<PAGE>
As filed with the Securities and Exchange Commission on October 22, 1999
Registration No. 333-87617
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
PRE-EFFECTIVE AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------
SOUTHERN UNION COMPANY Delaware 75-0571592
(Exact name of Registrant (State or other Jurisdiction (I.R.S. Employer
as specified in its Charter) of Incorporation or Organization) Identification
Number)
---------------
504 Lavaca Street, Suite 800
Austin, Texas 78701
(512) 477-5852
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
---------------
Dennis K. Morgan, Esq.
Senior Vice President--Legal and Secretary
Southern Union Company
504 Lavaca Street, Eighth Floor
Austin, Texas 78701
(512) 477-5852
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
With copies to:
Stephen A. Bouchard, Esq. Michael E. Lubowitz, Esq.
Fleischman and Walsh, L.L.P. Weil, Gotshal & Manges LLP
1400 Sixteenth Street, N. W. 767 Fifth Avenue
Suite 600 New York, New York 10153
Washington, D.C. 20036 (212) 310-8000
(202) 939-7900
(Name, address, including zip code, and telephone number, including area code,
of agent for service for each registrant)
---------------
Approximate Date of Commencement of Proposed Sale to Public: From time to
time after the effective date of the Registration Statement, as determined by
market conditions.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following blank:
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 blank: X
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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. [_]
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this registration statement is a combined prospectus relating also
to securities previously registered pursuant to the Registration Statement on
Form S-3 (File No. 33-58297) and not issued, which other registration
statement, as amended, previously filed by Southern Union Company has been
declared effective.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus 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 +
+preliminary prospectus is not an offer to sell these securities and is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated October 22, 1999.
PROSPECTUS SUPPLEMENT
(To prospectus dated , 1999)
$
Southern Union Company
% Senior Notes Due
------------
The senior notes will bear interest at % per year and will mature on .
We will pay interest on the senior notes twice a year on and
, beginning on . The senior notes will not be redeemable prior
to maturity and are not entitled to any sinking fund.
------------
<TABLE>
<CAPTION>
Per Senior Note Total
--------------- -----
<S> <C> <C>
Public offering price (1) % $
Underwriting discount % $
Proceeds to company % $
</TABLE>
(1) Plus accrued interest from , 1999, if settlement occurs
after that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The senior notes will be ready for delivery in book-entry form only through
The Depository Trust Company on or about , 1999.
------------
Joint Book-Running Managers
Donaldson, Lufkin & Jenrette Merrill Lynch & Co.
------------
Banc of America Securities LLC
Chase Securities Inc.
Credit Lyonnais Securities
------------
The date of this prospectus supplement is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
Prospectus Supplement
<S> <C>
Southern Union Company................................................... S-3
Use of Proceeds.......................................................... S-5
Capitalization........................................................... S-6
Ratio of Earnings to Fixed Charges....................................... S-7
Unaudited Pro Forma Combined Condensed Financial Statements.............. S-8
Description of Senior Notes.............................................. S-14
Underwriting............................................................. S-17
Legal Matters............................................................ S-18
Prospectus
About this Prospectus.................................................... 1
Cautionary Statement Regarding Forward-Looking Statements................ 1
Where You Can Find More Information...................................... 2
Southern Union Company................................................... 4
Use of Proceeds.......................................................... 4
Description of the Debt Securities....................................... 5
Plan of Distribution..................................................... 15
Legal Matters............................................................ 16
Experts.................................................................. 16
</TABLE>
----------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate only as of the dates of this prospectus supplement and
the prospectus, respectively. Our business, financial condition, results of
operations and prospects may have changed since that date.
S-2
<PAGE>
SOUTHERN UNION COMPANY
We principally operate as a natural gas distributor through our divisions
Southern Union Gas, Missouri Gas Energy and Atlantic Utilities. Southern Union
Gas is headquartered in Austin, Texas and serves 513,000 customers in Texas,
including the cities of Austin, El Paso, Brownsville, Galveston, Harlingen,
McAllen and Port Arthur. Missouri Gas Energy is headquartered in Kansas City,
Missouri and serves about 484,000 customers in Kansas City, St. Joseph, Joplin,
Monett and other cities and locations in central and western Missouri. Atlantic
Utilities does business under the name South Florida Natural Gas. South Florida
Natural Gas is headquartered in New Smyrna Beach, Florida and serves about
4,400 customers in the cities of New Smyrna Beach and Edgewater, Volusia County
and other locations in central Florida.
We have created subsidiaries to support and expand our natural gas sales and
to capitalize on our gas energy expertise. Our subsidiaries market natural gas
to end-users, operate natural gas pipeline systems, distribute propane and sell
commercial gas air conditioning and other gas-fired engine-driven applications.
By providing "one-stop shopping," we can serve our customers' particular energy
needs. Some of our subsidiaries hold investments in real estate and other
assets used mainly in our utility business.
We are a sales and market-driven energy company. Our management is committed
to achieving profitable growth of our natural gas energy businesses in an
increasingly competitive business environment. Our strategies for achieving
these objectives are:
. promoting new sales opportunities and markets for natural gas and
propane;
. enhancing financial and operating performance;
. further development of existing systems; and
. selectively acquiring new systems.
Our management develops and continually evaluates these strategies, by applying
its experience and expertise in analyzing the energy industry, technological
advances, market opportunities and general business trends. Each of these
strategies reflects our commitment to our core business of selling and
transporting natural gas.
We have a goal of planned growth and expansion in or related to the
utilities industry in a manner designed to consider the interests of our
stockholders, debt holders, customers and regulators. Our management and board
of directors will determine the nature and location of any such properties, the
structure of any acquisitions and the method of financing any expansion or
growth. See "Cautionary Statement Regarding Forward-Looking Statements" in the
accompanying prospectus.
On October 5, 1999, we announced a definitive merger agreement with Fall
River Gas Company ("FAL"). FAL provides gas distribution service to
approximately 48,000 customers in southeastern Massachusetts. The agreement
calls for us to acquire FAL in a transaction valued at approximately $75
million, including assumption of debt. For each share of FAL common stock, FAL
stockholders will receive a combination of Southern Union common stock or cash
valued at $23.50 per share of FAL common stock. The agreement requires that at
least 50 percent of the approximately 2.2 million outstanding shares of common
stock of FAL be converted into Southern Union common stock and up to the
remaining 50 percent of FAL shares be converted into cash. The exchange ratio
for the stock portion of the consideration is subject to an adjustment formula
based on the average trading price of Southern Union common stock during a ten
trading-day period ending three full trading days before the closing date of
the FAL merger. If our average stock price per share for the adjustment period
is either lower than $16.875 or higher than $19.6875, the portion of the FAL
merger consideration payable in stock would be determined based upon a fixed
exchange ratio calculated at such prices. The merger will be accounted for
using the purchase method. Consummation of the FAL merger is subject to
conditions customary for a utility merger, including receipt of regulatory
approvals, and to approval by the holders of two-thirds of FAL's outstanding
common stock. We believe the FAL merger will be completed in calendar year
2000.
S-3
<PAGE>
On June 7, 1999, we announced a definitive merger agreement with
Pennsylvania Enterprises, Inc. ("PEI"). The agreement calls for PEI to merge
into us in a transaction valued at approximately $500 million, including
assumption of debt. The merger will be accounted for using the purchase method.
In connection with completion of the merger, each PEI shareholder will receive
Southern Union common stock having a value of $32.00, plus $3.00 in cash,
subject to certain adjustments. PEI is a multifaceted energy company
headquartered in Wilkes-Barre, Pennsylvania with natural gas distribution being
its primary business. PEI's principal subsidiary, PG Energy, together with
Honesdale Gas Company, serve more than 152,000 gas customers in northeastern
and central Pennsylvania. In addition, PEI markets electricity to more than
20,000 customers through PG Energy Power Plus. Our stockholders and PEI's
stockholders approved the merger on October 19, 1999. We expect to complete the
PEI merger in conjunction with completing this offering of senior notes. We are
soliciting consents from holders of $70 million of debt securities of PG Energy
to amend certain terms of those securities in connection with the PEI merger.
Our corporate headquarters are located at 504 Lavaca Street, Suite 800,
Austin, Texas 78701, and our telephone number is (512) 477-5852.
S-4
<PAGE>
USE OF PROCEEDS
The sale of the senior notes is being made in connection with the merger of
PEI into our company.
We intend to use the net proceeds of approximately $ from the
sale of the senior notes towards the following purposes:
. to fund the cash portion of the merger consideration to be paid to the
PEI stockholders (which could be up to approximately $72 million), the
final amount of which will be based upon the average trading price of
our common stock during a specific period prior to completing the
merger;
. to refinance certain debt of PEI and its subsidiaries in an amount up to
$200 million;
. to finance other costs and expenses that we have incurred and expect to
incur in connection with the PEI merger that we estimate to be
approximately $10 million; and
. to repay outstanding borrowings under our bank credit agreements of up
to $100 million.
The PEI indebtedness that we may refinance has maturities ranging from one
day to twenty years, at interest rates presently ranging from 5.64% to 9.34%.
All outstanding borrowings under our bank credit agreements presently mature
within two weeks, at interest rates presently ranging from approximately 5.5%
to approximately 6.1%. See "Where You Can Find More Information" in the
accompanying prospectus for additional information on the terms of such
indebtedness.
S-5
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1999
(a) on an actual basis and (b) as adjusted to reflect the issuance of $350
million of senior notes, the application of the estimated net proceeds of the
offering and the closing of the PEI merger. See "Unaudited Pro Forma Combined
Condensed Financial Statements." The following data is qualified in its
entirety by reference to, and should be read together with, the detailed
information and financial statements appearing in the documents incorporated in
the accompanying prospectus.
<TABLE>
<CAPTION>
At September 30, 1999
-------------------------------------
Actual As Adjusted
----------------- -------------------
Amount Percent Amount Percent
--------- ------- ----------- -------
(thousands, except percentages)
<S> <C> <C> <C> <C>
Short-term debt(1)....................... $ 86,192 $ 2,089
========= ===========
Long-term debt
New % senior notes due .......... - 350,000
Existing 7.60% senior notes due 2024... 364,515 364,515
Capital lease and other................ 25,898 25,898
--------- -----------
390,413 49.7% 740,413 50.4%
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely subordinated notes of
Southern Union.......................... 100,000 12.7% 100,000 6.8%
Common stockholders' equity.............. 294,723 37.6% 628,289 42.8%
--------- ---- ----------- ----
Total Capitalization................... $ 785,136 100% $ 1,468,702 100%
========= ==== =========== ====
</TABLE>
- --------
(1) Includes notes payable with an aggregate outstanding balance of $84.1
million at September 30, 1999, and long-term debt due within one year.
S-6
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for us
on an historical basis for each of the five years in the period ended June 30,
1999 and for the three-month period ended September 30, 1999, and on a pro
forma basis for the year ended June 30, 1999 and for the three-month period
ended September 30, 1999. For the purpose of calculating such ratios,
"earnings" consist of income from continuing operations before income taxes and
"fixed charges" consist of interest expense, amortization of debt discount or
premiums and an estimate of interest implicit in rentals.
<TABLE>
<CAPTION>
Three Months
Ended Year ended June 30,
September 30, -----------------------------
1999(a) 1999 1998 1997 1996 1995
------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges.......................... -- 1.36x 1.42x 1.67x 1.72x 1.60x
Pro Forma--Ratio of Earnings to
Fixed Charges(b)................. -- 1.16x
</TABLE>
- --------
(a) Earnings would be insufficient to cover fixed charges for the actual and
pro forma three-month periods ended September 30, 1999 by approximately
$10.1 million and $21.7 million, respectively.
(b) This pro forma ratio gives effect to an increase in outstanding debt, as of
the beginning of the period presented, primarily as a result of the
issuance of $350 million of senior notes, the application of the estimated
net proceeds of the offering and the PEI merger, which we will finance
primarily through the issuance of common stock. The PEI merger was assumed
to occur as of the beginning of the period presented, as reflected in the
Unaudited Pro Forma Combined Condensed Financial Statements.
S-7
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Condensed Financial Statements
present the combined financial data of Southern Union and PEI, including their
respective subsidiaries, after giving effect to the merger and the issuance of
$350 million of debt securities. It was assumed that the merger and the
issuance of debt securities had been effective for the periods indicated and
that the purchase method of accounting was utilized. The pro forma adjustments
reflect an estimated additional purchase cost assigned to utility plant based
on the historical cost of the regulated assets and liabilities of PEI and an
estimate of the fair value of the non-regulated assets and liabilities of PEI,
plus estimated acquisition costs. The estimate of the fair value of the non-
regulated assets is preliminary and may be revised after the completion of
independent appraisals, which have not been performed. The unaudited pro forma
combined condensed financial information presented below is based on the
assumption that upon completion of the merger each PEI stockholder will
receive, in exchange for each share of PEI common stock he or she owns, a
combination of Southern Union common stock and cash worth in the aggregate $35.
The historical financial statements of PEI include certain reclassifications to
conform to Southern Union's presentation. These reclassifications have no
impact on net income or total stockholders' equity.
The fiscal years of Southern Union and PEI end on June 30 and December 31,
respectively, and, accordingly, the Unaudited Pro Forma Combined Condensed
Financial Statements have been prepared using the financial statements of
Southern Union incorporated by reference combined with the comparable financial
statement periods of PEI derived from its historical financial statements. The
Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 1999
is presented as if the merger had occurred on that date and using the Southern
Union and PEI balance sheets at September 30, 1999. The Unaudited Pro Forma
Combined Condensed Statements of Operations for the twelve months ended June
30, 1999, and the three-month period ended September 30, 1999, assumes that the
merger and the issuance of debt securities occurred at the beginning of the
earliest period presented and includes the comparable twelve months ended June
30, 1999, and the three-month period ended September 30, 1999, for PEI.
The following Unaudited Pro Forma Combined Condensed Financial Statements
have been prepared from, and should be read in conjunction with, the historical
financial statements and related notes thereto of Southern Union and PEI. See
"Where You Can Find More Information" in the accompanying prospectus. The
following Unaudited Pro Forma Combined Condensed Financial Statements are
presented for purposes of illustration only in accordance with the assumptions
set forth below and are not necessarily indicative of the financial position or
operating results that would have occurred if the merger and the issuance of
debt securities had been consummated on the dates as of which, or at the
beginning of the period for which, the merger is being given effect nor is it
necessarily indicative of the future operating results or financial position of
the combined enterprise. The Unaudited Pro Forma Combined Condensed Financial
Statements do not contain any adjustments to reflect cost savings or other
synergies anticipated as a result of the merger.
S-8
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
September 30, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ -------------------------
Southern Pennsylvania
Union Enterprises,
Company Inc. Adjustments Combined
---------- ------------ ----------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Property, plant and
equipment................. $1,130,034 $389,666 $ -- $1,519,700
Less accumulated
depreciation and
amortization.............. (376,440) (102,467) -- (478,907)
---------- -------- --------- ----------
753,594 287,199 -- 1,040,793
Additional purchase cost
assigned to utility plant,
net....................... 133,275 -- 259,453 (A) 392,728
---------- -------- --------- ----------
Net property, plant and
equipment............... 886,869 287,199 259,453 1,433,521
Current assets............. 84,672 60,183 7,131 (B) 151,986
Deferred charges........... 97,425 40,638 14,000 (C) 155,528
3,465 (D)
Investment securities...... 13,413 -- -- 13,413
Real estate and other...... 15,251 32,936 -- 48,187
---------- -------- --------- ----------
Total.................. $1,097,630 $420,956 $ 284,049 $1,802,635
========== ======== ========= ==========
Common stockholders'
equity.................... $ 294,723 $137,832 $(137,832)(E) $ 628,289
333,566 (F)
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust.......... 100,000 -- -- 100,000
Long-term debt and capital
lease obligation.......... 390,413 95,000 (95,000)(G) 740,413
350,000 (B)
---------- -------- --------- ----------
Total capitalization... 785,136 232,832 450,734 1,468,702
Current liabilities........ 164,848 109,666 (77,597)(G) 107,829
(4,985)(H)
(84,103)(I)
Deferred credits and
other..................... 79,023 15,106 -- 94,129
Accumulated deferred income
taxes..................... 68,623 63,352 -- 131,975
Commitments and
contingencies.............
---------- -------- --------- ----------
Total.................. $1,097,630 $420,956 $ 284,049 $1,802,635
========== ======== ========= ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-9
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For The Twelve Months Ended June 30, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ --------------------------
Southern Pennsylvania
Union Enterprises,
Company Inc. Adjustments Combined
---------- ------------ ----------- ----------
(thousands of dollars, except shares and per
share amounts)
<S> <C> <C> <C> <C>
Operating revenues....... $ 605,231 $233,605 $ -- $ 838,836
Cost of gas and other
energy.................. 342,301 145,319 -- 487,620
---------- -------- ---------- ----------
Operating margin....... 262,930 88,286 -- 351,216
---------- -------- ---------- ----------
Operating expenses:
Operating, maintenance
and general........... 109,693 36,696 -- 146,389
Depreciation and
amortization.......... 41,855 10,291 6,486 (J) 58,632
Taxes, other than on
income................ 46,535 12,415 -- 58,950
---------- -------- ---------- ----------
Total operating
expenses............ 198,083 59,402 6,486 263,971
---------- -------- ---------- ----------
Net operating
revenues............ 64,847 28,884 (6,486) 87,245
---------- -------- ---------- ----------
Other income (expenses):
Interest............... (35,999) (11,395) (30,334)(K) (64,357)
13,371 (L)
Dividends on preferred
securities............ (9,480) -- -- (9,480)
Other, net............. (1,814) 1,173 -- (641)
---------- -------- ---------- ----------
Total other expenses,
net................. (47,293) (10,222) (16,963) (74,478)
---------- -------- ---------- ----------
Earnings before income
taxes................... 17,554 18,662 (23,449) 12,767
Federal and state income
taxes (benefit)......... 7,109 7,090 (5,937)(M) 8,262
---------- -------- ---------- ----------
Net earnings before
preferred stock dividend
requirements............ 10,445 11,572 (17,512) 4,505
Preferred stock dividend
requirements............ -- (653) 653 (N) --
---------- -------- ---------- ----------
Net earnings available
for common stock........ $ 10,445 $ 10,919 $ (16,859) $ 4,505
========== ======== ========== ==========
Net earnings per share:
Basic.................. $ 0.34 $ 0.09
========== ==========
Diluted................ $ 0.32 $ 0.09
========== ==========
Weighted average shares
outstanding:
Basic.................. 30,894,613 17,873,590 (O) 48,768,203
========== ========== ==========
Diluted................ 32,589,610 17,873,590 (O) 50,463,200
========== ========== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-10
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For The Three Months Ended September 30, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ --------------------------
Southern Pennsylvania
Union Enterprises,
Company Inc. Adjustments Combined
---------- ------------ ----------- ----------
(thousands of dollars, except shares and per
share amounts)
<S> <C> <C> <C> <C>
Operating revenues....... $ 84,786 $31,854 $ -- $ 116,640
Cost of gas and other
energy.................. 39,277 19,571 -- 58,848
---------- ------- ---------- ----------
Operating margin....... 45,509 12,283 -- 57,792
---------- ------- ---------- ----------
Operating expenses:
Operating, maintenance
and general........... 25,264 10,247 -- 35,511
Depreciation and
amortization.......... 10,848 2,694 1,622 (J) 15,164
Taxes, other than on
income................ 7,589 1,948 -- 9,537
---------- ------- ---------- ----------
Total operating
expenses............ 43,701 14,889 1,622 60,212
---------- ------- ---------- ----------
Net operating
revenues............ 1,808 (2,606) (1,622) (2,420)
---------- ------- ---------- ----------
Other income (expenses):
Interest............... (8,364) (2,789) (7,583)(K) (15,393)
3,343 (L)
Dividends on preferred
securities............ (2,370) -- -- (2,370)
Other, net............. (1,157) (311) -- (1,468)
---------- ------- ---------- ----------
Total other expenses,
net................. (11,891) (3,100) (4,240) (19,231)
---------- ------- ---------- ----------
Loss before income tax
benefit................. (10,083) (5,706) (5,862) (21,651)
Federal and state income
tax benefit............. (3,983) (2,358) (1,484)(M) (7,825)
---------- ------- ---------- ----------
Net loss before preferred
stock dividend
requirements............ (6,100) (3,348) (4,378) (13,826)
Preferred stock dividend
requirements............ -- (52) 52 (N) --
---------- ------- ---------- ----------
Net loss available for
common stock............ $ (6,100) $(3,400) $ (4,326) $ (13,826)
========== ======= ========== ==========
Net loss per share:
Basic.................. $ (0.20) $ (0.28)
========== ==========
Diluted................ $ (0.20) $ (0.28)
========== ==========
Weighted average shares
outstanding:
Basic.................. 30,925,242 17,873,590 (O) 48,798,832
========== ========== ==========
Diluted................ 31,214,696 17,873,590 (O) 49,088,286
========== ========== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-11
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Adjustments to the Unaudited Pro Forma Combined Condensed Balance Sheet
(A) Reflects the estimated excess of the purchase price and other
transaction costs over the historical cost of the regulated net assets and
the estimated fair value of the non-regulated net assets of PEI.
(B) Reflects issuance of long-term debt at an estimated annual interest
rate of 8.5% which Southern Union believes would be obtained based on
current market rates. The long-term debt is assumed to be utilized: to
finance the cash portion of the purchase of PEI common stock and settlement
of PEI stock options; to refinance certain debt and related defeasance and
make whole provisions of PEI; to refinance certain short-term borrowings of
Southern Union; to pay for certain acquisition costs of $5 million related
to change of control agreements; to fund PEI's Director Retirement Plan,
Director Deferred Compensation Plan and supplemental retirement benefits
and the payments for severance benefits for certain PEI executives; and to
pay various professional fees incurred in connection with the merger
estimated to total $4 million. Excess cash of $7 million would be available
after application of the net proceeds to the items previously noted. As a
result of the application of net proceeds to reduce current short-term
borrowings of Southern Union and the timing of seasonal borrowings,
additional excess cash should be available in the future for general
corporate use. See Note (O).
(C) Reflects the costs incurred from defeasance and make whole
provisions from the refinancing of certain debt of PEI. These costs are
amortized on a straight line basis over the life of the new debt.
(D) Reflects the capitalization of estimated debt issuance costs
associated with the long-term debt to be issued in connection with the
merger as more specifically described in Note (B). These debt issue costs
are amortized on a straight line basis over the life of the new debt.
(E) Reflects the elimination of common stockholders' equity of PEI.
(F) Reflects the issuance of Southern Union common stock to PEI
stockholders. See Note (O).
(G) Reflects refinancing of certain debt of PEI.
(H) Reflects the repurchase of all of the PG Energy preferred stock
prior to the closing of the merger.
(I) Reflects refinancing of certain short-term borrowings under the
revolving credit facility of Southern Union.
Adjustments to the Unaudited Pro Forma Combined Condensed Statements of
Operations
(J) Reflects amortization of the estimated excess purchase price over
the historical cost of the regulated net assets and the estimated fair
value of the non-regulated net assets of PEI on a straight line basis over
a 40-year period based on the estimated useful lives of these assets.
(K) Reflects interest expense on issuance of long-term debt at an
assumed estimated interest rate of 8.5% which Southern Union believes would
be obtained based on current market rates. The long-term debt is assumed to
be utilized: to finance the cash portion of the purchase of PEI common
stock and settlement of PEI stock options; to refinance certain debt and
related defeasances and make whole provisions of PEI; to refinance certain
short-term borrowings of Southern Union; to pay for certain acquisition
costs of $5 million related to change of control agreements; to fund PEI's
Director Retirement Plan, Director Deferred Compensation Plan and
supplemental retirement benefits and the payments for severance benefits
for certain PEI executives; and to pay various professional fees incurred
in connection with the merger estimated to total $4 million. For every 1/8
percent change in the interest rate, interest expense for the twelve months
ended June 30, 1999 and the three months ended September 30, 1999 would
change by $438,000 and $109,000, respectively.
(L) Reflects the elimination of historical interest expense of PEI and
Southern Union as a result of refinancing certain debt in connection with
the merger. See Notes (B), (G) and (I).
S-12
<PAGE>
(M) Reflects the income tax consequences at the federal statutory rate
of the pro forma adjustments after excluding nondeductible goodwill
amortization.
(N) Reflects the elimination of preferred stock dividend requirement due
to the repurchase of all outstanding PG Energy preferred stock prior to the
closing of the merger.
(O) Reflects the issuance of Southern Union common stock to PEI
stockholders at an exchange ratio of 1.64419 based on an average trading
price of $18.6625 for Southern Union common stock for the ten trading-day
period ending on October 12, 1999. The actual exchange ratio will be based
upon the average closing price per share for Southern Union common stock
for the ten trading-day period ending on the third full trading day before
the day the PEI merger is completed. All PEI stock options are assumed to
be settled in cash based on the difference between the total merger
consideration per share of $35.00 and the exercise price of such stock
options.
S-13
<PAGE>
DESCRIPTION OF SENIOR NOTES
We will issue the senior notes under the Indenture, dated as of January 31,
1994 (the "Indenture"), between us and The Chase Manhattan Bank, as Trustee.
The Indenture is more fully described under the caption "Description of Debt
Securities" in the accompanying prospectus. The following description of the
particular terms of the senior notes supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of our debt securities included in the accompanying prospectus under
the caption "Description of the Debt Securities." The senior notes are part of
the $400,000,000 aggregate principal amount of debt securities we registered
under the Securities Act of 1933, in , 1999. The Indenture does not limit
the amount of additional debt that may be incurred by us.
General
The senior notes will bear interest at the annual rate stated on the cover
page of this prospectus supplement. Interest will be payable on and ,
beginning on . Interest on the senior notes will accrue from ,
1999. Interest will be paid to the person in whose name a senior note is
registered at the close of business on the preceding and ,
respectively, subject to certain exceptions. The senior notes will mature on
.
Defeasance
The defeasance provisions described under "Description of the Debt
Securities--Defeasance" in the accompanying prospectus will apply to the senior
notes.
Denominations
The senior notes will be issued in global form in denominations of $1,000
and integral multiples of $1,000.
Ranking of Senior Notes
The senior notes will be our senior unsecured obligations and will rank
equally in right of payment with each other and our other unsecured and
unsubordinated obligations, including our 7.60% Senior Notes due 2024 (the
"2024 Notes"). The senior notes will rank equally with all of our other
unsecured indebtedness, except that the senior notes will be senior in right of
payment to any subordinated indebtedness which states in its terms that it is
subordinate to our senior debt securities.
Covenants
In addition to the covenants contained in the Indenture, and described in
the accompanying prospectus, the senior notes will also include the additional
covenants discussed below under "Limitations on Restricted Payments,"
"Restriction on Transfer of Assets," and "Limitation on Transactions with
Affiliates" (the "Additional Covenants"). The Additional Covenants are the same
covenants that are applicable to our 2024 Notes. In the event that any or all
of the Additional Covenants are no longer applicable to the 2024 Notes (whether
by way of defeasance, amendment or discharge), the corresponding covenants will
also cease to be applicable to the senior notes.
S-14
<PAGE>
Limitations on Restricted Payments
We will not (and, with respect to clause (2) below will not permit any of
our subsidiaries to) directly or indirectly:
(1) declare or pay any dividend on, or make any distribution to the
holders of, any shares of our capital stock with the exception of dividends
and distributions payable solely in (A) shares of our capital stock other
than redeemable stock or (B) options, warrants or other rights to acquire
our capital stock other than redeemable stock; or
(2) purchase, redeem or otherwise acquire or retire for consideration
any shares of capital stock;
(the acts described in clauses (1) and (2) above are each referred to in this
section as a "restricted payment") unless, at the time of and after giving
effect to such restricted payment, the following conditions are met:
(A) no default or event of default as described in the prospectus
accompanying this prospectus supplement has occurred and is continuing; and
(B) the aggregate amount of all such restricted payments at the time of
such restricted payment does not exceed the sum of:
(x) 50% of our cumulative consolidated net income measured from
January 31, 1994 (the date of the Indenture) through March 31, 1998
(the "cut-off date") (or, if our consolidated net income is a loss
during that period, minus 100% of such loss) and 100% of our cumulative
consolidated net income after the cut-off date (or, if our consolidated
net income is a loss during that period, minus 100% of such loss), plus
(y) the aggregate net proceeds to us from sales of our capital stock
(other than redeemable stock and capital stock sold to a subsidiary)
after January 31, 1994.
Restriction on Transfer of Assets
We will not sell, convey, transfer or otherwise dispose of our assets or
property to any of our subsidiaries, except for:
(1) sales, conveyances, transfers or other dispositions of assets or
property acquired by us after January 31, 1994 (the date of the Indenture);
(2) sales, conveyances, transfers or other dispositions of Existing
Assets:
(A) with a net book value that, when aggregated with all other
transfers by us since January 31, 1994, less the net book value of
Existing Assets transferred to us from our subsidiaries, would not
exceed 10% of our Consolidated Assets; or
(B) to any of our subsidiaries if that subsidiary simultaneously
with the sale, conveyance, transfer or other disposition executes and
delivers a supplemental indenture to the Indenture providing for the
guarantee of payment of the senior notes by that subsidiary, which
guarantee shall be senior to any guarantee of that subsidiary of
subordinated debt, and will rank equally with any other debt of that
subsidiary that is not subordinated to any of its other debt or
guarantees; and
(3) sales, conveyances, transfers or other dispositions of Disposable
Assets that would not exceed 10% of our Consolidated Assets.
Any guarantee by a subsidiary of the senior notes as described in paragraph
(2)(B) above will be automatically and unconditionally released and discharged:
(1) on the date that the net book value of the Existing Assets held by
us is greater than 90% of Consolidated Assets; or
(2) upon any sale, exchange or transfer to any non-affiliated entity of
all of our stock in, or all or substantially all the assets of, the
subsidiary providing that guarantee.
S-15
<PAGE>
"Consolidated Assets" means the net book value of the Existing Assets shown
on our balance sheet, as determined in accordance with generally accepted
accounting principles (GAAP) consistently applied, as of December 31, 1993 (the
last day of the last fiscal quarter prior to January 31, 1994).
"Disposable Assets" means our general plant and all of our assets primarily
used in the natural gas vehicular fuels business.
"Existing Assets" means the assets and other property held by us (and not
held by any of our subsidiaries) as of December 31, 1993, plus any assets held
by us (and not by our subsidiaries) irrevocably designated by us as Existing
Assets.
Limitation on Transactions with Affiliates
We will not, and will not permit any of our subsidiaries to, enter into any
transactions with any of our affiliates unless:
(1) those transactions are between us and any of our wholly owned
subsidiaries; or
(2) (A) terms of those transactions are no less favorable to us or our
subsidiary than the terms which could be obtained by us or that subsidiary
in a comparable transaction made on an arm's-length basis between
unaffiliated parties; and
(B) a majority of our disinterested directors determines by board
resolution that those transactions meet the criteria set forth in clause
(2)(A) above.
S-16
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Banc of America Securities L.L.C., Chase
Securities Inc. and Credit Lyonnais Securities (USA) Inc., as underwriters, and
us, we have agreed to sell to the underwriters, and the underwriters have
severally agreed to purchase, the principal amount of the senior notes set
forth opposite their names below. The underwriting agreement provides that the
obligations of the underwriters are subject to certain conditions precedent and
that when such conditions are satisfied the underwriters will be obligated to
purchase all of the senior notes.
<TABLE>
<CAPTION>
Principal
Amount of
Underwriter Senior Notes
----------- ------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation................ $
Merrill Lynch, Pierce, Fenner & Smith Incorporated.................
Banc of America Securities LLC.....................................
Chase Securities Inc...............................................
Credit Lyonnais Securities (USA) Inc...............................
-----
Total......................................................... $
=====
</TABLE>
The underwriters have advised us that they propose initially to offer the
senior notes to the public at the public offering price set forth on the cover
page of this prospectus supplement and to certain dealers at such price less a
concession not in excess of % of the principal amount of the senior notes.
The underwriters may allow, and such dealers may reallow, a discount not in
excess of % of the principal amount of the senior notes to certain other
dealers. After the initial public offering, the underwriters may change the
public offering price, concession and discount.
The senior notes are new issues of securities, and there is currently no
established trading market for the senior notes. In addition, we do not intend
to apply for the senior notes to be listed on any securities exchange or to
arrange for the senior notes to be quoted on any quotation system. The
underwriters have advised us that they intend to make a market in the senior
notes, but they are not obligated to do so. The underwriters may discontinue
any market making in the senior notes at any time without notice. We can give
you no assurance as to the liquidity of, or any trading market for, the senior
notes.
In connection with this offering, the underwriters are permitted to engage
in certain transactions that stabilize the price of the senior notes. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the senior notes. If the underwriters create a short
position in the senior notes in connection with this offering, that is, if they
sell a greater aggregate principal amount of senior notes than is set forth on
the cover of this prospectus supplement, the underwriters may reduce that short
position by purchasing senior notes in the open market. In general, purchase of
a security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither we nor any underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the senior notes. In addition, neither we nor any
underwriter makes any representation that the underwriters will engage in such
transactions or that such transactions, once begun, will not be discontinued
without notice.
We have agreed to indemnify the underwriters against, or to contribute to
payments that the underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933.
S-17
<PAGE>
We estimate that our total expenses in connection with the offering,
excluding underwriting discounts and commissions, will be approximately $ .
Certain of the underwriters or their affiliates engage in various general
financing and banking transactions with us. In particular, an affiliate of
Chase Securities Inc. is the administrative agent and a lender under our
revolving credit facilities and affiliates of Banc of America Securities LLC
and Credit Lyonnais Securities (USA) Inc. are lenders under our revolving
credit facilities. A portion of the outstanding amounts under these facilities
will be repaid with the net proceeds of the offering. Because more than 10% of
the net proceeds of the offering will be paid to affiliates of the
underwriters, the offering is being made pursuant to Rule 2710(c)(8) of the
Conduct Rules of the National Association of Securities Dealers, Inc. The Chase
Manhattan Bank, the Trustee under the Indenture, is an affiliate of Chase
Securities Inc.
LEGAL MATTERS
The validity of the senior notes will be passed upon for us by Fleischman
and Walsh, L.L.P., Washington, D. C. Aaron I. Fleischman, Senior Partner of
Fleischman and Walsh, L.L.P., is a director of Southern Union. Mr. Fleischman,
Fleischman and Walsh, L.L.P., and other attorneys in that firm beneficially own
shares of common stock that, in the aggregate, represent less than two percent
(2%) of the shares of our outstanding common stock. Various legal matters
relating to the offering will be passed on for the underwriters by Weil,
Gotshal & Manges LLP, New York, New York.
S-18
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 22, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
$400,000,000
Southern Union Company
Senior Debt Securities and Subordinated Debt Securities
Southern Union Company may offer and sell in one or more offerings:
. unsecured senior debt securities consisting of debentures, notes or other
evidence of indebtedness in one or more series, and
. unsecured subordinated debt securities consisting of debentures, notes or
other evidence of indebtedness in one or more series.
Southern Union's obligations under the subordinated debt securities will be
subordinate and junior in right of payment to certain other indebtedness of
Southern Union.
The aggregate initial offering price of the securities that we offer by this
prospectus will not exceed $400,000,000. We will offer the securities in
amounts, at prices and on terms to be determined by market conditions at the
time of our offerings.
We will provide the specific terms of the securities in supplements to this
prospectus. You should read the prospectus and the prospectus supplements
carefully before you invest in any of our securities. This prospectus may not
be used to consummate sales of our securities unless it is accompanied by a
prospectus supplement.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is , 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission (SEC) utilizing a "shelf" registration
process. Under this shelf process, we may, over the next two years, sell
different types of securities described in this prospectus in one or more
offerings up to a total offering amount of $400,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering and the
securities offered by us in that offering. The prospectus supplement may also
add, update or change information in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information."
In this prospectus, references to "Southern Union Company," "we," "us" and
"our" mean Southern Union Company.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made statements in this prospectus, the accompanying prospectus
supplement and in documents that are incorporated by reference into this
document that constitute forward-looking statements. These statements are
subject to risks and uncertainties. Forward-looking statements include
information concerning possible or assumed future results of our operations.
These statements may relate to, but are not limited to, information or
assumptions about earnings per share, capital and other expenditures,
dividends, financing plans, capital structure, cash flow, pending legal
proceedings and claims, including environmental matters, future economic
performance, operating income, cost savings, management's plans, goals and
objectives for future operations and growth and markets for our common stock.
These forward-looking statements generally are accompanied by words such as
"intend," "anticipate," "believe," "estimate," "expect," "should" or similar
expressions. You should understand that these forward-looking statements are
necessary estimates reflecting the best judgment of our senior management, not
guarantees of future performance. They are subject to a number of assumptions,
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
Important factors that could cause actual results to differ materially from
estimates or projections contained in forward-looking statements include, among
others, the following:
. the timing and extent of changes in commodity prices;
. gas sales volumes;
. weather conditions and other natural phenomena in our service
territories;
. the achievement of operating efficiencies and the purchase and
implementation of new technologies for attaining such efficiencies;
. impact of relations with labor unions of bargaining-unit employees;
. the receipt of timely and adequate rate relief;
. the outcome of pending and future litigation;
. governmental regulations and proceedings affecting the companies,
including the restructuring of the natural gas industry in Pennsylvania,
Texas, Missouri and Florida;
. the impact of any year 2000 disruption;
. the risk that we may not fully realize the benefits expected to result
from the merger of Pennsylvania Enterprises, Inc. ("PEI") into Southern
Union; and
. the risk that PEI's businesses may not be successfully integrated with
our businesses.
1
<PAGE>
The nature and impact of any extraordinary transactions such as any
acquisition or divestiture of a business unit or any assets may also cause
actual results to differ materially from estimates or projections contained in
forward-looking statements. Our strategic plan is to increase the scale of our
operations and the size of our customer base by pursuing and consummating
future business combination transactions. Acquisitions may require substantial
additional financial expenditures that will need to be financed through cash
flow from operations or future debt and equity offerings. The availability and
terms of any such financing sources will depend upon various factors and
conditions such as our cash flow and earnings, our resulting capital structure,
credit ratings and conditions in financial capital markets at the time of any
such offering. Any future acquisitions and related financing arrangements or
debt assumptions would likely increase our aggregate indebtedness, and may
increase the portion of our total capitalization represented by debt.
Acquisitions and financings will also affect our results due to factors such as
our ability to realize any anticipated benefits from such transactions,
successful integration of new and different operations and businesses, effects
of different regional economic and weather conditions, and the extent of any
related debt financing.
These are representative of the factors that could affect the outcome of the
forward-looking statements. In addition, such statements could be affected by
general industry and market conditions, and general economic conditions,
including interest rate fluctuations, federal, state and local laws and
regulations affecting the retail gas industry or the energy industry generally,
and other factors.
Other factors that could cause actual results to differ materially from
estimates and projections contained in forward-looking statements are described
in the documents that have been incorporated by reference into this document.
You should not place undue reliance on forward-looking statements, which speak
only as of the date of this prospectus, or, in the case of documents
incorporated by reference, the date of those documents.
All subsequent written and oral forward-looking statements attributable to
us or any person acting on our behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this section. We will
not release publicly any revisions to these forward-looking statements
reflecting events or circumstances after the date of this prospectus or
reflecting the occurrence of unanticipated events, unless the securities laws
require us to do so.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the Securities Act
of 1933 that registers the securities offered by this prospectus. The
registration statement, including the attached exhibits, contains additional
relevant information about us. The rules and regulations of the SEC allow us to
omit some information included in the registration statement from this
prospectus.
In addition, we file annual, quarterly and special reports, proxy statements
and other information with the SEC under the Securities Exchange Act of 1934
("Exchange Act"). PEI also files annual, quarterly and special reports, proxy
statements and other information with the SEC under the Exchange Act. You may
read and copy this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
Room 1024 Suite 100 Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center Suite 1400
Washington, D.C. 20549 New York, New York 10048 500 West Madison Street
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the public
reference section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The SEC also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, including
2
<PAGE>
Southern Union Company, who file electronically with the SEC. The address of
that site is http://www.sec.gov. You can also inspect reports, proxy statements
and other information about us at the offices of The New York Stock Exchange,
Inc., located at 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
document, except for any information that is superseded by information that is
included directly in this document.
We incorporate by reference the documents listed below that we have
previously filed with the SEC, including documents incorporated by reference in
those documents, such as PEI's Annual Report on Form 10-K for the year ended
December 31, 1998. They contain important information about us, PEI and the
financial condition of our company and PEI.
<TABLE>
<CAPTION>
SEC FILINGS (FILE NO. 1-6407) DESCRIPTION OR PERIOD/AS OF DATE
- ----------------------------- --------------------------------
<S> <C>
Annual Report on Form 10-K Year ended June 30, 1999
Definitive Proxy Statement on Schedule 14A Definitive Proxy Statement relating to the
1999 Annual Meeting of Stockholders (filed
on September 17, 1999)
Current Report on Form 8-K Filed October 8, 1999
Quarterly Report on Form 10-Q Period ended September 30, 1999
</TABLE>
We incorporate by reference additional documents that we may file with the
SEC until all of the securities offered by this prospectus have been sold.
These documents include periodic reports, including Annual Reports on Form 10-
K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
You can obtain any of the documents incorporated by reference in this
document through us or from the SEC through the SEC's web site at the address
provided above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from us at the following address:
Attention: George Yankowski
Director of Investor Relations
Southern Union Company
504 Lavaca Street, Eighth Floor
Austin, Texas 78701
Telephone No.: (512) 477-5852
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION THAT DIFFERS FROM, OR ADDS TO, THE INFORMATION IN THIS DOCUMENT
OR IN OUR DOCUMENTS THAT ARE PUBLICLY FILED WITH THE SEC. THEREFORE, IF ANYONE
DOES GIVE YOU DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.
IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO OFFER TO EXCHANGE OR
SELL, OR TO ASK FOR OFFERS TO EXCHANGE OR BUY, THE SECURITIES OFFERED BY THIS
DOCUMENT, OR IF YOU ARE A PERSON TO WHOM IT IS UNLAWFUL TO DIRECT THESE
ACTIVITIES, THEN THE OFFER PRESENTED BY THIS DOCUMENT DOES NOT EXTEND TO YOU.
THE INFORMATION CONTAINED IN THIS DOCUMENT SPEAKS ONLY AS OF ITS DATE UNLESS
THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
3
<PAGE>
SOUTHERN UNION COMPANY
We principally operate as a natural gas distributor through our divisions
Southern Union Gas, Missouri Gas Energy and Atlantic Utilities. Southern Union
Gas is headquartered in Austin, Texas and serves 513,000 customers in Texas,
including the cities of Austin, El Paso, Brownsville, Galveston, Harlingen,
McAllen and Port Arthur. Missouri Gas Energy is headquartered in Kansas City,
Missouri and serves about 484,000 customers in Kansas City, St. Joseph, Joplin,
Monett and other cities and locations in central and western Missouri. Atlantic
Utilities does business under the name South Florida Natural Gas. South Florida
Natural Gas is headquartered in New Smyrna Beach, Florida and serves about
4,400 customers in the cities of New Smyrna Beach and Edgewater, Volusia County
and other locations in central Florida.
We have created subsidiaries to support and expand our natural gas sales and
to capitalize on our gas energy expertise. Our subsidiaries market natural gas
to end-users, operate natural gas pipeline systems, distribute propane and sell
commercial gas air conditioning and other gas-fired engine-driven applications.
By providing "one-stop shopping," we can serve our customers' particular energy
needs. Some of our subsidiaries hold investments in real estate and other
assets used mainly in our utility business.
We are a sales and market-driven energy company. Our management is committed
to achieving profitable growth of our natural gas energy businesses in an
increasingly competitive business environment. Our strategies for achieving
these objectives are:
. promoting new sales opportunities and markets for natural gas and
propane;
. enhancing financial and operating performance;
. further development of existing systems; and
. selectively acquiring new systems.
Our management develops and continually evaluates these strategies, by
applying its experience and expertise in analyzing the energy industry,
technological advances, market opportunities and general business trends. Each
of these strategies reflects our commitment to our core business of selling and
transporting natural gas.
We have a goal of planned growth and expansion in or related to the
utilities industry in a manner designed to consider the interests of our
stockholders, debt holders, customers and regulators. Our management and board
of directors will determine the nature and location of any such properties, the
structure of any acquisitions and the method of financing any expansion or
growth. See "Cautionary Statement Regarding Forward-Looking Statements."
Our corporate headquarters are located at 504 Lavaca Street, Suite 800,
Austin, Texas 78701, and our telephone number is (512) 477-5852.
USE OF PROCEEDS
We intend to add the net proceeds from the sale of the debt securities
offered by this prospectus to our general funds to be used for general
corporate purposes, including:
. repurchases of outstanding long-term debt securities including those of
any company that we acquire or that combines with us;
. repayment of other borrowings, including short-term borrowings, under
bank credit agreements;
. funding for the cash portion of the consideration we pay to acquire any
company or when any company combines with us; or
. as otherwise disclosed in any supplement to this prospectus.
We may invest any funds we do not require immediately in marketable securities
and short-term investments.
4
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
General
This is a description of the general terms and provisions of the debt
securities. The particular terms of the debt securities will be described in a
prospectus supplement relating to those securities.
The debt securities may be issued in one or more series and will be either
senior debt securities or subordinated debt securities. Senior debt securities
will be issued under the senior debt securities indenture, dated as of January
31, 1994, between us and The Chase Manhattan Bank, as the senior debt
securities trustee. The subordinated debt securities will be issued under the
subordinated debt securities indenture, dated as of May 10, 1995, between us
and The Chase Manhattan Bank, as the subordinated debt securities trustee. The
senior debt securities indenture and the subordinated debt securities indenture
will each be called an "indenture" and together the "indentures." The senior
debt securities trustee and the subordinated debt securities trustee will each
be called a "trustee" and together the "trustees."
We have summarized selected provisions of the debt securities and the
indentures below. These descriptions only summarize material provisions of the
indentures. We have not restated the entire agreements. We urge you to read
each indenture because each one, and not this description, defines your rights
as a holder of our debt securities. Copies of the indentures are filed as
exhibits to the registration statement that includes this prospectus.
The debt securities will be our direct, unsecured obligations. The senior
debt securities will rank equally with all of our other senior and
unsubordinated debt. The subordinated debt securities will have a junior
position to all of our senior debt securities. The general summary that follows
applies to both our senior debt securities and our subordinated debt securities
except when we specifically say the information applies to one or the other.
The indentures provide that the debt securities may be issued from time to
time in one or more series. A prospectus supplement and a supplemental
indenture relating to any series of debt securities being offered will include
specific terms relating to the offered debt securities. These terms will
include some or all of the following:
. the title and type of the debt securities;
. the total principal amount of the debt securities and the currency, if
other than U. S. dollars, in which such notes are denominated;
. the percentage of the principal amount at which the debt securities will
be issued and any payments due if the maturity of the debt securities is
accelerated;
. the dates on which the principal of the debt securities will be payable
and the terms on which any such maturity date may be extended;
. the interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
. any optional redemption periods;
. any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem some or all of the debt securities;
. any changes to or additional events of default or covenants;
. any special tax implications of the debt securities, including
provisions for original issue discount securities, if offered;
. restrictions on the declaration of dividends on our capital stock (other
than dividends in such stock) or requiring the maintenance of any asset
ratio or the creation or maintenance of reserves; and
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. any other terms of the debt securities.
The indentures do not limit the aggregate principal amount of debt
securities that we may issue pursuant to those indentures. The indentures do
not contain any provisions that would limit our ability to incur debt. The
indentures do not contain any provisions that protect the holders of the debt
securities in the event that we engage in a highly leveraged transaction or
other transaction in connection with a takeover attempt. Such a transaction
could result in a decline in the credit rating of the debt securities. If a
particular series of the debt securities has a provision providing protection
to the holders of the debt securities in the event of a highly leveraged or
other transaction in the event of a takeover attempt, it will be described in
the prospectus supplement relating to that series of debt securities.
Under the indentures, we have the ability to issue debt securities with
terms different from those of debt securities already issued, without the
consent of the holders of any previously issued series of debt securities.
Debt securities of a series may be issued in registered, bearer, coupon or
global form.
Denominations
The prospectus supplement for each issuance of debt securities will state
whether the securities will be issued in registered form of $1,000 each or
multiples of $1,000 or such lesser amount as may be indicated in a prospectus
supplement for a specific series of debt securities, or bearer form of $5,000
each, or global form.
Ranking of Senior Debt Securities
The senior debt securities will rank equally with all of our other unsecured
indebtedness, except that the senior debt securities will be senior in right of
payment to any subordinated indebtedness which states in its terms that it is
subordinate to the senior debt securities.
Subordination
The subordinated debt securities will be subordinated and junior in right of
payment to certain other of our indebtedness to the extent described in the
prospectus supplement for those subordinated debt securities.
Covenants
Under the indentures, we will:
. pay the principal of, and interest and any premium on, the debt
securities when due;
. maintain a place of payment;
. deliver a report to the trustee at the end of each fiscal year reviewing
our obligations under the indentures; and
. deposit sufficient funds with any paying agent on or before the due date
for any principal, interest or premium.
Consolidations, Mergers and Sales
The indentures provide that we will not consolidate with or merge with or
into any other entity, or convey, transfer or lease, or permit one or more of
our subsidiaries to convey, transfer or lease, all or substantially all of our
properties and assets on a consolidated basis to any entity, unless:
. either we are the continuing corporation or such corporation or entity
assumes by supplemental indenture all of our obligations under the
indentures and the debt securities;
. no default or event of default is existing immediately after the
transaction; and
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. the surviving entity is a corporation, partnership or trust organized
and validly existing under the laws of the United States of America, any
state of the United States or the District of Columbia.
Liens
Pursuant to the indentures, we will not, and we will not permit any
subsidiary to, create, incur, issue or assume any debt secured by any lien on
any property or assets owned by us or any of our subsidiaries, and we will not,
and we will not permit any of our subsidiaries to, create, incur, issue or
assume any debt secured by any lien on any shares of stock or debt of any
subsidiary (such shares of stock or debt of any subsidiary being called
"restricted securities"), unless
. in the case of new debt which is expressly by its terms subordinate or
junior in right of payment to the applicable series of debt securities,
the applicable series of debt securities are secured by a lien on such
property or assets that is senior to the new lien with the same relative
priority as such subordinated debt has with respect to the applicable
series of debt securities; or
. in the case of liens securing new debt that is ranked equally with the
applicable series of debt securities, the applicable series of debt
securities are secured by a lien on such property or assets that is
equal and ratable with the new lien, except that any lien securing such
debt securities may be junior to any lien on our accounts receivable,
inventory and related contract rights securing debt under our revolving
credit facility.
These restrictions do not prohibit us from creating the following:
(i) Any liens on any of our property, assets or restricted securities or
those of any subsidiary existing as of the date of the first issuance by us
of the applicable debt securities issued pursuant to an indenture, or such
other date as may be specified in a prospectus supplement for an applicable
series of debt securities issued pursuant to an indenture, subject to the
provisions of subsection (viii) below;
(ii) Liens on any property or assets or restricted securities of any
corporation existing at the time such corporation becomes a subsidiary, or
arising after such time (a) otherwise than in connection with the borrowing
of money arranged after the corporation became a subsidiary and (b)
pursuant to contractual commitments entered into prior to and not in
contemplation of such corporation becoming a subsidiary;
(iii) Liens on any of our property, assets or restricted securities or
those of any subsidiary existing at the time of acquisition of such
property, assets or securing the payment of all or any part of the purchase
price or construction cost of such property, assets or restricted
securities, or securing any debt incurred prior to, at the time of or
within 120 days after the later of the date of the acquisition of such
property, assets or restricted securities or the completion of any such
construction, for the purpose of financing all or any part of the purchase
price or construction cost;
(iv) Liens on any property or assets to secure all or any part of the
cost of development, operation, construction, alteration, repair or
improvement of all or any part of such property or assets or to secure debt
incurred by us or any of our subsidiaries prior to, at the time of or
within 120 days after, the completion of such development, operation,
construction, alteration, repair or improvement, whichever is later, for
the purpose of financing all or any related costs;
(v) Liens in favor of the trustee for the benefit of the holders and
subsequent holders of the debt securities securing the debt securities;
(vi) Liens secured by any of our property or assets or those of any
subsidiary that comprise no more than 20% of Consolidated Net Tangible
Assets (as defined under "Certain Definitions" below);
(vii) Liens which secure senior indebtedness owing by a subsidiary to us
or to another subsidiary; and
(viii) Any extension, renewal, substitution or replacement in whole or
in part, of any of the liens referred to in paragraphs (i) through (vii)
above or the debt secured by the liens; provided that:
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(a) such extension, renewal, substitution or replacement lien will
be limited to all or any part of the same property, assets or
restricted securities that secured the prior lien plus improvements on
such property and plus any other property or assets not then owned by
us or one of our subsidiaries or constituting restricted securities;
and
(b) in the case of items (i) through (iii) above, the debt secured
by such lien at such time is not increased.
If we give a guarantee that is secured by a lien on any property or assets or
restricted securities, or we create a lien on any property or assets or
restricted securities to secure debt that existed prior to the creation of such
lien, the indentures will deem that we have created debt in an amount equal to
the principal amount guaranteed or secured by such lien. The amount of debt
secured by liens on property, assets and restricted securities will be computed
without cumulating the indebtedness with any guarantee or lien securing the
same indebtedness.
Limitation on Sale and Leaseback Transactions
The indentures also provide that we will not, nor will we permit any of our
subsidiaries to, engage in a sale-leaseback transaction, unless:
(i) the sale-leaseback transaction involves a lease for a period,
including renewals, of not more than three years;
(ii) we or any of our subsidiaries, within 180 days after such sale-
leaseback transaction, apply or cause to be applied an amount not less than
the net sale proceeds from such sale-leaseback transaction to the
repayment, redemption or retirement of our funded debt or funded debt of
any such subsidiary; or
(iii) the Attributable Debt (as defined below under "Certain
Definitions") from such sale-leaseback transaction, together with all other
sale and leaseback transactions entered into after the date of the first
issuance by us of debt securities pursuant to the indenture other than
sale-leaseback transactions permitted by clauses (i) and (ii) above does
not exceed 20% of our Consolidated Net Tangible Assets (as defined below
under "Certain Definitions" below).
Events of Default
The indentures provide that any one of the following events is an event of
default:
. failure to pay any interest or any additional amounts due on any debt
security, or of any coupon, for 30 days;
. failure to pay the principal of or any premium on any debt security when
due, whether at maturity, upon redemption, by declaration or otherwise;
. failure to perform any other covenant or agreement in the indenture
which continues for 60 days after written notice is given to us by the
trustee or the holders of at least 25% of the outstanding debt
securities of that series;
. cross-acceleration of our other debt in excess of 10% of our
consolidated net worth;
. certain events in any bankruptcy, insolvency or reorganization of our
company;
. any other event of default listed in the indenture for debt securities
of that series.
We are required to file annually with the trustee an officer's certificate
as to our compliance with all conditions and covenants under each indenture.
Each indenture permits the trustee to withhold notice to the holders of debt
securities of any default, except in the case of a failure to pay the principal
of (or premium, if any), or interest on, any debt securities or the payment of
any sinking fund installment with respect to such securities, if the trustee
considers it in the interest of the holders of debt securities to do so.
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If an event of default, other than certain events with respect to our
bankruptcy, insolvency and reorganization or that of any of our significant
subsidiaries, occurs and is continuing with respect to debt securities, the
trustee or the holders of at least 25% in principal amount of outstanding debt
securities of that series may declare the outstanding debt securities of that
series due and payable immediately. If our bankruptcy, insolvency or
reorganization, or that of any of our significant subsidiaries, causes an event
of default for debt securities of a particular series, then the principal of
all the outstanding debt securities of that series, and accrued and unpaid
interest thereon, will automatically be due and payable without any act on the
part of the trustee or any holder.
If an event of default with respect to debt securities of a particular
series occurs and is continuing, the trustee will be under no obligation to
exercise any of its rights or powers under the applicable indenture at the
request or direction of any of the holders of debt securities of such series
(other than certain duties listed in the indenture), unless such holders offer
to the trustee reasonable indemnity and security against the costs, expenses
and liabilities that might be incurred by the trustee to comply with the
holders' request. If they provide this indemnity to the trustee, the holders of
a majority in principal amount of the outstanding debt securities of such
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee under the applicable
indenture, or exercising any trust or power given to the trustee with respect
to the debt securities of that series. The trustee may refuse to follow
directions in conflict with law or the indenture that may subject the trustee
to personal liability or may be unduly prejudicial to holders not joining in
such directions.
The holders of not less than a majority in principal amount of the
outstanding debt securities of any series may, on behalf of the holders of all
the debt securities of such series and any related coupons, waive any past
default under the applicable indenture with respect to such series and its
consequences, except a default:
. in the payment of the principal of (or premium, if any) or interest on
or additional amounts payable in respect of any debt security of such
series unless such default has been cured and a sum sufficient to pay
all matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the
trustee; or
. in respect of a covenant or provision that cannot be modified or amended
without the consent of the holder of each outstanding debt security of
such series affected by the modification or amendment.
Modification or Waiver
We and the applicable trustee may modify and amend the indentures with the
consent of the holders of not less than a majority in principal amount of all
outstanding indenture securities or any series that is affected by such
modification or amendment. The consent of the holder of each outstanding debt
security of a series is required in order to:
. change the stated maturity of the principal of (or premium, if any), or
any installment of principal or interest on any debt security of such
series;
. reduce the principal amount or the rate of interest on or any additional
amounts payable, or any premium payable upon the redemption of such
series;
. change our obligation to pay additional amounts in respect of any debt
security of such series;
. reduce the amount of principal of a debt security that is an original
issue discount security and would be due and payable upon a declaration
of acceleration of the maturity of that debt security;
. adversely affect any right of repayment at the option of the holder of
any debt security of such series;
. change the place or currency of payment of principal of, or any premium
or interest on, any debt security of such series;
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. impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity of the debt security or any
redemption date or repayment date for the debt security;
. reduce the percentage of holders of outstanding debt securities of such
series necessary to modify or amend the indenture or to consent to any
waiver under the indenture or reduce the requirements for voting or
quorum described below;
. modify the change of control provisions, if any;
. reduce the percentage of outstanding debt securities of such series
necessary to waive any past default; or
. modify any of the above requirements.
We and the applicable trustee may modify and amend an indenture without the
consent of any holder for the following purposes:
. to evidence the succession of another entity to us as obligor under an
indenture;
. to add to our covenants for the benefit of the holders of all or any
series of debt securities;
. to add events of default for the benefit of the holders of all or any
series of debt securities;
. to add or change any provisions of the applicable indenture to
facilitate the issuance of bearer securities;
. to change or eliminate any provisions of the applicable indenture but
only if any such change or elimination will become effective only when
there are no outstanding debt securities of any series created prior to
the change or elimination that is entitled to the benefit of such
provision;
. to establish the form or terms of debt securities of any series and any
related coupons;
. to secure the debt securities;
. to provide for the acceptance of appointment by a successor trustee or
facilitate the administration of the trusts under the applicable
indenture by more than one trustee; and
. to change the applicable indenture with respect to the authentication
and delivery of additional series of debt securities, in order to cure
any ambiguity, defect or inconsistency in the applicable indenture, but
only if such action does not adversely affect the interest of holders of
debt securities of any series in any material respect.
Each indenture contains provisions for convening meetings of the holders of
debt securities of a series if debt securities of that series are issuable as
bearer securities. A meeting may be called at any time by the applicable
trustee and also by such trustee pursuant to a request made to the trustee by
us or the holders of at least 10% in principal amount of the debt securities of
such series outstanding. In any case, notice must be given as provided in the
applicable indenture. Any resolution presented at a meeting or duly reconvened
adjourned meeting at which a quorum is present may be adopted by the
affirmative vote of the holders of a majority in principal amount of the debt
securities of that series, except for any consent that must be given by the
holder of each debt security affected, as described above in this section. Any
resolution passed or decision made in accordance with the applicable indenture
at any duly held meeting of holders of debt securities of any series will be
binding on all holders of the debt securities of that series and any related
coupons. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will consist of persons entitled to vote a majority in
principal amount of the debt securities of a series outstanding, unless a
specified percentage in principal amount of the debt securities of a series
outstanding is required for the consent or waiver, then the persons entitled to
vote such specified percentage in principal amount of the outstanding debt
securities of such series will constitute a quorum. However, if any action is
to be taken at a meeting of holders of debt securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other
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action that the applicable indenture expressly provides may be made, given or
taken by the holders of a specified percentage in principal amount of all
outstanding debt securities affected, or of the holders of such series of debt
securities and one or more additional series, then:
. there will be no minimum quorum requirement for such meeting; and
. the principal amount of the outstanding debt securities of such series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action will be taken into account in
determining whether such request, demand, authorization, direction,
notice, consent, waiver or other action has been made, given or taken
under the applicable indenture.
Defeasance
We will be discharged from our obligations on the senior debt securities of
any series at any time if we deposit with the trustee sufficient cash or
government securities to pay the principal, interest, any premium and any other
sums due to the stated maturity date or a redemption date of the debt
securities of the series. If this happens, the holders of the debt securities
of the series will not be entitled to the benefits of the indenture except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities.
Under U.S. federal income tax laws 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 should seek tax advice to determine their
particular consequences of a discharge, including the applicability and effect
of tax laws other than the U.S. federal income tax laws.
Financial Information
While any of the debt securities are outstanding, we will file with the SEC,
to the extent permitted under the Exchange Act, the annual reports, quarterly
reports and other documents otherwise required to be filed with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act even if we stop being
subject to those sections, and we will also provide to all holders and file
with the trustees copies of such reports and documents within 15 days after
filing them with the SEC or, if our filing such reports and documents with the
SEC is not permitted under the Exchange Act, within 15 days after we would have
been required to file such reports and documents if permitted, in each case at
our cost.
Certain Definitions
"Attributable Debt" means, with respect to a lease under which any entity is
liable for a term of more than 12 months, the total net amount of rent required
to be paid by the entity under such lease during the remaining term (excluding
any subsequent renewal or other extension options held by the lessee),
discounted from the respective due dates of the rent to the date that the
Attributable Debt is being determined at a rate equal to the weighted average
of the interest rates borne by the outstanding debt securities, compounded
monthly. The net amount of rent required to be paid under any lease for any
such period will be the aggregate amount of the rent payable by the lessee with
respect to such period after excluding any amounts required to be paid on
account of maintenance and repairs, services, insurance, taxes, assessments,
water rates and similar charges and contingent rents (such as those based on
sales). In the case of any lease that is terminable by the lessee upon the
payment of a penalty, such net amount of rent will include the lesser of (i)
the total discounted net amount of rent required to be paid from the later of
the first date upon which such lease may be so terminated or the date of the
determination of such net amount of rent, and (ii) the amount of such penalty
(in which event no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated).
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"Consolidated Net Tangible Assets" means the total amount of our assets and
those of our consolidated subsidiaries (less applicable reserves and other
properly deductible items) after deducting (i) all current liabilities
(excluding any current liabilities that are by their terms extendible or
renewable at the option of the obligor to a time more than 12 months after the
time as of which the amount of the Consolidated Net Tangible Assets is being
computed) and (ii) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on our
most recent consolidated balance sheet and computed in accordance with
generally accepted accounting principles.
Payment, Registration and Transfer
Unless we specify otherwise in a prospectus supplement, we will pay
principal, interest and any premium on the debt securities, and they may be
surrendered for payment or transferred, at the offices of the trustees. We will
make payment on registered securities by checks mailed to the persons in whose
names the debt securities are registered or by transfer to an account
maintained by the registered holder on days specified in the indentures or any
prospectus supplement. If we make debt securities payments in other forms, we
will specify the form and place in a prospectus supplement.
We will maintain a corporate trust office of the trustee or another office
or agency for the purpose of transferring or exchanging fully registered
securities, without the payment of any service charge except for any tax or
governmental charge.
The debt securities may be issued as registered securities or bearer
securities. Registered securities will be securities recorded in the securities
register kept at the corporate office of the trustee for the trust that issued
that series of securities. A bearer security is any debt security other than a
registered security. Registered securities will be exchangeable for other
registered securities of the same series and of a like aggregate principal
amount and tenor in different authorized denominations. If (but only if)
provided for in any prospectus supplement, bearer securities (with all
unmatured coupons, except as provided below, and all matured coupons in
default) of any series may be exchanged for registered securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor. In such event, bearer securities surrendered in a permitted exchange
for registered securities between a regular record date and the relevant date
for payment of interest will be surrendered without the coupon relating to such
date for payment of interest. Interest will not be payable on such date on the
registered security issued in exchange for such bearer security but will be
payable only to the holder of such coupon when due, in accordance with the
terms of the indenture. Unless otherwise specified in any prospectus
supplement, bearer securities will not be issued in exchange for registered
securities.
In the event of any redemption of debt securities, we will not be required
to:
. issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series to be redeemed
and ending at the close of business on (a) the day of mailing of the
relevant notice of redemption if debt securities of the series are
issuable only as registered securities, (b) the day of mailing of the
relevant notice of redemption if the debt securities of the series are
also issuable as registered securities and there is no publication, and
(c) the day of the first publication of the relevant notice of
redemption if the debt securities are issuable as bearer securities.
. register the transfer of or exchange any registered security, or portion
thereof, called for redemption, except the unredeemed portion of any
registered security being redeemed in part;
. exchange any bearer security selected for redemption, except to exchange
such bearer security for a registered security of that series and like
tenor that simultaneously is surrendered for redemption; or
. issue, register the transfer of or exchange any debt securities that
have been surrendered for repayment at the option of the holder, except
any portion not to be repaid.
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Global Securities
We may issue one or more series of the debt securities as permanent global
debt securities deposited with a depositary. Unless otherwise indicated in the
prospectus supplement, the following is a summary of the depository
arrangements applicable to debt securities issued in permanent global form and
for which The Depositary Trust Company (DTC) acts as depositary.
Each global debt security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, global debt securities
are not exchangeable for definitive certificated debt securities.
Ownership of beneficial interests in a global debt security is limited to
participants that have accounts with DTC or its nominee, or persons that may
hold interests through those participants. In addition, ownership of beneficial
interests by participants in a global debt security will be evidenced only by,
and the transfer of that ownership interest will be effected only through,
records maintained by DTC or its nominee for a global debt security. Ownership
of beneficial interests in a global debt security by persons that hold through
participants will be evidenced only by, and the transfer of that ownership
interest within that participant will be effected only through, records
maintained by that participant. DTC has no knowledge of the actual beneficial
owners of the debt securities. 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 participants through which the
beneficial owners entered the transaction. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in a global debt security.
We will make payment of principal of, and interest on, debt securities
represented by a global debt security registered in the name of or held by DTC
or its nominee to DTC or its nominee, as the case may be, as the registered
owner and holder of the global debt security representing those debt
securities. DTC has advised us that upon receipt of any payment of principal
of, or interest on, a global debt security, DTC will immediately credit
accounts of participants on its book-entry registration and transfer system
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of that global debt security as shown in the records of
DTC. Payments by participants to owners of beneficial interests in a global
debt security held through those participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the sole responsibility of those participants, subject to any
statutory or regulatory requirements that may be in effect from time to time.
Neither we, any trustee, nor any of our respective agents, will be
responsible for any aspect of the records of DTC, any nominee or any
participant relating to, or payments made on account of, beneficial interests
in a permanent global debt security or for maintaining, supervising or
reviewing any of the records of DTC, any nominee or any participant relating to
such beneficial interests.
A global debt security is exchangeable for definitive debt securities
registered in the name of, and a transfer of a global debt security may be
registered to, any person other than DTC or its nominee, only if:
. DTC notifies us that it is unwilling or unable to continue as depositary
for that global debt security or at any time DTC ceases to be registered
under the Exchange Act;
. we determine in our discretion that the global debt security shall be
exchangeable for definitive debt securities in registered form; or
. there shall have occurred and be continuing an event of default or an
event which, with notice or the lapse of time or both, would constitute
an event of default under the debt securities.
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Any global debt security that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive debt securities in
registered form, of like tenor and of an equal aggregate principal amount as
the global debt security, in denominations specified in the applicable
prospectus supplement, if other than $1,000 and integral multiples of $1,000.
The definitive debt securities will be registered by the registrar in the name
or names instructed by DTC. We expect that these instructions may be based upon
directions received by DTC from its participants with respect to ownership of
beneficial interests in the global debt security.
Except as provided above, owners of the beneficial interests in a global
debt security will not be entitled to receive physical delivery of debt
securities in definitive form and will not be considered the holders of debt
securities for any purpose under the indentures. No global debt security shall
be exchangeable except for another global debt security of like denomination
and tenor to be registered in the name of DTC or its nominee. Accordingly, each
person owning a beneficial interest in a global debt security must rely on the
procedures of DTC and, if that person is not a participant, on the procedures
of the participant through which that person owns its interest, to exercise any
rights of a holder under the global debt security or the indentures.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
debt security desires to give or take any action that a holder is entitled to
give or take under the debt securities or the indentures, DTC would authorize
the participants holding the relevant beneficial interests to give or take that
action, and those participants would authorize beneficial owners owning through
those participants to give or take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, 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 under the Exchange Act. DTC was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in those
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's book-entry system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
Governing Law
The debt securities and the indentures will be governed by, and interpreted
in accordance with, the laws of the State of New York.
Information Concerning the Trustees
The subordinated debt securities trustee, prior to a default, will perform
only the duties specifically described in the subordinated debt securities
indenture. After a default, the subordinated debt securities trustee will
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. The subordinated debt securities trustee is
under no obligation to exercise any of the powers vested in it by the
subordinated debt securities indenture at the request of any holder of
subordinated debt securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that the trustee might incur
in exercising those powers. The subordinated debt securities trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the subordinated debt securities
trustee reasonably believes that it may not receive repayment or adequate
indemnity.
14
<PAGE>
PLAN OF DISTRIBUTION
We may sell any series of the debt securities to or through underwriters or
dealers, directly to purchasers, or through agents. The prospectus supplement
with respect to any offering of securities will set forth:
. the terms of the offering of the securities, including the name or names
of any underwriters, dealers or agents;
. the purchase price of the securities and the proceeds to us;
. any underwriting discounts and commissions or agency fees and other
items constituting underwriters' or agents' compensation;
. any initial public offering prices;
. any discounts or concessions allowed or reallowed or paid to dealers;
and
. any securities exchange on which the offered securities may be listed.
Any initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
We may designate agents to solicit offers to purchase our securities.
. We will name any agent involved in offering or selling our securities,
and any commissions that we will pay to the agent, in our prospectus
supplement.
. Unless we indicate otherwise in our prospectus supplement, our agents
will act on a best efforts basis for the period of their appointment.
. Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of our securities that they offer or sell.
We may use one or more underwriters in the offer or sale of our securities.
. If we use an underwriter, we will execute an underwriting agreement with
the underwriter(s) at the time that we reach an agreement for the sale
of our securities.
. We will include the names of the managing underwriter(s), as well as any
other underwriters, and the terms of the transaction, including the
compensation the underwriters and dealers will receive, in our
prospectus supplement.
. The underwriters will use our prospectus supplement to sell our
securities.
We may use a dealer to sell our securities.
. If we use a dealer, we, as principal, will sell our securities to the
dealer.
. The dealer will then sell our securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
. We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.
We may directly solicit offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act of 1933, or as to
contribution with respect to payments that such agents, dealers or underwriters
may be required to make in connection with those liabilities. Our agents,
underwriters, and
15
<PAGE>
dealers, or their affiliates, may be customers of, engage in transactions with
or perform services for us, in the ordinary course of business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
. If we use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.
. These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
. We will indicate in our prospectus supplement the commission that
underwriters and agents soliciting purchases of our securities under
delayed delivery contracts will be entitled to receive.
Each series of debt securities offered will be a new issue of securities and
will have no established trading market. Any underwriters to whom the
securities are sold for public offering and sale may make a market in the
securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. The securities offered may or may not be
listed on a national securities exchange. No assurance can be given that there
will be a market for the securities.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Fleischman and Walsh, L.L.P., Washington, D. C. Aaron I. Fleischman, Senior
Partner of Fleischman and Walsh, L.L.P., is a director of Southern Union. Mr.
Fleischman, Fleischman and Walsh, L.L.P., and other attorneys in that firm
beneficially own shares of common stock that, in the aggregate, represent less
than two percent (2%) of the shares of our common stock outstanding.
EXPERTS
The consolidated financial statements of Southern Union Company included in
the Annual Report on Form 10-K for the years ended June 30, 1999, 1998 and 1997
have been incorporated in this Prospectus by reference thereto in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Pennsylvania Enterprises, Inc. for
the years ended December 31, 1998 and 1997 included in Pennsylvania
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1998, and incorporated in the Proxy Statement relating to Southern Union's 1999
Annual Meeting of Stockholders, have been incorporated in this Prospectus by
reference thereto in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements and schedules of Pennsylvania
Enterprises, Inc. for the year ended December 31, 1996 included in Pennsylvania
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1998, and incorporated in the Proxy Statement relating to Southern Union's 1999
Annual Meeting of Stockholders that have been incorporated in this Prospectus
by reference thereto, were audited by Arthur Andersen LLP, independent public
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 report.
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$
Southern Union Company
% Senior Notes due
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
Donaldson, Lufkin & Jenrette
Merrill Lynch & Co.
Banc of America Securities LLC
Chase Securities Inc.
Credit Lyonnais Securities (USA) Inc
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee................... $111,000
Rating Agency Fees.............................................. 100,000
Blue Sky Fees and Expenses...................................... 15,000
Trustee's Expenses.............................................. 4,000
Printing and Engraving Fees..................................... 30,000
Accounting Fees and Expenses.................................... 50,000
Legal Fees and Expenses......................................... 175,000
Miscellaneous................................................... 15,000
--------
Total......................................................... $500,000
========
</TABLE>
--------
* All fees and expenses other than SEC Registration Fee are
estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify its directors and officers, subject to certain
limitations. The Company's Bylaws require the Company to indemnify their
respective directors and officers to the fullest extent permitted by law.
Article TWELFTH of the Restated Certificate of Incorporation of Southern
Union eliminates personal liability of directors to the fullest extent
permitted by Delaware law. Section 145 of the Delaware General Corporation Law
provides that a Delaware corporation may indemnify any person against expenses,
fines and settlements actually and reasonably incurred by any such person in
connection with a threatened, pending or completed action, suit or proceeding
in which he is involved by reason of the fact that he is or was a director,
officer, employee or agent of such corporation, provided that (i) he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and (ii) with respect to any criminal
action or proceeding, he had no reasonable cause to believe his conduct was
unlawful. If the action or suit is by or in the name of the corporation, the
corporation may indemnify any such person against expenses actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that
no indemnification may be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation, unless and only
to the extent that the Delaware Court of Chancery or the court in which the
action or suit is brought determines upon application that, despite the
adjudication of liability but in the light of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expense as
the court deems proper.
The directors and officers of Southern Union are covered by insurance
policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"), which might be incurred by them in such capacities and
against which they cannot be indemnified by Southern Union. Southern Union has
entered into an Indemnification Agreement with each member of its Board of
Directors. The Indemnification Agreement provides the Directors with the
contractual right to indemnification for any acts taken in their capacity as a
director of Southern Union to the fullest extent permitted under Delaware law.
Any agents, dealers or underwriters who execute any of the agreements filed
as Exhibit 1 to this registration statement will agree to indemnify Southern
Union's directors and their officers who signed the registration statement
against certain liabilities that may arise under the Securities Act with
respect to information furnished to Southern Union by or on behalf of any such
indemnifying party.
i
<PAGE>
Item 16. Exhibits.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated herein by reference to such previous filings. All other exhibits
are provided as part of this electronic transmission.
<TABLE>
<C> <S>
(A) Underwriting Agreement
1.1 --Form of Underwriting Agreement for offering debt securities.*
(2) Plan of Acquisition
2.1 --Agreement of Merger between Southern Union Company and Pennsylvania
Enterprises, Inc. dated as of June 7, 1999. (Filed as Exhibit 2.1 to
Southern Union's Registration Statement on Form S-4 (No. 333-86883) and
incorporated herein by reference).
(4) Instruments Defining the Rights of Security Holders, Including Indentures
4.1 --Indenture between Chase Manhattan Bank, N.A., as trustee, and Southern
Union Company dated January 31, 1994, for Senior Debt Securities. (Filed
as Exhibit 4.1 to Southern Union's Current Report on Form 8-K dated
February 15, 1994 and incorporated herein by reference.)
4.2 --Form of Subordinated Debt Securities Indenture among Southern Union
Company and Chase Manhattan Bank, N.A., as Trustee. (Filed as Exhibit 4-
G to Southern Union's Registration Statement on Form S-3 (No. 33-58297)
and incorporated herein by reference.)
4.3 --Form of Supplemental Indenture for Senior Notes.*
(5) Opinion re Legality
5.1 --Opinion of Fleischman and Walsh, L.L.P. including the consent of such
firm.
(12) Statements re Computation of Ratios
12-1 --Computation of Ratio of Earnings to Fixed Charges of Southern Union
Company.
12-2 --Computation of Pro Forma Ratio of Earnings to Fixed Charges of Southern
Union Company.
(23) Consents of Experts and Counsel
23-A --Consent of Independent Accountants, PricewaterhouseCoopers LLP.
23-B --Consent of Independent Accountants, PricewaterhouseCoopers LLP.
23-C --Consent of Independent Public Accountants, Arthur Andersen LLP.
23-D --Consent of Fleischman and Walsh, L.L.P. is contained in the opinion of
counsel filed as Exhibit 5.1.
(24) Powers of Attorney
24 --Power of Attorney of the Directors of the Registrant.**
(25) Statements of Eligibility of Trustees
25.1 --Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, N.A., as Trustee, under the
Subordinated Debt Securities Indenture.**
25.2 --Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, N.A., as Trustee, under the Senior
Debt Securities Indenture. **
</TABLE>
- --------
* To be filed by amendment or by Registrant in a Current Report on Form 8-K.
** Previously filed.
ii
<PAGE>
Item 17. Undertaking.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Southern Union's Annual
Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the Plan
of Distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that 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 with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
iii
<PAGE>
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each 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.
iv
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Austin, State of Texas, on October 21, 1999.
Southern Union Company
Ronald J. Endres
By___________________________________
Ronald J. Endres
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons in the
capacities indicated on October 21, 1999.
Signature/Name Title
<TABLE>
<S> <C>
</TABLE>
George L. Lindemann* Chief Executive
---------------------------------------- Officer and
Director
Peter H. Kelley* Director and Chief
---------------------------------------- Operating Officer
John E. Brennan* Director
----------------------------------------
Frank W. Denius* Director
----------------------------------------
Aaron I. Fleischman* Director
----------------------------------------
Kurt A. Gitter, M.D.* Director
----------------------------------------
Adam M. Lindemann* Director
----------------------------------------
Roger J. Pearson* Director
----------------------------------------
George Rountree, III* Director
----------------------------------------
Dan K. Wassong* Director
----------------------------------------
v
<PAGE>
Signature/Name Title
Ronald J. Endres Executive Vice
---------------------------------------- President & Chief
Ronald J. Endres Financial Officer
David J. Kvapil Senior Vice
---------------------------------------- President &
David J. Kvapil Corporate
Controller
(Principal
Accounting Officer)
David J. Kvapil
*by ____________________________________
Attorney-in-fact
vi
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
(A) Underwriting Agreement
1.1 --Form of Underwriting Agreement for offering debt securities.*
(2) Plan of Acquisition
2.1 --Agreement of Merger between Southern Union Company and Pennsylvania
Enterprises, Inc. dated as of June 7, 1999. (Filed as Exhibit 2.1 to
Southern Union's Registration Statement on Form S-4 (No. 333-86883) and
incorporated herein by reference).
(4) Instruments Defining the Rights of Security Holders, Including Indentures
4.1 --Indenture between Chase Manhattan Bank, N.A., as Trustee, and Southern
Union Company dated January 31, 1994, for Senior Debt Securities. (Filed
as Exhibit 4.1 to Southern Union's Current Report on Form 8-K dated
February 15, 1994 and incorporated herein by reference.)
4.2 --Form of Subordinated Debt Securities Indenture among Southern Union
Company and Chase Manhattan Bank, N.A., as Trustee. (Filed as Exhibit 4-
G to Southern Union's Registration Statement on Form S-3 (No. 33-58297)
and incorporated herein by reference.)
4.3 --Form of Supplemental Indenture for Senior Notes.*
(5) Opinion re Legality
5.1 --Opinion of Fleischman and Walsh, L.L.P. including the consent of such
firm.
(12) Statements re Computation of Ratios
12-1 --Computation of Ratio of Earnings to Fixed Charges of Southern Union
Company.
12-2 --Computation of Pro Forma Ratio of Earnings to Fixed Charges of Southern
Union Company.
(23) Consents of Experts and Counsel
23-A --Consent of Independent Accountants, PricewaterhouseCoopers LLP.
23-B --Consent of Independent Accountants, PricewaterhouseCoopers LLP.
23-C --Consent of Independent Public Accountants, Arthur Andersen LLP.
23-D --Consent of Fleischman and Walsh, L.L.P. is contained in the opinion of
counsel filed as Exhibit 5.1.
(24) Powers of Attorney
24 --Power of Attorney of the Directors of the Registrant.**
(25) Statements of Eligibility of Trustees
25.1 --Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, N.A., as Trustee, under the
Subordinated Debt Securities Indenture.**
25.2 --Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, N.A., as Trustee, under the Senior
Debt Securities Indenture. **
</TABLE>
- --------
* To be filed by amendment or by Registrant in a Current Report on Form 8-K.
** Previously filed.
<PAGE>
EXHIBIT 5.1
OPINION OF FLEISCHMAN AND WALSH, L.L.P.
FLEISCHMAN AND WALSH, L.L.P.
1400 Sixteenth Street, N.W.
Sixth Floor
Washington, DC 20036
(202) 939-7900
October 21, 1999
Southern Union Company
504 Lavaca Street, Suite 800
Austin, Texas 78701
Dear Ladies and Gentlemen:
We have acted as counsel to Southern Union Company, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), of a Registration Statement on Form S-3, as
amended (Commission File No. 333-87617) (the "Registration Statement"),
relating to the registration of $400,000,000 aggregate offering price of debt
securities of the Company (the "Debt Securities"), for issuance from time to
time pursuant to Rule 415 under the Securities Act. The Debt Securities may be
offered in amounts, at prices and on terms to be determined by market
conditions at the time of an offering, and such amounts, prices, and terms will
be set forth in a prospectus supplement ("Supplement") to the prospectus
included in the Registration Statement ("Prospectus") at the time of an
offering. Defined terms used, but not defined herein, have the meaning given
them in the Prospectus.
The Debt Securities may be issued either as Senior Debt Securities pursuant
to the Senior Debt Securities Indenture filed as Exhibit 4.1 to the
Registration Statement or as Subordinated Debt Securities pursuant to the
Subordinated Debt Securities Indenture that is substantially similar to the
form of the Subordinated Debt Securities Indenture filed as Exhibit 4.2 to the
Registration Statement.
As counsel to the Company, we have examined: (i) the Registration Statement
and exhibits thereto, the Senior Debt Securities Indenture and the Subordinated
Debt Securities Indenture; (ii) the Company's Restated Certificate of
Incorporation and Bylaws; (iii) pertinent resolutions adopted by the Company's
Board of Directors; and (iv) such other documents and records of the Company,
and such matters of law, as we have considered necessary for the purpose of
rendering this opinion. In our examinations of documents submitted to us, we
have assumed (i) the genuineness of all such documents as originals and the
conformity to original and certified documents of all copies submitted to us as
conformed or photocopied copies thereof, (ii) the genuineness of all signatures
thereon, (iii) the power and authority of all signatories thereto and (iv) the
due execution and delivery thereof by all parties thereto. As to the various
questions of fact material to our opinion, we have relied upon representations,
statements or certificates of officers and representatives of the Company, and
other persons with responsibility for such matters.
Based upon and subject to the foregoing, we are of the following opinions:
1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware.
2. The Senior Debt Securities Indenture and the Subordinated Debt Securities
Indenture have been duly and validly authorized, executed and delivered by
the Company.
<PAGE>
3. Senior Debt Securities issued pursuant to the Registration Statement will
constitute valid and binding obligations of the Company, assuming that
their issuance and any applicable supplemental indenture or officer's
certificate with respect thereto have been duly authorized by the Company,
when (a) the Registration Statement and the applicable Supplement are
effective under the Act, (b) any necessary supplemental indenture or
officer's certificate with respect to the Senior Debt Securities Indenture
has been duly executed and delivered by the Company and the Senior Debt
Securities Trustee, (c) the terms of such Senior Debt Securities have been
duly established in accordance with the Senior Debt Securities Indenture
and any applicable supplemental indenture or officer's certificate with
respect thereto, (d) such Senior Debt Securities have been duly executed
and authenticated in accordance with the Senior Debt Securities Indenture
and any applicable supplemental indenture or officer's certificate with
respect thereto and (e) such Senior Debt Securities have been issued and
delivered in accordance with the Registration Statement, including the
Prospectus and the applicable Supplement. Subject to the foregoing, such
Senior Debt Securities will be enforceable in accordance with their terms
against the Company, except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally and (y) the
availability of equitable remedies may be limited by equitable principles
of general applicability (regardless of whether considered in a proceeding
at law or in equity).
4. Subordinated Debt Securities issued pursuant to the Registration Statement
will constitute valid and binding obligations of the Company, assuming that
their issuance and any applicable supplemental indenture or officer's
certificate with respect thereto have been duly authorized by the Company,
when (a) the Registration Statement and the applicable Supplement are
effective under the Act, (b) any necessary supplemental indenture or
officer's certificate with respect to the Subordinated Debt Securities
Indenture have been duly executed and delivered by the Company and the
Subordinated Debt Securities Trustee, (c) the terms of such Subordinated
Debt Securities have been duly established in accordance with the
Subordinated Debt Securities Indenture and any applicable supplemental
indenture or officer's certificate with respect thereto, (d) such
Subordinated Debt Securities have been duly executed and authenticated in
accordance with the Subordinated Debt Securities Indenture and any
applicable supplemental indenture or officer's certificate with respect
thereto and (e) such Subordinated Debt Securities have been issued and
delivered in accordance with the Registration Statement, including the
Prospectus and the applicable Supplement. Subject to the foregoing, such
Subordinated Debt Securities will be enforceable in accordance with their
terms against the Company, except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally and (y) the
availability of equitable remedies may be limited by equitable principles
of general applicability (regardless of whether considered in a proceeding
at law or in equity).
The opinions expressed herein are subject to the following assumptions,
limitations, qualifications and exceptions:
A. The opinions are limited to the laws of the District of Columbia,
applicable federal securities laws and the General Corporation Law of the
State of Delaware. We assume no responsibility as to the applicability of
the laws of any other jurisdiction to the subject transactions or the
effect of such laws thereon.
B. We express no opinion as to the effect on the Debt Securities of
laws that limit the rate of interest that legally may be contracted for,
charged or collected.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading of "Legal
Matters" in the Prospectus and in any Supplement. In giving such consent, we do
not thereby concede that we are within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
<PAGE>
Please be advised that Aaron I. Fleischman, Senior Partner of Fleischman and
Walsh, L.L.P., is a director of the Company, and that he, Fleischman and Walsh,
L.L.P., and certain other attorneys with Fleischman and Walsh, L.L.P., have
beneficial interests in shares of the Company's common stock.
If you have any questions regarding the opinions expressed herein, please
contact Stephen A. Bouchard, a partner with this firm, at (202) 939-7911.
Very truly yours,
Fleischman and Walsh, L.L.P.
<PAGE>
EXHIBIT 12-1
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months
Ended Year Ended June 30,
September 30, ---------------------------------------
1999 1999 1998 1997 1996 1995
------------- ------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Consolidated pretax
income (loss) from
continuing operations.. $(10,083) $17,554 $20,213 $31,405 $35,818 $27,043
Interest................ 10,734 45,479 44,364 42,945 45,312 41,043
Net amortization of debt
discount and premium
and issuance expense... 241 965 1,029 1,122 1,337 1,172
Interest portion of
rental expense......... 719 2,876 2,252 2,528 3,012 2,704
-------- ------- ------- ------- ------- -------
Earnings.............. $ 1,611 $66,874 $67,858 $78,000 $85,479 $71,962
======== ======= ======= ======= ======= =======
FIXED CHARGES:
Interest................ $ 10,734 $45,479 $44,364 $42,945 $45,312 $41,043
Net amortization of debt
discount and premium
and issuance expense... 241 965 1,029 1,122 1,337 1,172
Interest portion of
rental expense......... 719 2,876 2,252 2,528 3,012 2,704
-------- ------- ------- ------- ------- -------
Fixed charges......... $ 11,694 $49,320 $47,645 $46,595 $49,661 $44,919
======== ======= ======= ======= ======= =======
Ratio of earnings to
fixed charges.......... 0.14 1.36 1.42 1.67 1.72 1.60
======== ======= ======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 12-2
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Pro Forma (a)
--------------------------------
Three Months Ended Year Ended
September 30, 1999 June 30, 1999
------------------ -------------
(dollars in thousands)
<S> <C> <C>
EARNINGS:
Consolidated pretax income (loss) from
continuing operations....................... $(21,651) $12,767
Interest..................................... 17,763 73,837
Net amortization of debt discount and premium
and issuance expense........................ 241 965
Interest portion of rental expense........... 719 2,876
-------- -------
Earnings (loss)............................ $ (2,928) $90,445
======== =======
FIXED CHARGES:
Interest..................................... $ 17,763 $73,837
Net amortization of debt discount and premium
and issuance expense........................ 241 965
Interest portion of rental expense........... 719 2,876
-------- -------
Fixed charges.............................. $ 18,723 $77,678
======== =======
Ratio of earnings to fixed charges........... (0.16) 1.16
======== =======
</TABLE>
- --------
(a) To give effect to an increase in outstanding debt, as of the beginning of
the period presented, primarily as a result of the issuance of $350
million of senior notes, the application of the estimated net proceeds of
the offering and the PEI merger which will be financed primarily through
the issuance of common stock. The PEI merger was assumed to occur as of
the beginning of the period presented, as reflected in the Unaudited Pro
Forma Combined Condensed Financial Statements.
<PAGE>
EXHIBIT 23-A
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Southern Union Company ("Southern Union") of our
report dated August 12, 1999, except for Note XVI as to which the date is
September 3, 1999, relating to the consolidated financial statements, which
appears in Southern Union's 1999 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
June 30, 1999. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Austin, Texas
October 21, 1999
<PAGE>
EXHIBIT 23-B
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 17, 1999 relating to the
financial statements and financial statement schedules, which appears in
Pennsylvania Enterprises, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 21, 1999
<PAGE>
EXHIBIT 23-C
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 19, 1997
included in Pennsylvania Enterprises, Inc.'s Form 10-K for the year ended
December 31, 1998 and to all references to our Firm included in this
Registration Statement. It should be noted that we have not audited any
financial statements of the company subsequent to December 31, 1996 or
performed any audit procedures subsequent to the date of our report.
Arthur Andersen LLP
New York, New York
October 21, 1999
