UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
El Paso Energy Corporation
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(Name of Issuer)
Common Stock (par value $3.00 per share)
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(Title of Class and Securities)
283905107
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(CUSIP Number)
Austin M. O'Toole
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, TX 77046
Telephone: (713) 877-1400
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
with a copy to:
Kevin Barnette, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, NW
Washington, DC 20005
Telephone: (202) 371-7000
January 17, 2000
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 283905107
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1. NAMES OF REPORTING PERSON
The Coastal Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
74-1734212
___________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
___________________________________________________________________
3. SEC USE ONLY
___________________________________________________________________
4. SOURCE OF FUNDS*
00
___________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
___________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
___________________________________________________________________
7. SOLE VOTING POWER
NUMBER OF 35,080,566
SHARES _____________________________________
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH _____________________________________
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 35,080,566
WITH _____________________________________
10. SHARED DISPOSITIVE POWER
0
___________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14.9%
___________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
___________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
14.9%
___________________________________________________________________
14. TYPE OF REPORTING PERSON
CO
___________________________________________________________________
ITEM 1. Security and Issuer
This Statement on Schedule 13D (this "Statement") relates to the
common stock, par value $3.00 per share (the "El Paso Common Stock"), of El
Paso Energy Corporation, a Delaware corporation ("El Paso"). The principal
executive offices of El Paso are located at 1001 Louisiana Street, Houston,
Texas, 77002.
ITEM 2. Identity and Background
This Statement is being filed by The Coastal Corporation, a Delaware
corporation ("Coastal"). The principal business and executive offices of
Coastal are located at Coastal Tower, Nine Greenway Plaza, Houston, Texas,
77046. Coastal is a diversified energy holding company with subsidiary
operations in natural gas gathering, marketing, processing, storage and
transmission; petroleum refining, marketing and distribution and chemicals;
gas and oil exploration and production; coal mining; and power.
(a)-(c); (f) Schedule I hereto contains certain information with
respect to the executive officers and directors of Coastal, including their
business addresses, their principal occupations or employment, the name,
principal businesses and address of any corporation or other organization
in which such employment is conducted and their citizenship.
(d)-(e) Neither Coastal nor, to the knowledge of Coastal, any of the
executive officers or directors of Coastal, has, during the last five (5)
years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or been a party to a civil proceeding
resulting in his or its being subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, the federal or state securities laws or finding any violations
with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
As more fully described below, pursuant to the terms of the Stock
Option Agreement, dated as of January 17, 2000, by and between Coastal and
El Paso (the "El Paso Stock Option Agreement"), Coastal will have the
right, upon the occurrence of certain events, to purchase from time to time
up to 35,080,566 shares of El Paso Common Stock at a price of $37.80 per
share (subject to adjustment as provided in the El Paso Stock Option
Agreement) (the "El Paso Option"). If Coastal purchases El Paso Common
Stock pursuant to the El Paso Stock Option Agreement, Coastal anticipates
that the funds to finance such purchase would come from a combination of
borrowings and working capital. Because the option under the El Paso Stock
Option Agreement is not currently exercisable, no determination has been
made at this time as to the source of such funds. As further described in
Item 4 hereof, under certain circumstances, Coastal can perform a cashless
exercise of the El Paso Option.
ITEM 4. Purpose of Transaction
(a)-(j) On January 17, 2000, El Paso, Coastal, and El Paso Merger
Company, a Delaware corporation and a wholly-owned subsidiary of El Paso
("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"), a copy of which is attached as Exhibit 1 hereto and
incorporated herein by reference. All references herein are qualified in
their entirety by reference to the Merger Agreement. The Merger Agreement
provides, among other things, for the merger of Merger Sub with and into
Coastal (the "Merger"), with Coastal being the surviving corporation and
becoming a wholly-owned subsidiary of El Paso.
Pursuant to the Merger Agreement and subject to certain exceptions
contained therein, at the effective time of the Merger (the "Effective
Time") (i) each share of Coastal Common Stock, and each share of Class A
Common Stock, par value $.33-1/3 per share, of Coastal ("Coastal Class A
Common Stock"), issued and outstanding immediately prior to the Effective
Time will cease to exist and will be converted into the right to receive
1.230 shares of common stock, par value $3.00 per share, of El Paso
(including any associated preferred stock purchase rights) (the "El Paso
Common Stock"), and (ii) each share of serial Preferred Stock, par value
$.33 1/3 per share (the "Coastal Preferred Stock") will cease to exist and
will be converted in the right to receive: (a) in the case of Coastal
Preferred Stock designated as "$1.19 Cumulative Convertible Preferred
Stock, Series A" (the "Coastal Series A Preferred Stock"), 9.133 shares of
El Paso Common Stock; (b) in the case of Coastal Preferred Stock designated
as "$1.83 Cumulative Convertible Preferred Stock, Series B" (the "Coastal
Series B Preferred Stock"), 9.133 shares of El Paso Common Stock; and (c)
in the case of Coastal Preferred Stock designated as "$5.00 Cumulative
Convertible Preferred Stock, Series C", 17.980 shares of El Paso Common
Stock.
Pursuant to the Merger Agreement, unless otherwise agreed by El Paso
and Coastal, upon consummation of the Merger (a) the Restated Certificate
of Incorporation of Coastal will be the certificate of incorporation of the
surviving corporation, (b) the Amended and Restated By-laws of Coastal will
constitute the by-laws of the surviving corporation, (c) the officers of
Coastal immediately prior to the Effective Time will continue to serve in
their respective offices of the surviving corporation (until their
successors are elected or appointed and qualified or until their
resignation or removal), and (d) the directors of Merger Sub prior to the
Effective Time will be the directors of the surviving corporation.
Stock Option Agreements
In connection with, and as a condition and inducement to El Paso's
willingness to enter into the Merger Agreement, Coastal granted to El Paso,
pursuant to the terms of a Stock Option Agreement, dated January 17, 2000
(the "Coastal Stock Option Agreement" and together with the El Paso Stock
Option Agreement, the "Stock Option Agreements"), an option (the "Coastal
Option"and together with the El Paso Option, the "Options") to purchase,
under certain circumstances, for $34.14375 per share (subject to adjustment
as provided in the Coastal Stock Option Agreement), up to 31,834,515 shares
of Coastal Common Stock (subject to adjustment as provided in the Coastal
Stock Option Agreement).
In connection with, and as a condition and inducement to Coastal's
willingness to enter into the Merger Agreement, El Paso granted to Coastal,
pursuant to the terms of the El Paso Stock Option Agreement, an option to
purchase, under certain circumstances, for $37.80 per share (subject to
adjustment as provided in the El Paso Stock Option Agreement), up to
35,080,566 shares of El Paso Common Stock (subject to adjustment as
provided in the El Paso Stock Option Agreement).
The Stock Option Agreements are attached as Exhibits 2 and 3 hereto,
respectively, and are incorporated herein by reference. All references
herein are qualified in their entirety by reference to the Stock Option
Agreements.
Pursuant to the Stock Option Agreements, either El Paso or Coastal, as
the case may be, may exercise the Option granted to it, in whole or in
part, at any time or from time to time after the occurrence of any event as
a result of which it is entitled to receive a termination fee pursuant to
Section 8.2 of the Merger Agreement (described below) if the Merger
Agreement is being or has been terminated (an "Exercise Event"). Each of
the Options shall terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time and (B) nine months after the
first occurrence of an Exercise Event with respect thereto.
If, prior to the termination of the Coastal Option or the El Paso
Option, as the case may be, the grantor enters into any agreement (x)
pursuant to which all outstanding shares of the grantor's stock are to be
purchased for, or converted into the right to receive cash or (y) with
respect to any merger, consolidation, sale or transfer of all or
substantially all of any assets (each of the transactions set forth in
clauses (x) and (y), a "Transaction"), El Paso and Coastal agree that
proper provision shall be made in such agreement to provide that, if the
Coastal Option or El Paso Option, as the case may be, shall not theretofore
have been exercised, then upon the consummation of the Transaction, if such
Option is then exercisable, the Option holder shall have the right, at its
election, to receive in exchange for the cancellation of the Coastal Option
or El Paso Option, as the case may be, an amount in cash equal to the
Spread. The "Spread" is defined as the number of shares subject to the
applicable Option multiplied by the excess of (A) the higher of (i) the
average of the closing prices of the shares of the grantor's stock as
reported by The Wall Street Journal over the ten-trading day period
beginning on the trading day immediately following the announcement of the
Transaction or (ii) the average of the closing prices of the shares of the
grantor's stock as reported by The Wall Street Journal over the ten-trading
day period ending on the trading day immediately prior to the consummation
of such Transaction, over (B) the exercise price of the applicable Option.
The amount of the Spread, when added to other profit realized by
Coastal or El Paso pursuant to the applicable Option, plus the Termination
Fee paid or payable to Coastal or El Paso as described below, as the case
may be, may not exceed $325 million.
Following exercise of the Option by the grantee company, in the event
that the company sells, pledges or otherwise disposes (including by merger
or exchange) of any of the option shares (a "Sale"), then:
(i) any Termination Fee due and payable by the grantor company
(pursuant to the Merger Agreement) following such time shall be
reduced by an amount equal to the excess of (1) the total of
(A) such Termination Fee, (B) the excess of (w) the aggregate
amounts received (whether in cash, securities or otherwise) by the
grantee company in all such Sales, over (x) the aggregate purchase
price of the option shares sold in such Sales (such excess in this
sub-clause (B) being the "Offset Amounts") and (C) cash received
pursuant to the provisions discussed above, over (2) $325 million.
(ii) if grantor company has paid to the grantee company a Termination
Fee prior to the Sale, then the grantee company shall immediately
remit to the grantor, as additional purchase price for the option
shares, the excess, if any, of (y) the total of the Termination Fee
paid by the grantor under the Merger Agreement, the Offset Amounts
of all Sales and cash received pursuant to the provisions discussed
above, over (z) $325 million.
The aggregate of any Termination Fee, all Offset Amounts, and cash
received pursuant to the Option Agreements are not to exceed $325 million.
Other Matters
Consummation of the Merger is subject to the satisfaction (or, in
certain circumstances, waiver) at or prior to the Effective Time of certain
conditions including, but not limited to the following:
(1) approval and adoption of the Merger and the Merger Agreement by
the requisite vote of the stockholders of Coastal;
(2) approval of the issuance of shares of El Paso Common Stock in
connection with the Merger Agreement by the stockholders of El
Paso;
(3) expiration or termination of the applicable waiting period (or
any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act");
(4) the obtaining of all waivers, consents, approvals, orders and
authorizations of, and notices reports and filings with,
governmental entities necessary for the consummation of the
transactions contemplated by the Merger Agreement except as would
not have a Post-Merger Material Adverse Effect (defined below);
(5) the effectiveness of a registration statement on Form S-4 with
respect to the shares of El Paso Common Stock issuable in the
transaction ("Form S-4"), so long as no stop order suspending the
effectiveness of the Form S-4 is in effect;
(6) the obtaining of all material necessary approvals and permits
under state securities or "blue sky" laws relating to the issuance
of shares of El Paso Common Stock;
(7) approval of the shares of El Paso Common Stock to be issued
pursuant to the terms of the Merger Agreement for listing on the
NYSE, subject to official notice of issuance;
(8) the receipt of a letter from Coastal's independent public
accountants stating that Coastal is eligible to participate in a
transaction with El Paso accounted for as a pooling-of-interests
under Opinion 16 of the Accounting Principles Board ("APB 16"); and
(9) the receipt of a letter from El Paso's independent public
accountants stating that the accounting of the Merger as a pooling-
of-interests under APB 16 is appropriate if the merger is closed
and consummated in accordance with the terms of the Merger
Agreement.
The consummation of the Merger is also subject to the satisfaction
(or, in certain circumstances, the waiver) of certain other customary
conditions.
El Paso and Coastal have each agreed to use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary to consummate the Merger and the other
transactions contemplated by the Merger Agreement. Each party further
agreed to take all actions necessary to cause the expiration or termination
of the applicable waiting periods under the HSR Act as soon as practicable.
Notwithstanding the foregoing, neither El Paso nor Coastal are
required to sell or otherwise dispose of or conduct their business in a
specified manner as a condition to obtaining approval from a governmental
entity, if such sale or other disposition or conduct of their business in a
specified manner, individually or in the aggregate, are not conditioned on
the Closing under the Merger Agreement or would, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, assets, results of operations or condition (financial or
otherwise) of El Paso and its Subsidiaries (including the Surviving
Corporation), taken together, after giving effect to the Merger (a "Post-
Merger Material Adverse Effect"). The Merger Agreement provides that El
Paso and its Subsidiaries shall not be obligated to take any action that
would have a material adverse effect on or with respect to Tennessee Gas
Pipeline Company or ANR Pipeline Company, and any such adverse effect shall
constitute a "Post-Merger Material Adverse Effect", and that Coastal shall
not take any action that would reasonably be likely to have a Post-Merger
Material Adverse Effect.
Under the terms of the Merger Agreement, the Board of Directors of
both El Paso and Coastal are prohibited from taking certain actions,
including:
(1) withdrawing or modifying, in any way adverse to the other party,
their approval or recommendation of, in the case of El Paso, the
issuance of El Paso Common Stock (the "El Paso Stock Issuance") in
connection with the Merger Agreement or, in the case of Coastal,
the Merger or the Merger Agreement, unless such Board determines in
good faith that adverse developments affecting the other party have
caused the Merger to be contrary to the best interests of its
stockholders;
(2) approving any Acquisition Agreement (as defined in the Merger
Agreement, but not including the Merger Agreement);
(3) approving or recommending a Takeover Proposal (as defined in the
Merger Agreement) by any third party.
Notwithstanding the restrictions mentioned in (1) - (3) above, the
Board of Directors of El Paso, or the Board of Directors of Coastal, as
applicable, may terminate the Merger Agreement and enter into an
Acquisition Agreement with respect to any Superior Proposal. A "Superior
Proposal" means any proposal made by a third party to acquire, directly or
indirectly, more than 50% of the combined voting power or assets of El Paso
and its Subsidiaries or Coastal and its Subsidiaries, as the case may be,
so long as the following conditions are met:
(1) the proposal is otherwise on terms which the Board of Directors
of El Paso or Coastal, as applicable, determines in good faith
(based upon the advice of a financial advisor) to be more favorable
than the Merger to El Paso's or Coastal's stockholders (and the
financing for such proposal is committed or is reasonably capable
of being committed in the judgment of the applicable Board of
Directors), and
(2) the Board of Directors of El Paso or Coastal, as applicable,
determines in good faith that taking action with respect to such
proposal is required for the Board of Directors of El Paso or
Coastal, as applicable, to comply with its fiduciary duties to the
stockholders.
The Merger Agreement may also be terminated under the following
circumstances:
(1) by mutual written consent of El Paso and Coastal;
(2) by either El Paso or Coastal if the Merger is not completed on or
before January 17, 2001, except that if the Merger Agreement has
not been completed on or before January 17, 2001 because of the
failure to obtain all required regulatory consents or because the
waiting period under the HSR Act has not expired or been
terminated, then the Merger Agreement may not be terminated by
either party until April 17, 2001 (so long as all other conditions
set forth in the Merger Agreement were satisfied, waived, or
capable of being satisfied on or before January 17, 2001). The
right to terminate the Merger Agreement due to the failure of the
Merger to be completed prior to January 17, 2001 or April 17, 2001,
as the case may be, is not available to any party whose failure to
fulfill any obligation under the Merger Agreement was the cause of,
or resulted in, the failure of the Merger to be completed on or
before such date;
(3) by either El Paso or Coastal if a governmental entity of
competent jurisdiction issues a final, non-appealable order, decree
or injunction, or takes other action, making the transactions
contemplated by the Merger Agreement illegal or permanently
prohibiting such transactions. The right to terminate the Merger
Agreement under these circumstances is not available unless the
terminating party has used all reasonable best efforts (in
accordance with the terms of the Merger Agreement) to cause the
applicable order, decree or injunction to be lifted or vacated;
(4) by either El Paso or Coastal if there has been a material breach
by the other party of any representations, warranties, covenants or
agreements contained in the Merger Agreement if the breach would
result in failure to satisfy certain conditions as set forth in the
Merger Agreement (only if such breach is incapable of being cured,
or if capable of being cured, has not been cured within 20 days of
receiving written notice by the non-breaching party);
(5) by either El Paso or Coastal if the Coastal stockholders fail to
approve and adopt the Merger Agreement and Merger at the Coastal
shareholder meeting;
(6) by either El Paso or Coastal if the El Paso stockholders fail to
approve the El Paso Stock Issuance at the El Paso shareholder
meeting;
(7) by El Paso if the Board of Directors of Coastal (i) withdraws or
modifies in a manner adverse to El Paso its recommendation of the
Merger Agreement or the Merger, (ii) approves or recommends a
Takeover Proposal or Acquisition Transaction (as defined in the
Merger Agreement), or (iii) fails to reaffirm its approval or
recommendation of the Merger Agreement and Merger within 15 days of
a request by El Paso (provided that, in connection with a Takeover
Proposal, El Paso may make only one such request);
(8) by Coastal if the Board of Directors of El Paso (i) withdraws or
modifies in a manner adverse to Coastal its approval of the Merger
Agreement, the Merger, or the El Paso Stock Issuance or its
recommendation of the El Paso Stock Issuance, (ii) approves or
recommends a Takeover Proposal or Acquisition Transaction, or (iii)
fails to reaffirm its approval or recommendation of the Merger
Agreement, the Merger or the El Paso Stock Issuance within 15 days
of a request by Coastal (provided that, in connection with a
Takeover Proposal, Coastal may make only one such request);
Coastal and El Paso (as applicable, the "company") have each agreed to
pay the other a $300 million termination fee if:
(a) the company receives a Takeover Proposal and the Merger Agreement
is subsequently terminated for the reasons described in paragraph
(2) above or paragraphs (5) or (6), as applicable, above, and (b)
within 12 months after the such termination, the company
consummates an Acquisition Transaction or enters into an
Acquisition Agreement;
(b) the company receives a Takeover Proposal and the Merger Agreement
is terminated by the other party for the reasons described in
paragraphs (7) or (8) above, as applicable; or
(c) the company has not received a Takeover Proposal prior to the
termination of the Merger Agreement, the Merger Agreement is
terminated by the other party for the reasons described in
paragraphs (7) or (8) above, as applicable and, within three months
after termination of the Merger Agreement, the company consummates
an Acquisition Transaction or enters into an Acquisition Agreement;
or
(d) the Merger Agreement is terminated by the other party in
connection with a Superior Proposal, as discussed above.
Coastal and El Paso (as applicable, the "company") have each agreed to
reimburse up to $10 million of the other party's expenses incurred in
connection with the Merger Agreement if:
(a) the company receives a Takeover Proposal and the Merger Agreement
is subsequently terminated for the reasons described in paragraph
(2) above and, within 12 months, the company consummates an
Acquisition Transaction or enters into an Acquisition Agreement;
(b) the company has not received a Takeover Proposal prior to the
termination of the Merger Agreement and the Merger Agreement is
terminated by the other party for the reasons described in
paragraphs (7) or (8) above, as applicable, and, within three
months after termination of the Merger Agreement, the company
consummates an Acquisition Transaction or enters into an
Acquisition Agreement;
(c) the company receives a Takeover Proposal and the Merger Agreement
is terminated by the other party for the reasons described in
paragraphs (7) or (8) above, as applicable; or
(d) the Merger Agreement is terminated by the other party in
connection with a Superior Proposal, as discussed above, or for the
reasons described in paragraphs (5) or (6) above, as applicable.
The Merger Agreement provides that, as of the Effective Time, the
Board of Directors of El Paso will consist of 12 directors, seven of whom
will be designated by El Paso and five of whom will be designated by
Coastal. El Paso's designees will include William A. Wise, currently
President and Chief Executive Officer of El Paso and, if the Effective Time
occurs prior to December 31, 2000, Ronald L. Kuehn, Jr., currently Chairman
of El Paso. Coastal's designees will include David A. Arledge, currently
Chairman, President and Chief Executive Officer of Coastal.
In addition, the Merger Agreement provides that, as of the Effective
Time, the Board of Directors of El Paso will have two nominating
committees: one comprised initially of the seven designees of El Paso (the
"EP Committee") and the other comprised initially of the five designees of
Coastal (the "Coastal Committee"). As required by the Merger Agreement,
from and after the Effective Time and until December 31, 2002 (the "Initial
Period"), the Board of Directors of El Paso will maintain the existence of
both the Coastal Committee and the EP Committee, and each such committee
must at all times be comprised of Company Directors (as defined in the
Merger Agreement and referred to herein as "C Directors") and El Paso
Directors (as defined in the Merger Agreement and referred to herein as "E
Directors"), respectively.
The EP Committee will be vested with the sole power and authority to
recommend up to seven candidates for nomination at each El Paso annual
meeting (who, if elected, would be E Directors) and to designate persons to
fill vacancies on the El Paso Board of Directors arising from the
resignation of an E Director (with such designated person becoming an E
Director). The Coastal Committee will be vested with the sole power and
authority to recommend up to five candidates for nomination at each El Paso
annual meeting (who, if elected, would be C Directors) and to designate
persons to fill vacancies on the El Paso Board of Directors arising from
the resignation of a C Director (with such designated person becoming a C
Director).
During the Initial Period, no special meeting of the stockholders of
El Paso may be called for the purpose of removing or electing one or more
directors of El Paso (other than certain Combination Directors as defined
in the Merger Agreement) without the approval of at least two-thirds of all
of the E Directors and C Directors, voting together.
During the Initial Period, the Board of Directors of El Paso shall
consist of 12 directors; provided, however, that the Board of Directors of
El Paso may increase the number of directors solely in connection with one
or more Combination Transactions (as defined in the Merger Agreement).
During the Initial Period, the Board of Directors of El Paso cannot take
any action inconsistent with these provisions relating to the Board of
Directors unless such action is approved by at least two-thirds of all of
the E Directors and C Directors respectively.
The Merger Agreement provides that the Board of Directors of El Paso
shall take all action necessary so that, (w) if the Effective Time occurs
prior to December 31, 2000, Ronald L. Kuehn, Jr. will hold the position of
Chairman of the Board of Directors of El Paso during the period from the
Effective Time through December 31, 2000, and William A. Wise will hold the
position of Chairman of the Board of Directors of El Paso from and after
January 1, 2001 (or any earlier time at which Ronald L. Kuehn, Jr. is no
longer Chairman of the Board of Directors of El Paso), (x) if the Effective
Time occurs on or after December 31, 2000 (or any earlier time at which
Ronald L. Kuehn, Jr. will resign as Chairman of the Board of Directors of
El Paso), William A. Wise will hold the position of Chairman of the Board
of Directors of El Paso from the Effective Time, (y) William A. Wise will
also hold the positions of Chief Executive Officer and President of El Paso
from the Effective Time and (z) as of the Effective Time, David A. Arledge
will hold the position of Vice Chairman of the Board of Directors of El
Paso and all senior officers of El Paso and its Subsidiaries involved in
the operation of El Paso's and its subsidiaries' non-regulated businesses
will report to David A. Arledge with respect to such non-regulated
businesses, or David A. Arledge will have such other authority and
responsibilities as he and El Paso mutually agree upon. During the Initial
Period, (a) William A. Wise may not be removed as Chief Executive Officer
or President of El Paso, (b) the power and authority of the Chief Executive
Officer, President or Vice Chairman of El Paso may not be reduced, (c) no
action may be taken to deny William A. Wise the position of Chairman of the
Board of Directors of El Paso in accordance with the foregoing sentence or
to deny David A. Arledge the position of Vice Chairman of the Board of
Directors of El Paso in accordance with the foregoing sentence, (d) David
A. Arledge will not be removed as Vice Chairman of the Board of Directors
of El Paso, (e) William A. Wise may not be removed as Chairman of the Board
of Directors of El Paso, and (f) the power and authority of the Chairman or
Vice Chairman may not be reduced, in each case without the approval of at
least two-thirds of all E Directors and C Directors, voting together.
The foregoing provisions regarding the Board of Directors and officers
of El Paso will be reflected in a By-law amendment to be adopted by El
Paso's Board of Directors as of the Effective Time. During the Initial
Period, this By-law amendment cannot be replaced or further amended without
the approval of at least two thirds of all C Directors and E Directors,
voting together.
Except as described above or in other Items of this Schedule 13D
(which Items are incorporated hereby by reference), or as provided in the
Merger Agreement or the Stock Option Agreements, neither Coastal nor, to
the best of Coastal's knowledge, any of the individuals named in Schedule I
hereto has any plans or proposals which relate to or which would result in
or relate to any of the actions specified in subparagraphs (a) through (j)
of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
(a) - (b) By reason of its execution of the El Paso Stock Option
Agreement, Coastal may be deemed to have beneficial ownership of, and sole
voting and dispositive power with respect to, the El Paso Common Stock
subject to the El Paso Option and, accordingly, may be deemed to
beneficially own 35,080,566 shares of El Paso Common Stock (or
approximately 14.9% of the outstanding shares of El Paso Common Stock based
upon the 235,440,039 shares of El Paso Common Stock outstanding at the
close of business on December 31, 1999 as provided in the Merger
Agreement). Coastal expressly disclaims any beneficial ownership of shares
of El Paso Common Stock which are purchasable by Coastal upon exercise of
the El Paso Option, on the grounds that the El Paso Option is not presently
exercisable and only becomes exercisable upon the occurrence of the events
referred to in Item 4 above. If the El Paso Option were exercised, Coastal
would have the sole right to vote and to dispose of the shares of El Paso
Common Stock issued as a result of such exercise. Except as described in
this Schedule 13D, to the best of Coastal's knowledge, none of the
individuals named in Schedule I hereto have beneficial ownership of, or
sole or shared voting power or sole or shared dispositive power with
respect to, El Paso Common Stock. O. S. Wyatt, Jr. and Harold Burrow each
have beneficial ownership of, and sole voting and dispositive power with
respect to, 2,000 shares of El Paso Common Stock (or less than 1% of the
outstanding shares of El Paso Common Stock based upon the 235,440,039
shares of El Paso Common Stock outstanding at the close of business on
December 31, 1999 as provided in the Merger Agreement). M. Truman Arnold
has beneficial ownership of, and sole voting and dispositive power with
respect to, 800 shares of El Paso Common Stock (or less than 1% of the
outstanding shares of El Paso Common Stock based upon the 235,440,039
shares of El Paso Common Stock outstanding at the close of business on
December 31, 1999 as provided in the Merger Agreement).
(c) Except as described in this Schedule 13D, neither Coastal nor, to
the best of Coastal's knowledge, any of the individuals named in Schedule I
hereto, has effected any transaction in shares of El Paso Common Stock
during the past 60 days. On January 21, 2000, O. S. Wyatt, Jr. acquired
beneficial ownership of 2,000 shares of El Paso Common Stock by purchase
through a brokerage account at the price of $33.3125 per share.
(d) So long as Coastal does not exercise the El Paso Option, Coastal
will not have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, any shares of El Paso
Common Stock. Except as described in this Schedule 13D, neither Coastal
nor, to the best of Coastal's knowledge, any of the individuals named in
Schedule I hereto, have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any shares of
El Paso Common Stock. With respect to the 2,000 shares of El Paso Common
Stock beneficially owned by Harold Burrow, The VWB Partnership, Ltd. (of
which Mr. Burrow is the general partner) has the right to receive all
dividends and proceeds.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
Reference is made to Item 4 for a description of the Merger Agreement
and the Stock Option Agreements.
Except as described in this Schedule 13D or as provided in the Merger
Agreement and the Stock Option Agreements, neither Coastal nor, to the
knowledge of Coastal, any executive officer or director of Coastal, has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of El Paso, including, but not limited to,
transfer or voting of any such securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division
of profits or loss, or the giving or withholding of proxies.
ITEM 7. Material to be Filed as Exhibits
Exhibit 1 -- Agreement and Plan of Merger, dated as of January 17,
2000 between El Paso Energy Corporation, El Paso Merger
Company and The Coastal Corporation (Incorporated by
reference to Exhibit 1 of Schedule 13D filed by El Paso
Energy Corporation on January 26, 2000).
Exhibit 2 -- Stock Option Agreement, dated as of January 17, 2000
between El Paso Energy Corporation and The Coastal
Corporation (Incorporated by reference to Exhibit 2 of
Schedule 13D filed by El Paso Energy Corporation on
January 26, 2000).
Exhibit 3 -- Stock Option Agreement, dated as of January 17, 2000
between El Paso Energy Corporation and The Coastal
Corporation (Incorporated by reference to Exhibit 3 of
Schedule 13D filed by El Paso Energy Corporation on
January 26, 2000).
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
THE COASTAL CORPORATION
By: /s/ Austin M. O'Toole
---------------------------------
Name: Austin M. O'Toole
Title: Senior Vice President and
Secretary
Dated: January 26, 2000
Schedule I
Executive Officers and Directors of
The Coastal Corporation
The name, present principal occupation or employment, and the name of
any corporation or other organization in which such employment is
conducted, of each of the directors and executive officers of Coastal is
set forth below.
Position/Principal
Name and Citizenship Business Address Occupation
-------------------- ---------------- ------------------
David A. Arledge The Coastal Corporation Chairman, President and
(United States Citizen) Coastal Tower Chief Executive Officer
Nine Greenway Plaza of Coastal
Houston, Texas 77046
Harold Burrow Eight Greenway Plaza Vice Chairman of the
(United States Citizen) Suite 930 Board of Coastal
Houston, Texas 77046
John M. Bissell 2345 Walker Avenue, NW Director of Coastal/
(United States Citizen) Grand Rapids, MI 49544 Chairman of the Board
of Bissell, Inc.
George L. Brundrett, Jr. The Coastal Corporation Director of Coastal
(United States Citizen) Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
James F. Cordes The Coastal Corporation Director of Coastal
(United States Citizen) Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
Roy L. Gates The Coastal Corporation Director of Coastal
(United States Citizen) Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
Anthony W. Hall, Jr. 900 Bagby Director of Coastal/
(United States Citizen) Fourth Floor City Attorney, City of
Houston, Texas 77002 Houston, Texas
Kenneth O. Johnson The Coastal Corporation Director of Coastal/
(United States Citizen) Coastal Tower Senior Vice President
Nine Greenway Plaza of Coastal
Houston, Texas 77046
Jerome S. Katzin The Coastal Corporation Director of Coastal
(United States Citizen) Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
J. Carleton MacNeil, Jr. 7020 N. Port Washington Director of Coastal/
(United States Citizen) Road Securities Brokerage
Suite 200 and Investments
Milwaukee, WI 53217
Thomas R. McDade Two Houston Center Director of Coastal/
(United States Citizen) 909 Fannin Attorney, McDade &
Suite 1200 Fogler
Houston, Texas 77010
O. S. Wyatt, Jr. Eight Greenway Plaza Director of Coastal
(United States Citizen) Suite 930
Houston, Texas 77046
Coby C. Hesse The Coastal Corporation Senior Executive Vice
(United States Citizen) Coastal Tower President of Coastal
Nine Greenway Plaza
Houston, Texas 77046
James A. King The Coastal Corporation Executive Vice
(United States Citizen) Coastal Tower President of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Jeffrey A. Connelly The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Carl A. Corrallo The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower and General Counsel
Nine Greenway Plaza of Coastal
Houston, Texas 77046
Rodney D. Erskine The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Donald H. Gullquist The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Dan J. Hill The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Austin M. O'Toole The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower and Secretary of
Nine Greenway Plaza Coastal
Houston, Texas 77046
James L. Van Lanen 310 First Street Senior Vice President
(United States Citizen) Roanoke, VA 24011 of Coastal
Thomas M. Wade The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
Keith O. Rattie The Coastal Corporation Senior Vice President
(United States Citizen) Coastal Tower of Coastal
Nine Greenway Plaza
Houston, Texas 77046
M. Truman Arnold The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
Daniel F. Collins The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
Thomas E. Jackson The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
Jeffrey B. Levos The Coastal Corporation Vice President and
(United States Citizen) Coastal Tower Controller of Coastal
Nine Greenway Plaza
Houston, Texas 77046
John J. Lipinski The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
Stirling D. Pack, Jr. The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
M. Frank Powell The Coastal Corporation Vice President of
(United States Citizen) Coastal Tower Coastal
Nine Greenway Plaza
Houston, Texas 77046
Ronald D. Matthews The Coastal Corporation Treasurer of Coastal
(United States Citizen) Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
EXHIBIT INDEX
Exhibit 1 -- Agreement and Plan of Merger, dated as of January 17, 2000
between El Paso Energy Corporation, El Paso Merger Company
and The Coastal Corporation (Incorporated by reference to
Exhibit 1 of Schedule 13D filed by El Paso Energy
Corporation on January 26, 2000).
Exhibit 2 -- Stock Option Agreement, dated as of January 17, 2000 between
El Paso Energy Corporation and The Coastal Corporation
(Incorporated by reference to Exhibit 2 of Schedule 13D
filed by El Paso Energy Corporation on January 26, 2000).
Exhibit 3 -- Stock Option Agreement, dated as of January 17, 2000 between
El Paso Energy Corporation and The Coastal Corporation
(Incorporated by reference to Exhibit 3 of Schedule 13D
filed by El Paso Energy Corporation on January 26, 2000).
