<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 16, 1995)
$150,000,000
THE COASTAL CORPORATION
LOGO
7.75% SENIOR DEBENTURES DUE OCTOBER 15, 2035
------------------
Interest Payable April 15 and October 15
------------------
The Debentures are not redeemable prior to maturity and have no sinking fund
provisions. The Debentures will be senior unsecured obligations of the Company.
The Debentures will be represented by one or more global securities (the
"Global Debentures") registered in the name of The Depository Trust Company,
New York, New York (the "Depository") or its nominee. Beneficial interests in
the Global Debentures will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository (with respect to
participants' interests) and its participants. Except as described herein,
Debentures in definitive form will not be issued.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Discounts Proceeds to
Public(1) and Commissions(2) Company(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture.................. 99.961% 1.000% 98.961%
- --------------------------------------------------------------------------------
Total.......................... $149,941,500 $1,500,000 $148,441,500
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from the date of initial issuance of the
Debentures.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses of the Company estimated at $100,000.
------------------
The Debentures offered by this Prospectus Supplement are being offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the
Debentures will be made in book-entry form through the facilities of the
Depository on or about October 19, 1995.
------------------
LEHMAN BROTHERS
CITICORP SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
October 16, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings to fixed
charges, on a consolidated basis, for the periods indicated:
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- --------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio................................... 1.81x -- -- 1.39x 1.72x 1.85x 1.65x
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges,
"earnings" are computed by adding to net earnings (loss) from continuing
operations the provision for income taxes and fixed charges net of interest
capitalized. "Fixed charges" consist of interest plus interest capitalized,
subsidiary preferred stock dividends and a portion of operating lease rent
expense deemed to be representative of interest. For the years ended December
31, 1991 and 1992, earnings were less than fixed charges by $23.2 million and
$209.2 million, respectively.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debentures
to fund the redemption in November 1995 of debt with a weighted average annual
interest rate of 10.09%. Pending such redemption, the Company intends to use
such net proceeds to retire short-term borrowings and borrowings under
revolving credit agreements having a weighted average annual interest rate of
6.32%.
DESCRIPTION OF SECURITIES
GENERAL
The Debentures offered hereby by the Company are to be issued under an
Indenture dated as of September 15, 1992, which is more fully described in the
accompanying Prospectus under "Description of Debt Securities."
Each Debenture will mature on October 15, 2035 and will bear interest from
the date of initial issuance at the rate of 7.75% per annum. Interest will be
payable semi-annually on April 15 and October 15, commencing April 15, 1996, to
holders of record as of the last day of the month preceding the month in which
such interest payment occurs.
As of June 30, 1995, the Company had approximately $2,797 million of
indebtedness outstanding which would rank pari passu with the Debentures, and
the Company's subsidiaries had an aggregate of approximately $1,121 million of
indebtedness owed to non-affiliates (some of which the Company has guaranteed).
BOOK-ENTRY SYSTEM
The Debentures will be issued in the form of one or more fully registered
Global Debentures which will be deposited with, or on behalf of, the Depository
and registered in the name of the Depository or its nominee. Except as
described below, Debentures in definitive form will not be issued.
S-2
<PAGE>
Upon the issuance of the Global Debentures, the Depository will credit the
accounts of persons which have accounts with it ("participants") with the
respective principal amounts of the Debentures represented by such Global
Debentures. Such accounts shall be designated by the Underwriters. Ownership of
beneficial interests in the Global Debentures will be limited to participants
or persons that may hold interests through participants. Ownership of
beneficial interests by participants in a Global Debenture will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the Depository for such Global Debenture. Ownership of
beneficial interests in such Global Debenture by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to acquire or
transfer beneficial interests in a Global Debenture.
Payment of principal of and interest on Debentures represented by any Global
Debenture will be made to the Depository or its nominee, as the case may be, as
the sole registered owner and the sole holder of the Debentures represented
thereby for all purposes under the Indenture. Neither the Company, the Trustee
nor any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depository's records relating to or payments
made on account of beneficial ownership interests in a Global Debenture
representing any Debentures or for maintaining, supervising or reviewing any of
the Depository's records relating to such beneficial ownership interests.
The Company expects that the Depository, upon receipt of any payment of
principal of or interest on any Global Debenture, will credit, on its book-
entry registration and transfer system, the accounts of participants with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Debenture as shown on the records of the
Depository. Payments by participants to owners of beneficial interests in a
Global Debenture held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held
for customer accounts registered in "street name" and will be the sole
responsibility of such participants.
A Global Debenture may not be transferred except as a whole by the Depository
to a nominee of the Depository. A Global Debenture representing Debentures is
exchangeable for Debentures in certificated form only if (x) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for such Global Debenture or if at any time the Depository ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and the Company fails within 90 days thereof to appoint a successor,
(y) the Company in its sole discretion determines that such Global Debenture
shall be exchangeable or (z) there shall have occurred and be continuing an
Event of Default (as defined in the Indenture) or an event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default with respect to the Debentures represented by such Global Debenture.
Any Global Debenture that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Debentures in certificated form issuable in
denominations of $1,000 and integral multiples thereof and registered in such
names as the Depository holding such Global Debenture shall direct. Subject to
the foregoing, a Global Debenture is not exchangeable, except for a Global
Debenture of like denomination to be registered in the name of the Depository
or its nominee.
So long as the Depository or its nominee is the registered owner of a Global
Debenture, such Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Debentures represented by such
Global Debenture for the purposes of receiving payment on the Debentures,
receiving notices and for all other purposes under the Indenture and the
Debentures. Beneficial interests in the Debentures will be evidenced only by,
and transfers thereof will be effected only through, records maintained by the
Depository and its participants. Except as provided herein, owners of
beneficial interests in a Global Debenture will not be entitled to and will not
be considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such a Global
Debenture must rely on
S-3
<PAGE>
the procedures of the Depository, and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture.
The Indenture provides that the Depository may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a holder is entitled
to give or take under the Indenture. The Company expects that, in the event
that the Company requests any action of holders or that an owner of a
beneficial interest in the Global Debentures desires to give or take any action
which a holder is entitled to give or take under the Indenture, the Depository,
under existing industry practices, would authorize the participants holding the
relevant beneficial interest to give or take such action and such participants
would authorize beneficial owners owning through such participants to give or
take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
The Depository has advised the Company as follows: It is a limited-purpose
trust company which was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of its Participants.
Participants include securities brokers and dealers (including the
Underwriters), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depository's 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 ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants or
indirect participants.
UNDERWRITING
The names of the Underwriters of the Debentures, and the principal amount
thereof which each has severally agreed to purchase from the Company, subject
to the terms and conditions of the Underwriting Agreement dated October 16,
1995, and the related Terms Agreement referred to therein, are as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF DEBENTURES
----------- ----------------
<S> <C>
Lehman Brothers Inc...................................... $ 50,000,000
Citicorp Securities, Inc................................. 50,000,000
NationsBanc Capital Markets, Inc......................... 50,000,000
------------
Total.................................................. $150,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligations are such
that the Underwriters are committed to purchase all of the Debentures if any
are purchased.
The Underwriters propose to offer the Debentures directly to the public at
the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such prices less a concession not in
excess of .50% of principal amount of the Debentures. The Underwriters may
allow and such dealers may reallow a concession not in excess of .25% of
principal amount of the Debentures to certain other dealers. After the initial
offering, the offering price and other selling terms may be changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the Underwriters may be required to
make in respect thereof.
Each of the Underwriters and/or certain of its affiliates performs investment
banking and/or commercial banking services for, and/or engages in transactions
with, the Company and certain of its affiliates from time to time in the
ordinary course of business.
S-4
<PAGE>
PROSPECTUS
THE COASTAL CORPORATION
LOGO
DEBT SECURITIES
The Coastal Corporation ("Coastal" or the "Company") intends to issue from
time to time its senior unsecured debt securities (the "Debt Securities") at an
aggregate initial offering price not to exceed $250,000,000 (or, if the
principal of the Debt Securities is payable in a foreign currency, the
equivalent thereof at the time of offering), which will be offered on terms to
be determined at the time of sale. The accompanying Prospectus Supplement (the
"Prospectus Supplement") sets forth the specific terms of the Series of Debt
Securities (the "Series") in respect of which this Prospectus is being
delivered, including the designation of the Debt Securities, the aggregate
principal amount offered, the rate or rates of interest or the provisions for
determining such rate or rates and the time of payment thereof, maturity,
currency of payment, offering price, terms relating to redemption (whether
mandatory, at the option of the Company or the holder) and information as to
listing on any securities exchange.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Debt Securities may be sold directly by the Company, through agents
designated by the Company from time to time or through underwriters or dealers
designated by the Company from time to time. If any agents of the Company or
any dealers or underwriters are involved in the sale of the Series of Debt
Securities in respect of which this Prospectus is being delivered, the names of
such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price or underwriter's discount are set forth in or may be
calculated from the Prospectus Supplement. The net proceeds to the Company from
such sale will be the purchase price of such Series of Debt Securities less
such commission in the case of an agent, the purchase price of such Series of
Debt Securities in the case of a dealer or the public offering price of such
Series of Debt Securities less such discount in the case of an underwriter and
less, in each case, other attributable issuance expenses. See "Plan of
Distribution" for indemnification arrangements for agents, dealers and
underwriters.
----------------
The date of this Prospectus is October 16, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004, and at regional offices of the Commission at the
following addresses: 7 World Trade Center, Suite 1300, New York, New York
10048; and Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549-1004. In addition, similar information concerning
the Company can also be inspected at the offices of the New York Stock
Exchange, Inc. at 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement (the "Registration Statement"), of which this Prospectus
is a part, and exhibits relating thereto, which Coastal has filed with the
Commission in Washington, D.C. Statements contained herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. Copies of the Registration
Statement and the exhibits are on file at the offices of the Commission and may
be obtained, upon payment of the fee prescribed by the Commission, or may be
examined without charge at the public reference facilities of the Commission
described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Coastal hereby incorporates in this Prospectus by reference the following
documents which have been filed with the Commission pursuant to the Exchange
Act:
(a) Coastal's Annual Report on Form 10-K for the year ended December 31,
1994 (the "1994 Annual Report"); and
(b) Coastal's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1995 and June 30, 1995.
All documents filed by Coastal pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Any person, including any beneficial owner, receiving a copy of this
Prospectus may obtain without charge, upon request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Such requests should be directed to The Coastal Corporation,
Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995, Attention:
Corporate Secretary, telephone number: (713) 877-1400.
2
<PAGE>
THE COMPANY
The Coastal Corporation, acting through its subsidiaries (hereinafter
collectively referred to as "Coastal" or the "Company" unless the context
otherwise requires), is a diversified energy holding company with operations in
natural gas marketing, processing, storage and transmission; petroleum
refining, marketing and distribution; gas and oil exploration and production;
coal mining; chemicals; independent power production; and trucking. The Company
was incorporated under the laws of Delaware in 1972 to become the successor
parent, through a corporate restructuring, of a corporate enterprise founded in
1955. The Company's principal office is located at Coastal Tower, Nine Greenway
Plaza, Houston, Texas 77046-0995 (telephone number (713) 877-1400).
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be used to repay short-term
borrowings and for the repayment of borrowings under revolving credit
agreements, including short-term borrowings and revolving credit agreements of
subsidiaries, and for other general corporate purposes. Prior to such uses, the
net proceeds from the sale of Debt Securities will be invested in certificates
of deposit or other highly liquid investments with short-term maturities.
RATIO OF EARNINGS TO FIXED CHARGES
A description of the ratio of the Company's earnings to fixed charges, on a
consolidated basis, appears in the accompanying Prospectus Supplement.
DESCRIPTION OF BUSINESS
Coastal, through its subsidiaries, operates approximately 22,000 miles of
natural gas pipelines and has gas storage capacity of about 300 billion cubic
feet, giving the Company access to production areas and markets throughout the
nation. The Company's natural gas subsidiaries and affiliates include: ANR
Pipeline Company, Colorado Interstate Gas Company, Wyoming Interstate Company,
Ltd., ANR Storage Company, Coastal Gas Marketing Company, Great Lakes Gas
Transmission Limited Partnership (50-percent owned), High Island Offshore
System (40-percent owned), U-T Offshore System (33 1/3-percent owned) and
Iroquois Gas Transmission System (9.4-percent owned). The operations of these
subsidiaries and affiliates include producing, purchasing, gathering, storing,
transporting and selling natural gas to and for utilities, industrial
customers, distributors, other pipeline companies and end-users. Activities
also include the extraction and sale of natural gas liquids and other elements
from the gas stream.
Subsidiary refineries located in Aruba, New Jersey, Alabama and Texas have a
combined capacity of 422,500 barrels per day and produce a full range of
petroleum products from transportation fuels to paving asphalt. In addition,
international operations include a minority investment, through a foreign
subsidiary, in a refinery located in Hamburg, Germany which has a refining
capacity of 100,000 barrels per day.
A refined products marketing and distribution system operated by subsidiaries
utilizes approximately 370 refined products terminals in 37 states and also
includes crude, liquified petroleum gas or refined products pipelines; tank
trucks, tugs, oil barges and owned and time-chartered tankers; and
approximately 1,460 "Coastal" branded retail outlets in 37 states.
Coastal's international subsidiaries acquire feedstocks for the refineries
and products for the domestic distribution system and are located in Aruba,
Bahrain, Bermuda, London, Madrid and Singapore.
Coastal's subsidiaries participate in drilling for and producing gas and oil
in most major reserve basins in the United States. Such subsidiaries engaged in
exploration and production own interests in approximately 6,300 producing gas
and oil wells and serve as operator for about 2,600 wells. These subsidiaries
also own
3
<PAGE>
interests in and operate natural gas processing facilities with a total
capacity of 642 million cubic feet per day and own four drilling rigs. At year-
end 1994, the Company held reserves estimated at 33.7 million barrels of oil,
condensate and natural gas liquids, 958,414 billion cubic feet of natural gas
and more than one million net acres of property available for U.S. exploration.
Coastal's subsidiaries mine, process and market low-sulfur coal from
extensive reserves in both the Appalachians and Utah. In addition, subsidiaries
manage a large royalty program and broker coal for others. Certain of these
subsidiaries also operate five coal preparation plants in West Virginia,
Virginia and Kentucky and two underground mines in Utah.
Other subsidiaries of the Company produce chemicals for the agriculture and
mining industries; participate in cogeneration and private electric power
generation business; and conduct trucking operations.
The information in this section is as of December 31, 1994.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under the Indenture dated as of September
15, 1992 (the "Indenture"), between the Company and NationsBank of Texas,
National Association, as Trustee (the "Trustee"). A copy of the form of
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The summaries of certain provisions of the Indenture
hereunder do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms and those terms made part of
the Indenture by reference to the Trust Indenture Act of 1939 as in effect on
the date of the Indenture. Certain capitalized terms used below and not defined
have the respective meanings assigned thereto in the Indenture.
GENERAL
The Indenture provides for the issuance by the Company from time to time of
its Debt Securities in one or more Series. The Indenture does not limit the
amount of Debt Securities which may be issued thereunder, and provides that the
specific terms of any Series of Debt Securities shall be set forth in, or
determined pursuant to, an Authorizing Resolution and/or a supplemental
indenture, if any, relating to such Series.
The specific terms of the Series of Debt Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement relating thereto, including the following, as applicable:
1. the title of the Series;
2. the aggregate principal amount of the Debt Securities of the Series;
3. the date or dates on which principal and premium, if any, on the Debt
Securities of the Series is payable, and, if applicable, the terms on which
such maturity may be extended;
4. the rate or rates of interest (if any) on the Debt Securities of such
Series (whether floating or fixed), the provisions, if any, for determining
such interest rate or rates and adjustments thereto, the interest payment
dates and the regular record dates with respect thereto;
5. the currency(ies) in which principal, premium, if any, and interest
are payable by the Company, if other than United States dollars;
6. provisions relating to redemption, at the option of the Company,
pursuant to a Sinking Fund or otherwise or at the option of a Holder and
the respective redemption dates and redemption prices and the terms and
conditions for such redemption;
7. additional or different covenants or Events of Default, if any, with
respect to the Debt Securities of such Series in addition to or in lieu of
the covenants and Events of Default specified in the Indenture; and
8. if less than 100% of the principal amount of the Debt Securities of
such Series is payable on acceleration or provable in bankruptcy (which may
be the case for Original Issue Discount Securities), a schedule of the
amounts which would be so payable or provable from time to time.
4
<PAGE>
The Debt Securities will be issued only in registered form, without coupons,
in denominations of $1,000 and integral multiples thereof, or in such other
currencies or denominations as may be specified in, or pursuant to, the
Authorizing Resolution and/or supplemental indenture relating to such Series of
Debt Securities. The Debt Securities will be senior unsecured obligations of
the Company.
Except as otherwise specified in the Authorizing Resolution and/or
supplemental indenture relating to the Debt Securities in respect of which this
Prospectus is being delivered, principal and interest will be payable, and the
Debt Securities will be transferable, at the office of the Trustee in New York,
New York. At the Company's option, interest may be paid by check mailed to the
registered holders of the Debt Securities. The Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection with certain transfers or exchanges. Initially, the Trustee will act
as paying agent and registrar under the Indenture. The Company may act as
paying agent and registrar and may change any paying agent or registrar without
notice.
Except as otherwise specified in the Authorizing Resolution and/or
supplemental indenture relating to the Debt Securities in respect of which this
Prospectus is being delivered, the Debt Securities do not contain event risk
provisions designed to require the Company to redeem the Debt Securities, reset
the interest rate or take other actions in response to highly leveraged
transactions, change in credit rating or other similar occurrences.
DEFINITIONS
"Attributable Debt" means, with respect to any Sale and Leaseback Transaction
as of any particular time, the present value (discounted at the rate of
interest implicit in the terms of the lease) of the obligations of the lessee
under such lease for net rental payments during the remaining term of the lease
(including any period for which such lease has been extended or may, at the
option of the Company, be extended).
"Consolidated Net Tangible Assets" means the total assets appearing on a
consolidated balance sheet of the Company and its Consolidated Subsidiaries (as
defined in the Indenture), less, without duplication: (i) current liabilities;
(ii) reserves for estimated rate refunds pending the outcome of a rate
proceeding to the extent such refunds have not been finally determined; (iii)
all intangible assets; and (iv) deferred income tax assets.
"Funded Debt" means all Indebtedness maturing one year or more from the date
of the creation thereof, all Indebtedness directly or indirectly renewable or
extendible, at the option of the debtor, by its terms or by the terms of any
instrument or agreement relating thereto, to a date one year or more from the
date of the creation thereof, and all Indebtedness under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of one year or more, even though such Indebtedness may also conform to
the definition of Short-Term Borrowing (as defined in the Indenture).
"Indebtedness" means (i) any liability of any person (a) for borrowed money,
(b) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property or
assets (other than inventory or similar property acquired in the ordinary
course of business), including securities, or (c) for the payment of money
relating to a Capitalized Lease Obligation (as defined in the Indenture); (ii)
any guarantee by any person of any liability of others described in the
preceding clause (i); and (iii) any amendment, renewal, extension or refunding
of any liability of the types referred to in clauses (i) and (ii) above.
"Lien" means any mortgage, lien, pledge, charge, or other security interest
or encumbrance of any kind.
"Principal Domestic Property of the Company" shall mean any property, plant,
equipment or facility of the Company which is located in the United States or
any territory or political subdivision thereof, except any property which the
Board of Directors or management of the Company or any such Subsidiary shall
determine to be not material to the business or operations of the Company and
its Subsidiaries, taken as a whole.
5
<PAGE>
"Sale and Leaseback Transaction" is defined in the "Restrictions on Sales and
Leasebacks" covenant described below.
"Stated Maturity" when used with respect to any security or any installment
of interest thereon means the date specified in such security as the fixed date
on which the principal of such security or such installment of interest is due
and payable.
"Subsidiary" means (i) a corporation a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by the Company and a Subsidiary
(or Subsidiaries) of the Company or by a Subsidiary (or Subsidiaries) of the
Company or (ii) any person (other than a corporation) in which the Company, a
Subsidiary (or Subsidiaries) of the Company or the Company and a Subsidiary (or
Subsidiaries) of the Company, directly or indirectly, at the date of
determination thereof has at least majority ownership interest; provided, that
no corporation shall be deemed a Subsidiary until the Company, a Subsidiary (or
Subsidiaries) of the Company or the Company and a Subsidiary (or Subsidiaries)
of the Company acquires more than 50% of the outstanding voting stock thereof
and has elected a majority of its board of directors.
RESTRICTIONS ON LIENS
The Company will not incur, create, assume or otherwise become liable with
respect to any Indebtedness secured by a Lien, or guarantee any Indebtedness
with a guarantee which is secured by a Lien, on any Principal Domestic Property
of the Company or any shares of stock or Indebtedness of any Consolidated
Subsidiary, without effectively providing that the Debt Securities (together
with, if the Company shall so determine, any other Indebtedness of the Company
then existing or thereafter created ranking equally with the Debt Securities)
shall be secured equally and ratably with (or, at the option of the Company,
prior to) such secured Indebtedness so long as such secured Indebtedness shall
be so secured; provided, however, that this covenant will not apply to
Indebtedness secured by: (a) Liens existing on the date of the Indenture; (b)
Liens in favor of governmental bodies to secure progress, advance or other
payments; (c) Liens existing on property, shares of stock or Indebtedness at
the time of acquisition thereof (including acquisition through lease, merger or
consolidation) or Liens to secure the payment of all or any part of the
purchase price thereof or the purchase price of construction, installation,
renovation, improvement or development thereon or thereof or to secure any
Indebtedness incurred prior to, at the time of, or within 360 days after the
later of the acquisition, completion of such construction, installation,
renovation, improvement or development or the commencement of full operation of
such property or within 360 days after the acquisition of such shares or
Indebtedness for the purpose of financing all or any part of the purchase price
thereof; (d) Liens securing Indebtedness in an aggregate amount which, at the
time of incurrence and together with all outstanding Attributable Debt in
respect of Sale and Leaseback Transactions permitted by clause (y) in the
"Restrictions on Sales and Leasebacks" covenant, does not exceed five percent
of the Consolidated Net Tangible Assets of the Company; and (e) any extension,
renewal or replacement (or successive extensions, renewals or replacements), as
a whole or in part, of any Liens referred to in the foregoing clauses (a)
through (d) inclusive; provided, that such extension, renewal or replacement of
such Lien is limited to all or any part of the same property, shares of stock
or Indebtedness that secured the Lien extended, renewed or replaced (plus
improvements on such property), and that such secured Indebtedness at such time
is not increased.
RESTRICTIONS ON SALES AND LEASEBACKS
The Company will not sell or transfer any Principal Domestic Property of the
Company, with the Company taking back a lease of such Principal Domestic
Property of the Company (a "Sale and Leaseback Transaction"), unless (i) such
Principal Domestic Property of the Company is sold within 360 days from the
date of acquisition of such Principal Domestic Property of the Company or the
date of the completion of construction or commencement of full operations of
such Principal Domestic Property of the Company, whichever is later, or (ii)
the Company, within 120 days after such sale, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company
6
<PAGE>
which by its terms or the terms of the instrument pursuant to which it was
issued is subordinate in right of payment to the Debt Securities) an amount not
less than the greater of (A) the net proceeds of the sale of such Principal
Domestic Property of the Company or (B) the fair value (as determined in any
manner approved by the Board of Directors) of such Principal Domestic Property
of the Company. The provisions of this covenant shall not prevent a Sale and
Leaseback Transaction (x) if the lease entered into by the Company in
connection therewith is for a period, including renewals, of not more than 36
months or (y) if the Company would, at the time of entering into such Sale and
Leaseback Transaction, be entitled, without equally and ratably securing the
Debt Securities, to create or assume a Lien on such Principal Domestic Property
securing Indebtedness in an amount at least equal to the Attributable Debt in
respect of such Sale and Leaseback Transaction pursuant to clause (d) above in
the "Restrictions on Liens" covenant.
RANKING
The Debt Securities constitute senior unsecured obligations of the Company.
As of June 30, 1995, the Company had approximately $2,797 million of
indebtedness outstanding which would rank pari passu with the Debt Securities,
and the Company's Subsidiaries had an aggregate of approximately $1,121 million
of indebtedness owed to non-affiliates (some of which the Company has
guaranteed) and mandatory redemption preferred stock outstanding. Creditors of
the Company's Subsidiaries and holders of such preferred stock will have a
claim on the assets of such Subsidiaries which will be prior to the holders of
the Debt Securities. Except as otherwise specified in the Authorizing
Resolution and/or supplemental indenture relating to the Debt Securities in
respect of which this Prospectus is being delivered, there are no limitations
in the Indenture relating to the Debt Securities on the amount of additional
Indebtedness which may rank pari passu with the Debt Securities or on the
amount of Indebtedness, secured or otherwise, which may be incurred or
preferred stock which may be issued by any of the Company's Subsidiaries;
provided, that the incurrence of secured Indebtedness by the Company is subject
to the limitations set forth in the "Restrictions on Liens" covenant.
DISCHARGE
Except as specifically set forth in the Indenture, the Company may terminate
its obligations under any Series of Debt Securities and the Indenture with
respect to such Series, at any time, (a) by delivering all outstanding Debt
Securities of such Series to the Trustee for cancellation and paying any other
sums payable by it under such Debt Securities and the Indenture with respect to
such Series, or (b) after giving notice to the Trustee of its intention to
defease all of the Debt Securities of such Series by irrevocably depositing
with the Trustee or a paying agent (other than the Company or a Subsidiary) (i)
in the case of any Debt Securities of any Series denominated in United States
dollars, cash or U.S. Government Obligations (as defined in the Indenture)
sufficient to pay all remaining Indebtedness on such Debt Securities and (ii)
in the case of any Debt Securities of any Series denominated in any currency
other than United States dollars, an amount of the Required Currency (as
defined in the Indenture) sufficient to pay all remaining Indebtedness on such
Debt Securities; provided that if such irrevocable deposit pursuant to (b)
above is made on or prior to one year from the Stated Maturity for payment of
principal of such Series of Debt Securities, the Company shall have delivered
to the Trustee either an opinion of counsel with no material qualifications or
a favorable ruling of the Internal Revenue Service, in either case to the
effect that holders of such Debt Securities (i) will not recognize income, gain
or loss for Federal income tax purposes as a result of such deposit (and the
defeasance contemplated in connection therewith) and (ii) will be subject to
Federal income tax on the same amounts and in the same manner and at the same
time as would have been the case if such deposit and defeasance had not
occurred.
MERGER AND CONSOLIDATION
The Company shall not consolidate with or merge with or into any other
corporation or transfer all or substantially all of its property and assets as
an entirety to any person unless (i) the Company shall be the
7
<PAGE>
continuing person or the corporation formed by such consolidation or into which
the Company is merged or to which the properties and assets of the Company as
an entirety are transferred is a corporation organized and existing under the
laws of the United States or any State thereof or the District of Columbia
which expressly assumes all of the obligations of the Company under the Debt
Securities and the Indenture and (ii) immediately before and immediately after
giving effect to such transaction, no Event of Default and no event which,
after notice or lapse of time or both, would become an Event of Default shall
have occurred and be continuing.
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the holders of not less than a majority in
principal amount of the outstanding Debt Securities of all Series affected
thereby (voting as a single class); provided that such modification or
amendment may not, without the consent of the holder of the Debt Securities
affected thereby, (i) extend the Stated Maturity of the principal of or any
installment of interest with respect to the Debt Securities; (ii) reduce the
principal amount of, or the rate of interest on, or alter the redemption
provisions with respect to, the Debt Securities; (iii) change the currency of
payment of principal of or interest on the Debt Securities; (iv) impair the
right to institute suit for the enforcement of any payment on or with respect
to the Debt Securities; (v) reduce the above-stated percentage of holders of
the Debt Securities necessary to modify or amend the Indenture; or (vi) modify
the foregoing requirements or reduce the percentage of outstanding Debt
Securities necessary to waive any covenant or past default. Holders of not less
than a majority in principal amount of the outstanding Debt Securities of all
Series affected thereby (voting as a single class) may waive certain past
defaults and may waive compliance by the Company with any provision of the
Indenture or such Debt Securities (subject to the immediately preceding
sentence); provided, that, only the holders of a majority in principal amount
of Debt Securities of a particular Series may waive compliance with a provision
of the Indenture or the Debt Securities of such Series having applicability
solely to such Series.
EVENTS OF DEFAULT AND NOTICE THEREOF
The term "Event of Default" when used in the Indenture with respect to any
Series of Debt Securities, means any one of the following: (i) failure of the
Company to pay interest on such Series of Debt Securities within 30 days of
when due or principal on such Series of Debt Securities when due (including any
Sinking Fund installment); (ii) failure to perform any other agreement in the
Debt Securities of such Series or the Indenture other than an agreement
relating solely to another Series of Debt Securities for 30 days after notice;
(iii) acceleration of Indebtedness of the Company or any Significant Subsidiary
(as defined in the Indenture) under the terms of the instruments evidencing
such Indebtedness aggregating more than $5,000,000 at the time outstanding;
(iv) judgments for the payment of more than $5,000,000 at the time outstanding
rendered against the Company or any Significant Subsidiary and not discharged
within 60 days after such judgment becomes final and nonappealable; and (v)
certain events of bankruptcy, insolvency or reorganization with respect to the
Company or any Significant Subsidiary. Additional or different Events of
Default, if any, applicable to the Series of Debt Securities in respect of
which this Prospectus is being delivered are specified in the accompanying
Prospectus Supplement.
The Indenture provides that the Trustee shall, within 60 days after the
occurrence of any default (the term "default" to include the events specified
above without grace or notice) with respect to any Series of Debt Securities
actually known to it, give to the holders of such Debt Securities notice of
such default; provided that, except in the case of a default in the payment of
principal of or interest on any of the Debt Securities or in the payment of any
Sinking Fund installment, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interest of the holders of such Debt Securities. The Indenture will require
the Company to certify to the Trustee quarterly as to whether any default
occurred during such quarter.
8
<PAGE>
In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) with respect to any Debt Securities
of such Series shall occur and be continuing, the Trustee or the holders of at
least 25% in aggregate principal amount of the Debt Securities of such Series
then outstanding, by notice in writing to the Company (and to the Trustee if
given by the holders of the Debt Securities of such Series), may declare all
unpaid principal of and accrued interest on such Debt Securities then
outstanding to be due and payable immediately. In case an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization shall
occur, all unpaid principal of and accrued interest on all Debt Securities then
outstanding shall be due and payable immediately without any declaration or
other act on the part of the Trustee or the holders of any Debt Securities.
Such acceleration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal of or interest on the Debt Securities
of such Series) may be waived by the holders of a majority in principal amount
of the Debt Securities of such Series then outstanding upon the conditions
provided in the Indenture.
The Indenture provides that no holder of the Debt Securities of such Series
may pursue any remedy under the Indenture unless the Trustee shall have failed
to act after, among other things, notice of an Event of Default and request by
holders of at least 25% in principal amount of the Debt Securities of the
Series of which the Event of Default has occurred and the offer to the Trustee
of indemnity satisfactory to it; provided, however, that such provision does
not affect the right to sue for enforcement of any overdue payment on such Debt
Securities.
THE TRUSTEE
NationsBank of Texas, National Association will be Trustee under the
Indenture. NationsBank of Texas, National Association has announced the sale of
its corporate trust operations to The Bank of New York. The Bank of New York is
expected to succeed NationsBank of Texas, National Association as Trustee on or
before January 1, 1996.
The Indenture contains certain limitations on the right of the Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
provided, however, if it acquires any conflicting interest, it must eliminate
such conflict or resign.
The holders of a majority in principal amount of all outstanding Debt
Securities of a Series (or if more than one Series is affected thereby, of all
Series so affected voting as a single class) will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy
or power available to the Trustee.
In case an Event of Default shall occur (and shall not be cured) and is known
to the Trustee, the Trustee shall exercise such of the rights and powers vested
in it by the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the holders of Debt Securities unless they shall have
offered to the Trustee security and indemnity satisfactory to it.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by the laws of the
State of New York.
BACKUP WITHHOLDING
Under Section 3406 of the Internal Revenue Code of 1986, as amended, and
applicable Department of Treasury regulations, a holder of the Debt Securities
may be subject to backup withholding at the rate of 20% with respect to
interest paid or the proceeds of a sale, exchange or redemption of Debt
Securities unless (a) such holder is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact; or (b)
provides a taxpayer identification number, certifies as to no loss of exemption
from backup withholding and otherwise complies with applicable requirements of
the backup withholding rules.
9
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser; or (iii) through agents. Any such dealer
or agent, in addition to any underwriter, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933, as amended. The terms of the
offering of the Series of Debt Securities with respect to which this Prospectus
is being delivered are set forth in the accompanying Prospectus Supplement,
including the name or names of any underwriters, dealers or agents, the
purchase price of such Series and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, the initial public offering price and any discounts or
concessions which may be allowed or reallowed or paid to dealers and any
securities exchanges on which the Series may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The Debt
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by one or more underwriters
acting alone. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase the Debt Securities described in
the accompanying Prospectus Supplement will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all such Debt
Securities if any are so purchased by them. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agents involved in the offer
or sale of the Debt Securities in respect of which this Prospectus is being
delivered are named, and any commissions payable by the Company to such agents
are set forth in the accompanying Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If dealers are utilized in the sale of any Debt Securities, the Company will
sell the Debt Securities to the dealers, as principals. Any dealer may resell
the Debt Securities to the public at varying prices to be determined by the
dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the Prospectus Supplement with respect to the
Debt Securities being offered thereby.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase the Series of Debt Securities to which this Prospectus
and the Prospectus Supplement relates from the Company at the public offering
price set forth in the Prospectus Supplement, plus accrued interest, pursuant
to delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject only to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of such contracts.
Underwriters will not be obligated to make a market in any Debt Securities.
The Company cannot predict the activity of trading in, or liquidity of, any
Debt Securities.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution by the Company to payments they may be required to make in respect
thereof. Agents, dealers and underwriters may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
10
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Debt Securities offered hereby
are being passed upon for the Company by Austin M. O'Toole, Esq., Senior Vice
President, Secretary and Senior Counsel of Coastal, and for the underwriters,
agents and dealers by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York. As of June 30, 1995, Mr.
O'Toole beneficially owned approximately 50,742 shares of Common Stock and 630
shares of Class A Common Stock of Coastal, including exercisable stock
options.
EXPERTS
The annual consolidated financial statements of the Company incorporated in
this Prospectus by reference to the 1994 Annual Report have been so
incorporated in reliance on the report of Deloitte & Touche LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement and the accompanying Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company, by the Underwriters or by any other person. This Prospectus
Supplement and the accompanying Prospectus do not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered hereby to
any person or by anyone in any state in which such offer or solicitation may
not lawfully be made. Neither the delivery of this Prospectus Supplement and
the accompanying Prospectus, nor any sale made hereunder, shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
Ratio of Earnings to Fixed Charges......................................... S-2
Use of Proceeds............................................................ S-2
Description of Securities.................................................. S-2
Underwriting............................................................... S-4
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of Business.................................................... 3
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 10
Legal Matters.............................................................. 11
Experts.................................................................... 11
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$150,000,000
LOGO
THE COASTAL
CORPORATION
7.75% SENIOR DEBENTURES DUE
OCTOBER 15, 2035
------------------
PROSPECTUS SUPPLEMENT
October 16, 1995
------------------
LEHMAN BROTHERS
CITICORP SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
