a subsidiary;
- certain mortgages created within one year after completion of such
acquisition or construction;
- certain mortgages created on any contract for the sale of products or
services related to the operation or use of any property acquired or
constructed within one year after completion of such acquisition or
construction;
- mortgages on property of a subsidiary existing at the time it became a
subsidiary of Williams; and
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- mortgages, other than as specifically excepted, in an aggregate amount
which, at the time of, and after giving effect to, the incurrence does
not exceed five percent of Consolidated Net Tangible Assets. See the
senior debt indenture, section 3.6.
Consolidation, Merger, Conveyance of Assets. Each indenture provides, in
general, that Williams will not consolidate with or merge into any other entity
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless:
- the corporation, limited liability company, limited partnership, joint
stock company or trust formed by such consolidation or into which
Williams is merged or the person which acquires such assets expressly
assumes Williams' obligations under the applicable indenture and the debt
securities issued under this indenture; and
- immediately after giving effect to such transaction, no event of default,
and no event which, after notice or lapse of time or both, would become
an event of default, shall have happened and be continuing. See section
9.1.
Event Risk. Except for the limitations on liens described above, neither
indenture nor the debt securities contains any covenants or other provisions
designed to afford holders of the debt securities protection in the event of a
highly leveraged transaction involving Williams.
EVENT OF DEFAULT
In general, each indenture defines an Event of Default with respect to debt
securities of any series issued under such indenture as being:
(a)default in payment of any principal of the debt securities of such
series, either at maturity, upon any redemption, by declaration or
otherwise;
(b) default for 30 days in payment of any interest on any debt securities of
such series unless otherwise provided;
(c)default for 90 days after written notice in the observance or
performance of any covenant or warranty in the debt securities of such
series or such Indenture other than
- default in or breach of a covenant which is dealt with otherwise below
or
- if certain conditions are met, if the events of default described in
this clause (c) are the result of changes in generally accepted
accounting principles; or
(d) certain events of bankruptcy, insolvency or reorganization of Williams.
See section 5.1.
In general, each indenture provides that if an Event of Default described
in clause (a) or (b) above or in (c) above occurs and does not affect all series
of debt securities then outstanding, the trustee or the holders of debt
securities may then declare the following amounts to be due and payable
immediately:
- the entire principal of all debt securities of each series affected by
the Event of Default; and
- the interest accrued on such principal.
Such a declaration by the holders requires the approval of at least 25
percent in principal amount of the debt securities of each series issued under
the applicable indenture and then outstanding, treated as one class, which are
affected by the Event of Default.
Each indenture also generally provides that if a default described in
clause (c) above which is applicable to all series of debt securities then
outstanding or certain events of bankruptcy, insolvency and reorganization of
Williams occur and are continuing, the trustee or the holders of debt securities
may declare the entire principal of all such debt securities and interest
accrued thereon to be due and payable immediately.
Such a declaration by the holders requires the approval of at least 25
percent in principal amount of all debt securities issued under the applicable
indenture and then outstanding, treated as one class. Upon
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certain conditions, the holders of a majority in aggregate principal amount of
the debt securities of all such affected series then outstanding may annul such
declarations and waive the past defaults. However, the majority holders may not
annul or waive a continuing default in payment of principal of, premium, if any,
or interest on such debt securities. See sections 5.1 and 5.10.
Each indenture provides that the holders of debt securities issued under
that indenture, treated as one class, will indemnify the trustee before the
trustee exercises any of its rights or powers under this indenture. Such
indemnification is subject to the trustee's duty to act with the required
standard of care during a default. See section 6.2. The holders of a majority in
aggregate principal amount of the outstanding debt securities of each series
affected, treated as one class, issued under the applicable indenture may direct
the time, method and place of
- conducting any proceeding for any remedy available to the trustee or of
- exercising any trust or power conferred on the trustee.
This right of the holders of debt securities is, however, subject to the
provisions in each indenture providing for the indemnification of the trustee
and other specified limitations. See section 5.9.
In general, each indenture provides that holders of debt securities issued
under that indenture may only institute an action against Williams under such
indenture if the following four conditions are fulfilled:
- the holder previously has given to the trustee written notice of default
and the default continues;
- the holders of at least 25 percent in principal amount of the debt
securities of each affected series (treated as one class) issued under
the applicable indenture and then outstanding have both (1) requested the
trustee to institute such action and (2) offered the trustee reasonable
indemnity;
- the trustee has not instituted such action within 60 days of receipt of
such request; and
- the trustee has not received direction inconsistent with such written
request by the holders of a majority in principal amount of the debt
securities of each affected series (treated as one class) issued under
the applicable indenture and then outstanding. See sections 5.6, 5.7 and
5.9.
The above four conditions do not apply to actions by holders of the debt
securities under the applicable indenture against Williams for payment of
principal or interest on or after the due date provided. Each indenture contains
a covenant that Williams will file annually with the Trustee a certificate of no
default or a certificate specifying any default that exists. See section 3.5.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Williams can discharge or defease its obligations under each indenture as
set forth below. See section 10.1.
Under terms satisfactory to the trustee, Williams may discharge certain
obligations to holders of any series of debt securities issued under the
applicable indenture which have not already been delivered to the trustee for
cancellation. Such debt securities must also
- have become due and payable;
- be due and payable by their terms within one year; or
- be scheduled for redemption within by their terms within one year.
Williams may redeem any series of debt securities by irrevocably depositing
an amount certified to be sufficient to pay at maturity or upon redemption the
principal of and interest on such debt securities. Williams may make such
deposit in cash or, in the case of debt securities payable only in U.S. dollars,
U.S. Government Obligations, as defined in the applicable indenture.
Williams may also, upon satisfaction of the conditions listed below,
discharge certain obligations to holders of any series of debt securities issued
under such indenture at any time ("Defeasance"). Under terms satisfactory to the
trustee, Williams may be released with respect to any outstanding series of debt
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securities issued under the relevant indenture from the obligations imposed by
sections 3.6 and 9.1, in the case of the senior debt indenture, and section 9.1,
in the case of the subordinated debt indenture. These sections contain the
covenants described above limiting liens and consolidations, mergers and
conveyances of assets. Also under terms satisfactory to the trustee, Williams
may omit to comply with these sections without creating an Event of Default
("Covenant Defeasance"). Defeasance or Covenant Defeasance may be effected only
if, among other things:
- Williams irrevocably deposits with the trustee cash or, in the case of
debt securities payable only in U.S. dollars, U.S. Government obligations
as trust funds in an amount certified to be sufficient to pay at maturity
or upon redemption the principal of and interest on all outstanding debt
securities of such series issued under the applicable indenture;
- Williams delivers to the trustee an opinion of counsel to the effect that
the holders of this series of debt securities will not recognize income,
gain or loss for United States federal income tax purposes as a result of
such Defeasance or Covenant Defeasance. Such opinion must further state
that these holders will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if Defeasance or Covenant Defeasance had not occurred. In
the case of a Defeasance, this opinion must be based on a ruling of the
Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the applicable indenture, since this
result would not occur under current tax law;
- in the case of the subordinated debt indenture, no event or condition
shall exist that, pursuant to certain provisions described under
"-- Subordinated Debt" above, would prevent Williams from making payments
of principal of or interest on the subordinated debt securities at the
date of the irrevocable deposit referred to above or at any time during
the period ending on the 91st day after the deposit date; and
- in the case of the subordinated indenture, Williams delivers to the
trustee for the subordinated debt indenture an opinion of counsel to the
effect that
(1) the trust funds will not be subject to any rights of holders of
senior indebtedness and
(2) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
If a court were to rule under any such law in any case or proceeding that
the trust funds remained property of Williams, counsel must give its opinion
only with respect to:
(1) the trustee's valid and perfected security interest in these trust
funds;
(2) adequate protection of holders of the subordinated debt securities
interests in these funds; and
(3) no prior rights of holders of senior debt securities in property or
interests granted to the trustee or holders of the subordinated debt
securities in exchange for or with respect to these trust funds.
MODIFICATION OF THE INDENTURES
Each indenture provides that Williams and the trustee may enter into
supplemental indentures which conform to the provisions of the Trust Indenture
Act of 1939 without the consent of the holders to, in general:
- secure any debt securities;
- evidence the assumption by a successor person of the obligations of
Williams;
- add further covenants for the protection of the holders;
- cure any ambiguity or correct any inconsistency in that indenture, so
long as such action will not adversely affect the interests of the
holders;
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- establish the form or terms of debt securities of any series; and
- evidence the acceptance of appointment by a successor trustee. See
section 8.1.
Each indenture also permits Williams and the trustee to
- add any provisions to that indenture;
- change in any manner that indenture;
- eliminate any of the provisions of that indenture; and
- modify in any way the rights of the holders of debt securities of each
series affected.
All of the above actions require the consent of the holders of at least a
majority in principal amount of debt securities of each series issued under that
indenture then outstanding and affected. These holders will vote as one class to
approve such changes.
Such changes must, however, conform to the Trust Indenture Act of 1939 and
Williams and the trustee may not, without the consent of each holder of
outstanding debt securities affected thereby:
- extend the final maturity of the principal of any debt securities;
- reduce the principal amount of any debt securities;
- reduce the rate or extend the time of payment of interest on any debt
securities;
- reduce any amount payable on redemption of any debt securities;
- change the currency in which the principal, including any amount in
respect of original issue discount, or interest on any debt securities is
payable;
- reduce the amount of any original issue discount security payable upon
acceleration or provable in bankruptcy;
- alter certain provisions of the indenture relating to debt securities not
denominated in U.S. dollars or for which conversion to another currency
is required to satisfy the judgment of any court;
- impair the right to institute suit for the enforcement of any payment on
any debt securities when due; or
- reduce the percentage in principal amount of debt securities of any
series issued under the applicable indenture, the consent of the holders
of which is required for any such modification. See section 8.2.
The subordinated debt indenture may not be amended to alter the
subordination of any outstanding subordinated debt securities without the
consent of each holder of senior indebtedness then outstanding that would be
adversely affected by such an amendment. See the subordinated debt indenture,
section 8.6.
CONCERNING THE TRUSTEE
The trustee is one of a number of banks with which Williams, its parent and
its subsidiaries maintain ordinary banking relationships and with which Williams
and its subsidiaries and affiliates maintain credit facilities.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
Debt securities in bearer form are subject to special U.S. tax requirements
and may not be offered, sold or delivered within the United States or its
possessions or to a U.S. person, except in certain transactions permitted by
U.S. tax regulations. Investors should consult the prospectus supplement in the
event that bearer debt securities are issued for special procedures and
restrictions that will apply to such an offering.
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DESCRIPTION OF PREFERRED STOCK
Under the Williams' certificate of incorporation, as amended, Williams is
authorized to issue up to 30,000,000 shares of preferred stock, par value $1.00
per share, in one or more series. At December 31, 1998, approximately one
million eight-hundred thousand (1,800,000) shares of preferred stock were
outstanding. The following description of preferred stock sets forth certain
general terms and provisions of the series of preferred stock to which any
prospectus supplement may relate. The prospectus supplement relating to a
particular series of preferred stock will describe certain other terms of such
series of preferred stock. If so indicated in the prospectus supplement relating
to a particular series of preferred stock, the terms of any such series of
preferred stock may differ from the terms set forth below. The description of
preferred stock set forth below and the description of the terms of a particular
series of preferred stock set forth in the related prospectus supplement are not
complete and are qualified in their entirety by reference to the certificate of
incorporation and to the certificate of designation relating to that series of
preferred stock.
The rights of the holders of each series of preferred stock will be
subordinate to those of Williams' general creditors.
GENERAL TERMS OF THE PREFERRED STOCK
The certificate of incorporation will set forth the designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions of the preferred stock of each
series. To the extent the certificate of incorporation does not set forth such
rights and limitations, they shall be fixed by the certificate of designation
relating to such series. A prospectus supplement, relating to each series, shall
specify the terms of the preferred stock as follows:
- the distinctive designation of such series and the number of shares which
shall constitute such series;
- the rate of dividends, if any, payable on shares of such series, the
dates, if any, from which such dividends shall accrue, the dates when
such dividends shall be payable, and whether such dividends shall be
cumulative or noncumulative;
- the amounts which the holders of the preferred stock of such series shall
be entitled to be paid in the event of a voluntary or involuntary
liquidation, dissolution or winding up of Williams; and
- whether or not the preferred stock of such series shall be redeemable and
at what times and under what conditions and the amount or amounts payable
thereon in the event of redemption.
The prospectus supplement may, in a manner not inconsistent with the
provisions of the certificate of incorporation:
- limit the number of shares of such series which may be issued;
- provide for a sinking fund for the purchase or redemption or a purchase
fund for the purchase of shares of such series; set forth the terms and
provisions governing the operation of any such fund; and establish the
status as to reissue of shares of preferred stock purchased or otherwise
reacquired or redeemed or retired through the operation of such sinking
or purchase fund;
- grant voting rights to the holder of shares of such series, in addition
to and not inconsistent with those granted by the certificate of
incorporation to the holders of preferred stock;
- impose conditions or restrictions upon the creation of indebtedness of
Williams or upon the issue of additional preferred stock or other capital
stock ranking equally with or prior to such preferred stock or capital
stock as to dividends or distribution of assets on liquidation;
- impose conditions or restrictions upon the payment of dividends upon, the
making of other distributions to or the acquisition of junior stock;
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- grant to the holders of the preferred stock of such series the right to
convert such stock into shares of another series or class of capital
stock; and
- grant such other special rights to the holders of shares of such series
as the board of directors may determine and as shall not be inconsistent
with the provisions of the certificate of incorporation.
DIVIDENDS
Holders of the preferred stock of any series shall be entitled to receive,
when and as declared by the board of directors, preferential dividends in cash
at the rate per annum, if any, fixed for such series. Such entitlement will be
subject to any limitations specified in the certificate of designation providing
for the issuance of a particular series of preferred stock. The certificate of
designation providing for the issuance of preferred stock of such series may
specify the date on which such preferential dividends are payable. Such
preferential dividends shall further be payable to stockholders of record on a
date which precedes each such dividend payment date which the board of directors
has fixed in advance of each such particular dividend.
Each share of preferred stock shall rank on a parity with each other share
of preferred stock, irrespective of series, with respect to preferential
dividends accrued on the shares of such series. Williams will not declare or pay
any dividend nor will it set apart a dividend for payment for the preferred
stock of any series unless at the same time (1) Williams declares or pays a
dividend in like proportion to the dividends accrued upon the preferred stock of
each other series or (2) Williams sets apart a dividend for payment on preferred
stock of each other series then outstanding. This does not, however, prevent
Williams from authorizing or issuing one or more series of preferred stock
bearing dividends subject to contingencies as to the existence or amount of
earnings of Williams during one or more fiscal periods, or as to other events,
to which dividends on other series of preferred stock are not subject.
So long as any shares of preferred stock remain outstanding, Williams will
not, unless all dividends accrued on outstanding shares of preferred stock for
all past dividend periods shall have been paid, or declared and a sum sufficient
for the payment of such dividends set apart:
- pay or declare any dividends whatsoever, whether in cash, stock or
otherwise;
- make any distribution on any class of junior stock;
- purchase, retire or otherwise acquire for valuable consideration any
shares of preferred stock (subject to certain limitations) or junior
stock.
The ability of Williams, as a holding company, to pay dividends on the
preferred stock will depend upon the payment of dividends, interest or other
charges by subsidiaries to it. Debt instruments of certain subsidiaries of
Williams limit the amount of payments to Williams which could affect the amount
of funds available to Williams to pay dividends on the preferred stock.
First Chicago Trust Company of New York is the registrar, transfer agent
and dividend disbursing agent for the shares of the preferred stock.
REDEMPTION
With the approval of its board of directors, Williams may redeem all or any
part of the preferred stock of any series which by its terms is redeemable.
Redemption will take place at the time or times and on the terms and conditions
fixed for such series. Williams must duly give notice in the manner provided in
the certificate of designation providing for this series. Williams must pay for
preferred stock in cash the sum fixed for this series, together, in each case,
with an amount equal to accrued and unpaid dividends thereon. The certificate of
designation providing for a series of preferred stock which is subject to
redemption may provide that the shares will no longer be deemed outstanding, and
all rights with respect to such shares, including the accrual of further
dividends, other than the right to receive the redemption price of such shares
without interest, will cease upon two conditions:
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- Williams has given notice of redemption of all or part of the shares of
this series and
- Williams has set aside or deposited with a suitable depositary for the
proportionate benefit of the shares called for redemption the redemption
price of these shares, together with accrued dividends to the date fixed
as the redemption date.
Redemption will also terminate the right of holders of the preferred stock
to accrual of further dividends, but it will not terminate the right of holders
of the shares redeemed to receive the redemption price for these shares without
interest.
VOTING RIGHTS
The preferred stock shall have no right or power to vote on any question or
in any proceeding or to be represented at or to receive notice of any meeting of
stockholders, except as:
- as stated in this prospectus;
- expressly provided by law; or
- provided in the certificate of designation of such series of preferred
stock.
On any matters on which the holders of the preferred stock or any series
thereof shall be entitled to vote separately as a class or series, they shall be
entitled to one vote for each share held.
So long as any shares of preferred stock are outstanding, Williams shall
not redeem or otherwise acquire for value any shares of the preferred stock or
of any other stock ranking on a parity with the preferred stock concerning
dividends or distribution of assets on liquidation during the continuance of any
default in the payment of dividends on the preferred stock. Holders of a
majority of the number of shares of preferred stock outstanding at the time may,
however, permit such a redemption by giving their consent in person or in proxy,
either in writing or by vote at any annual meeting or any special meeting called
for the purpose.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the affairs
of Williams, voluntary or involuntary, the holders of the preferred stock of the
respective series are entitled to be paid in full
- the respective amount fixed in the certificate of designation providing
for the issue of shares of such series,
- plus a sum equal to all accrued and unpaid dividends on the shares of
preferred stock to the date of payment of such dividends. Williams must
have made this payment in full to the holders of the preferred stock
before Williams may make any distribution or payment to the holders of
any class of stock of Williams ranking junior to the preferred stock as
to dividends or distribution of assets on liquidation. After Williams has
made this payment in full to the holders of the preferred stock, the
remaining assets and funds of Williams will be distributed among the
holders of the stocks of Williams ranking junior to the preferred stock
according to their rights. If the assets of Williams available for
distribution to holders of preferred stock are sufficient to make the
payment required to be made in full, these assets will be distributed to
the holders of shares of preferred stock proportionately to the amounts
payable upon each share of preferred stock.
CURRENTLY OUTSTANDING PREFERRED STOCK
Williams currently has two series of preferred stock outstanding, each of
which is briefly described below. The preferred stock to be offered by this
prospectus will not include either of the outstanding series.
The first outstanding series is the Cumulative Convertible preferred stock,
$3.50 Series. Holders of $3.50 Preferred Stock are entitled to receive an annual
cash dividend of $3.50 per share. The dividends are payable in quarterly
installments, and are cumulative from the date of initial issuance. Williams may
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redeem the shares of $3.50 Preferred Stock after November 1, 1999. The $3.50
Preferred Stock ranks prior to the Series A Junior Participating preferred
stock, described below, as well as all other shares of capital stock of Williams
currently outstanding.
The second currently outstanding series of preferred stock is the Series A
Junior Participating preferred stock. Holders of Junior Preferred Stock are
entitled to receive quarterly dividends payable in cash of an amount per share
equal to
- the greater of (a) $120 or (b) 1200 times the aggregate per share amount
of all cash dividends, plus
- 1200 times the aggregate per share amount payable in kind of all non-cash
dividends or other distributions other than dividends payable in common
stock, since the immediately preceding quarterly dividend payment date.
The dividends on the Junior Preferred Stock are cumulative. Holders of
Junior Preferred Stock have voting rights entitling them to 1200 votes per share
on all matters submitted to a vote of the stockholders of Williams. The Junior
Preferred Stock is not redeemable. The Junior Preferred Stock ranks junior to
all other series of Williams' preferred stock as to the payment of dividends and
the distribution of assets unless the terms of such series specify otherwise.
PLAN OF DISTRIBUTION
Williams may sell the securities through agents, through underwriters,
through dealers and directly to purchasers.
Agents designated by Williams from time to time may solicit offers to
purchase the securities. The prospectus supplement will name any such agent who
may be deemed to be an underwriter, as that term is defined in the Securities
Act, involved in the offer or sale of the securities in respect of which this
prospectus is delivered. The prospectus supplement will also set forth any
commissions payable by Williams to such agent. Unless otherwise indicated in the
prospectus supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
If Williams uses any underwriters in the sale, Williams will enter into an
underwriting agreement with such underwriters at the time of sale to them. The
prospectus supplement which the underwriter will use to make resales to the
public of the securities in respect of which this prospectus is delivered will
set forth the names of the underwriters and the terms of the transaction.
If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, Williams will sell such securities to the dealer,
as principal. The dealer may then resell such securities to the public at
varying prices to be determined by such dealer at the time of resale.
Agents, dealers and underwriters may be entitled under agreements entered
into with Williams to indemnification by Williams against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect of such civil liabilities. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for Williams in the ordinary course of business.
One or more firms, referred to as "remarketing firms," may also offer or
sell the securities, if the prospectus supplement so indicates, in connection
with a remarketing arrangement upon their purchase. Remarketing firms will act
as principals for their own accounts or as agents for Williams and such
remarketing firms will offer or sell the securities in accordance with a
redemption or repayment pursuant to the terms of the securities. The prospectus
supplement will identify any remarketing firm and the terms of its agreement, if
any, with Williams and will describe the remarketing firm's compensation.
Remarketing firms may be deemed to be underwriters in connection with the
securities they remarket. Remarketing firms may be entitled under agreements
which may be entered into with Williams to indemnification by Williams against
certain civil liabilities, including liabilities under the Securities Act,
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and may be customers of, engage in transactions with or perform services for
Williams in the ordinary course of business.
If the prospectus supplement so indicates, Williams will authorize agents
and underwriters or dealers to solicit offers by certain purchasers to purchase
the securities from Williams at the public offering price set forth in the
prospectus supplement. Such solicitation will occur pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject to only those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth the
commission payable for solicitation of such offers.
Each series of debt securities offered will be a new issue of securities
and will have no established trading market. Such debt securities offered may or
may not be listed on a national securities exchange. Williams cannot be sure as
to the liquidity of or the existence of trading markets for any debt securities
offered.
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the securities.
Specifically, the underwriters, if any, may overallot in connection with the
offering, and may bid for, and purchase, the securities in the open market.
EXPERTS
As set forth in their report incorporated by reference in this prospectus,
Ernst & Young LLP, independent auditors, have audited the consolidated financial
statements and schedule of Williams for the three years ended December 31, 1998,
which appear in Williams' Annual Report on Form 10-K for the year ended December
31, 1998. Such report of Ernst & Young LLP is based in part on the report of
Deloitte & Touche LLP, independent auditors, on the consolidated financial
statements of MAPCO Inc. for each of the years ended December 31, 1997, and
December 31, 1996. Such report of Deloitte & Touche LLP appears in Williams'
Annual Report on Form 10-K and is incorporated by reference in this prospectus.
The report of Deloitte & Touche LLP expresses an unqualified opinion and
includes explanatory paragraphs relating to certain litigation to which MAPCO
Inc. is a defendant and the change in its method of accounting for business
process reengineering activities to conform to the consensus reached by the
Emerging Issues Task Force in Issue No. 97-13. Williams' consolidated financial
statements and schedule for the three years ended December 31, 1998, which
appear in Williams Annual Report on Form 10-K are incorporated in this
prospectus by reference in reliance upon such reports given upon the authority
of such firms as experts in accounting and auditing.
The consolidated financial statements and schedules of Williams included in
or incorporated by reference in any documents filed pursuant to Section 13, 14
or 15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering will be so included or incorporated by reference in
reliance upon the reports of independent auditors pertaining to such financial
statements (to the extent covered by consents filed with the Commission) given
upon the authority of such independent auditors as experts in accounting and
auditing.
LEGAL MATTERS
William G. von Glahn, Senior Vice President and General Counsel of Williams
will pass upon certain legal matters for Williams in connection with the
securities offered by this prospectus. Davis Polk & Wardwell, New York, New York
will pass upon certain legal matters for the underwriters in connection with the
securities offered by this prospectus. As of the date of this prospectus, Mr.
von Glahn beneficially owns, directly or indirectly approximately 177,527 shares
of Williams' common stock and also has exercisable options to purchase an
additional 93,838 shares of Williams' common stock. Pursuant to its by-laws,
Williams is required to indemnify Mr. von Glahn to the fullest extent permitted
by Delaware law against any expenses actually and reasonably incurred by him in
connection with any action, suit or proceeding in which he is made party by
reason of his being an offer of Williams. Williams also maintains directors' and
officers' liability insurance under which Mr. von Glahn is insured against
certain expenses and liabilities.
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$700,000,000
LOGO
THE WILLIAMS
COMPANIES, INC.
7.625% NOTES DUE 2019
----------------------------
PROSPECTUS SUPPLEMENT
JULY 21, 1999
----------------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
BANC OF AMERICA
SECURITIES LLC
CHASE SECURITIES INC.
BANC ONE CAPITAL MARKET, INC.
CIBC WORLD MARKETS
CREDIT LYONNAIS SECURITIES
NESBITT BURNS SECURITIES INC.
RBC DOMINION SECURITIES CORPORATION
SCOTIA CAPITAL MARKETS
