PROSPECTUS SUPPLEMENT
(To Prospectus dated March 14, 1995)
$150,000,000
CONSOLIDATED NATURAL GAS COMPANY
7 3/8% DEBENTURES
DUE APRIL 1, 2005
-------------------
Interest on the Debentures offered hereby (the "New Debentures") is payable
semi-annually, on April 1 and October 1, commencing October 1, 1995. The New
Debentures will not be redeemable prior to maturity. The New Debentures will be
issued only in book-entry form through the facilities of The Depository Trust
Company ("Depositary").
Application has been made to list the New Debentures on the New York Stock
Exchange. Listing will be subject to meeting the requirements of the Exchange,
including those related to distribution.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture............................ 99.5% .234% 99.266%
- -----------------------------------------------------------------------------------------------------------
Total.................................... $149,250,000 $351,000 $148,899,000
===========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from April 19, 1995.
(2) Before deduction of expenses payable by the Company estimated at $200,000.
The New Debentures are offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, subject to certain
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that the New
Debentures will be delivered in book-entry form only on or about April 19, 1995
through the facilities of DTC.
-------------------
MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
-------------------
The date of this Prospectus Supplement is April 12, 1995.
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED UPON THE NEW YORK STOCK EXCHANGE OR IN
THE OVER-THE-COUNTER MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
THE COMPANY AND ITS SUBSIDIARIES
Reference is made to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "1994 Annual Report") and its Current Report on
Form 8-K filed April 10, 1995, which are incorporated herein by reference, for
current information concerning the Company and its subsidiaries including the
Company's consolidated financial statements set forth therein and the related
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
RECENT DEVELOPMENTS
IMPAIRMENT OF GAS AND OIL PRODUCING PROPERTIES
As described in the Company's 1994 Annual Report, the Company follows the
full cost method of accounting for its gas and oil producing activities
prescribed by the Securities and Exchange Commission ("SEC"). Under this method,
all costs directly associated with property acquisition, exploration and
development activities are capitalized, with the limitation that such amounts,
net of related deferred taxes, not exceed the present value of the estimated
future revenues expected from the production of the related proved gas and oil
reserves. The estimate of future revenues is determined under guidelines
established by the SEC and is not necessarily indicative of the future economic
value of the Company's proved reserves. However, if net capitalized costs exceed
the estimated value at the end of any quarterly period, then a permanent
write-down of the assets must be recognized in that period.
Due primarily to the decline in wellhead gas prices since December 31,
1994, reflecting ample supplies nationwide and high storage inventory levels
attributable to the mild winter weather during the latter part of 1994 and the
first quarter of 1995, the Company will be required to recognize an impairment
of its gas and oil producing properties at March 31, 1995. The actual effect on
earnings will not be known until the completion of the first quarter closing.
However, based on current estimates, the impact of this noncash charge is
expected to be in the range of $100 million to $150 million, net of tax, or
$1.08 to $1.61 per share.
As a result of this charge, the Company's ability to issue funded debt will
be restricted for a period of time (see "Restrictions Under Certain Debt
Agreements," page 4, of the Company's 1994 Annual Report). However, the Company
has adequate alternative financing resources available to meet expected
operating and capital requirements.
WORK FORCE REDUCTION PROGRAM
In March 1995, the Company's Board of Directors approved a work force
reduction program as part of the Company's efforts to permanently reduce costs
in response to competitive conditions. The work force reduction program consists
of a voluntary early retirement program, with eligibility based upon the
employee's age and years of service as of December 31, 1995, and an involuntary
separation program. The early retirement incentives include five additional
years of age and pension service for determining pension benefits. The early
retirement program is being offered at six of the Company's subsidiaries from
April 1 through May 31, 1995, with eligible employees retiring before December
31, 1995. The involuntary separation program will involve severance benefit
payments to affected employees. The Company is expected to permanently eliminate
approximately 470 positions as a result of this program.
Management is currently considering a work force reduction program at a seventh
subsidiary.
The charges to earnings resulting from the approved work force reduction
program are expected to be material to the Company's 1995 results of operations
and will be recognized in the second quarter of 1995. However, the savings
attributable to reduced salary and benefit costs will positively impact the last
six months of 1995 and future periods. Also, the recovery of the costs of the
program at the rate-regulated subsidiaries may be sought, if appropriate, in
future rate-making proceedings.
S-2
<PAGE>
<PAGE>
ENVIRONMENTAL MATTER
The Company has determined through its environmental monitoring practices
that one of its subsidiaries, The East Ohio Gas Company ("East Ohio Gas"), may
not have been in full compliance with the Resource Conservation and Recovery Act
("RCRA") and the Toxic Substances Control Act ("TSCA"), which govern the
handling, storage and disposal of pipeline drip fluids that are contaminated
with hazardous substances such as polychlorinated biphenyls ("PCBs"). East Ohio
Gas has taken appropriate action to bring its operations into compliance with
the TSCA and RCRA regulations and is voluntarily reporting its non-compliance to
the appropriate state and federal environmental agencies. Although East Ohio Gas
is subject to civil penalties as a result of this non-compliance, the Company is
unable to estimate the amount of any fines at this time. Based upon its
investigation, the Company does not expect that these fines and any related
remediation costs will have a material effect on the Company's financial
position, results of operations, or cash flows.
OTHER MATTER
As described in the Company's 1994 Annual Report (see "The Company and its
Subsidiaries," page 3), the Company has various options under review with
respect to the coal reserves and a related plant site owned by CNG Coal Company,
a subsidiary. Management is considering a possible disposition of the assets of
CNG Coal Company which could result in additional charges to earnings during
1995.
USE OF PROCEEDS
The proceeds from the sale of the New Debentures will be added to the
Company's treasury fund and subsequently used to finance, in part, 1995 capital
expenditures of the Company and its subsidiary companies estimated at
$445,000,000; and/or acquire, retire, or redeem securities of which the Company
is an issuer.
SUPPLEMENTAL DESCRIPTION OF THE NEW DEBENTURES
The following description of the particular terms of the New Debentures
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the New Debentures set
forth in the accompanying Prospectus under "Certain Terms and Descriptions of
Debt Securities and Indenture," to which description reference is hereby made.
The following brief summaries of certain provisions contained in the Indenture
do not purport to be complete, use certain terms defined in the Indenture, and
are qualified in their entirety by express reference to the Indenture.
The New Debentures will be unsecured general obligations of the Company and
will be issued as a separate series of securities under an Indenture to be dated
as of April 1, 1995 ("Indenture") between the Company and United States Trust
Company of New York, as Trustee ("Trustee").
The New Debentures will be limited to $150,000,000 aggregate principal
amount and will mature on April 1, 2005. Each New Debenture will bear interest
from April 19, 1995 or from the most recent interest payment date to which
interest has been paid, at the rate per annum specified on the cover page
hereof, payable semi-annually on April 1 and October 1, commencing October 1,
1995, to the person in whose name such New Debenture is registered at the close
of business on the preceding March 15 and September 15, respectively.
The New Debentures will not be redeemable prior to maturity and will not be
subject to mandatory redemption.
The covenants described in the accompanying Prospectus under "Certain Terms
and Descriptions of Debt Securities and Indenture--Certain Covenants" will apply
to the New Debentures, subject to defeasance as described therein. Future series
of Debt Securities issued under the Indenture may or may not have the benefit of
such covenants.
The New Debentures will be subject to defeasance under the conditions
described in the Prospectus.
BOOK-ENTRY PROCEDURES
Upon issuance, the New Debentures will be represented by a single global
Security which will be deposited with, or on behalf of, the Depositary and will
be registered in the name of the Depositary, or a nominee of the Depositary.
S-3
<PAGE>
<PAGE>
Upon the issuance of a global Security, the Depositary for such global
Security or its nominee will credit the accounts designated by the Underwriters
of persons having accounts with the Depositary with the respective principal
face amounts of the book-entry New Debentures represented by such global
Security. Ownership of beneficial interests in the global Security will be
limited to participants and to persons that have accounts with the Depositary
("participants") or persons that may hold interests through participants.
Ownership interests in the global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such global Security (with respect to a
participant's interest) and records maintained by participants (with respect to
interests of persons other than participants).
Payment of principal of and any premium and interest on the book-entry New
Debentures represented by a global Security will be made to the Depositary or
its nominee, as the case may be, as the sole registered owner and the sole
Holder of the New Debentures represented thereby for all purposes under the
Indenture. Neither the Company nor the Trustee, nor any agent of the Company or
the Trustee, will have any responsibility or liability for any aspect of the
Depositary's records relating to beneficial ownership interests or payments made
on account of beneficial ownership interests in the global Security representing
any book-entry New Debentures, for any acts or omissions of the Depositary or
for any transactions between the Depositary and participants or beneficial
owners.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on the global Security, the
Depositary will immediately 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
Security as shown on the records of the Depositary. Payments 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.
The global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary. The global Security is exchangeable
only if (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such global Security or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 ("Exchange Act"), and if the Company does not appoint a
successor depositary within 90 days, (ii) the Company in its sole discretion
determines that such global Security shall be exchangeable for definitive New
Debentures in registered form, or (iii) an Event of Default with respect to the
New Debentures represented by such global Security has occurred and is
continuing. A global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for New Debentures issuable in denominations of
$1,000 and integral multiples thereof and registered in such names as the
Depositary holding such global Security shall direct. Subject to the foregoing,
the global Security is not exchangeable, except for a global Security of like
denomination to be registered in the name of the Depositary or its nominee. If
the New Debentures were subsequently issued in registered form, they would
thereafter be transferred or exchanged without any service charge at the office
of the Paying Agent and Transfer Agent, United States Trust Company of New York,
114 West 47th Street, New York, New York 10036, or at any other office or agency
maintained by the Company for such purpose.
So long as the Depositary for the global Security, or its nominee, is the
registered owner of such global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the New
Debentures represented by such global Security for the purpose of receiving
payment on the New Debentures, receiving notices and for all other purposes
under the Indenture and the New Debentures. Except as provided above, owners of
beneficial interests in the global Security representing the New Debentures will
not be entitled to receive physical delivery of New Debentures in definitive
form and will not be considered the Holders thereof for any purpose under the
Indenture. Accordingly, each person owning a beneficial interest in the global
Security representing the New Debentures must rely on the procedures of the
Depositary 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 of such securities under the Indenture. The Depositary 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
understands that under existing industry practices, in the event that the
S-4
<PAGE>
<PAGE>
Company requests any action of Holders or an owner of a beneficial interest in
such a global Security desires to give or take any action which a Holder is
entitled to give or take under the Indenture, the Depositary would authorize the
participants holding the relevant beneficial interests 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 Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
UNDERWRITERS
Each of the Underwriters named below (the "Underwriters") has severally
agreed, subject to the terms and conditions of the Purchase Agreement, to
purchase from the Company the principal amount of New Debentures set forth
opposite its name. The Purchase Agreement provides that the Underwriters will be
obligated to purchase all of the New Debentures if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT
----- --------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................... $ 75,000,000
Donaldson, Lufkin & Jenrette Securities Corporation.................... 75,000,000
--------------
Total...................................................... $150,000,000
==============
</TABLE>
The Company has been advised by the Underwriters that they propose to make
a public offering of the New Debentures at the public offering price set forth
on the cover page of this Prospectus Supplement; that the Underwriters may allow
to certain dealers a concession from the public offering price of .2% of the
principal amount of the New Debentures; that the Underwriters may allow and such
dealers may reallow a concession of .125% to certain other dealers; and that
after the initial public offering, the public offering price and concessions may
be changed.
The Company has agreed to indemnify the several Underwriters against
certain civil liabilities, including liabilities under the Securities Act of
1933, and to contribute to payments that the Underwriters may be required to
make in respect thereof.
S-5
<PAGE>
<PAGE>
============================================================================
<PAGE>
<PAGE>
Prospectus
Consolidated Natural Gas Company
Debt Securities
Consolidated Natural Gas Company ("Company") may offer from time to time
up to $500,000,000 aggregate principal amount of its debt securities ("Debt
Securities") in one or more series in amounts, at prices and upon terms to be
determined in light of market conditions at the time of sale and in conformity
with the requirements of the Public Utility Holding Company Act of 1935
("Holding Company Act"). The Debt Securities may be sold directly by the
Company, through agents designated from time to time, or to or through
underwriters or dealers (see "Plan of Distribution").
The specific aggregate principal amount, maturity, rate and time of
payment of interest, any redemption provisions, initial public offering price,
proceeds to the Company, and any other specific terms in connection with the
offering and sale of a series of Debt Securities, including the names of the
underwriters or agents, if any, and the terms of such offering, will be set
forth in a Prospectus Supplement accompanying this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 14, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 ("Exchange Act") and in accordance therewith
files reports and other information with the Securities and Exchange
Commission ("Commission"). Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549; and at the Commission's Regional Offices in the Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
In addition, reports, proxy material and other information concerning the
Company may be inspected at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement
("Registration Statement") which the Company has filed with the Commission
under the Securities Act of 1933, as amended, with respect to the Debt
Securities. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and related exhibits thereto for further information with respect to
the Company and the securities offered hereby. Such additional information can
be obtained from the Commission's office in Washington, D.C. Any statements
contained herein concerning the provisions of any documents are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-3196), are incorporated by
reference in this Prospectus and shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1993; and
(2) The Company's Quarterly Reports on Form 10-Q for the Quarters ended
March 31, June 30 and September 30, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the documents incorporated herein by
reference, excluding the exhibits thereto. Requests for such documents should
<PAGE>
be addressed to Ms. Laura J. McKeown, Secretary, Consolidated Natural Gas
Company, CNG Tower, 625 Liberty Avenue, Pittsburgh, PA 15222-3199, (412)
227-1125.
THE COMPANY AND ITS SUBSIDIARIES
The Company is a Delaware corporation organized on July 21, 1942. It is
engaged solely in the business of owning and holding the outstanding
securities of fifteen companies primarily engaged in the natural gas business.
The Company and its subsidiaries ("Consolidated System" or "System") are
engaged in all phases of the natural gas business distribution, transmission
and exploration and production. The Company's principal subsidiaries are
described below.
CNG Transmission Corporation operates a regional interstate pipeline
system and provides gas transportation and storage services to each of the
Company's public utility subsidiaries (except West Ohio Gas Company) and to
non-affiliated utilities, end-users and others in the Midwest, the
Mid-Atlantic states and the Northeast. CNG Transmission Corporation is
subject to regulation by the Federal Energy Regulatory Commission.
Public utility subsidiaries of the Company are The East Ohio Gas
Company, West Ohio Gas Company, The Peoples Natural Gas Company, Virginia
Natural Gas, Inc. and Hope Gas, Inc. Principal cities served at retail are:
Cleveland, Akron, Youngstown, Canton, Warren, Lima, Ashtabula and Marietta in
Ohio; Pittsburgh (a portion), Altoona and Johnstown in Pennsylvania; Norfolk,
Newport News, Virginia Beach, Chesapeake, Hampton and Williamsburg in
Virginia; and Clarksburg and Parkersburg in West Virginia.
CNG Producing Company is the Company's exploration and production
subsidiary. It explores for and produces gas and oil primarily in the Gulf of
Mexico, the southern and western United States, the Appalachian region and in
Canada.
CNG Energy Services Corporation conducts activities in the unregulated
energy area, including gas and electric power marketing, and investments in
power generation facilities.
USE OF PROCEEDS
The proceeds from the sale of the Debt Securities will be added to the
treasury funds of the Company and subsequently used to finance System capital
expenditures, general corporate purposes, purchase of the Company's common
stock in the open market and/or acquire, retire or redeem debt securities
issued by the Company as authorized by the Commission under the Holding
Company Act. The balance of funds required for these purposes is expected to
be obtained principally from internal cash generation and the issuance of
other debt securities. Reference is made to the documents incorporated by
reference herein for information relating to estimated capital expenditures.
CERTAIN TERMS AND DESCRIPTIONS OF
DEBT SECURITIES AND INDENTURE
<PAGE>
The Debt Securities will be issued in one or more series under an
Indenture dated as of April 1, 1995 ("Indenture") between the Company and
United States Trust Company of New York, as Trustee ("Trustee"), the form of
which is filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are qualified in their entirety by express reference to the Indenture and
the Securities Resolutions (as defined in the Indenture). Certain terms
defined in the Indenture are used in this summary without definition.
The Indenture will not limit the amount of Debt Securities that can be
issued thereunder and provides that the Debt Securities may be issued from
time to time in one or more series pursuant to the terms of one or more
Securities Resolutions establishing such series. As of the date of this
Prospectus, there were no Debt Securities outstanding under the Indenture.
The Debt Securities will be unsecured and will rank on a parity with all other
unsecured and unsubordinated debt of the Company. Although the Indenture
provides for the possible issuance of Debt Securities in other forms or
currencies, the only Debt Securities covered by this Prospectus will be Debt
Securities denominated in U.S. dollars in registered form without coupons.
Consequently, information contained in the Indenture relating to the offer and
sale of Debt Securities in other forms or currencies is not provided in this
Prospectus.
Certain Terms of the Debt Securities
Reference is made to the Prospectus Supplement for the following terms,
if applicable, of the Debt Securities offered thereby: (1) the designation,
aggregate principal amount and denominations; (2) the price at which such Debt
Securities will be issued and, if an index, formula or other method is used,
the method for determining amounts of principal or interest; (3) the maturity
date and other dates, if any, on which principal will be payable; (4) the
interest rate (which may be fixed or variable), if any; (5) the date or dates
from which interest will accrue and on which interest will be payable, and the
record dates for the payment of interest; (6) the manner of paying principal
or interest; (7) the place or places where principal and interest will be
payable; (8) the terms of any mandatory or optional redemption by the Company;
(9) the terms of any redemption at the option of Holders; (10) whether such
Debt Securities are to be represented in whole or in part by a Debt Security
in global form and, if so, the identity of the depositary ("Depositary") for
any global Security; (11) any tax indemnity provisions; (12) the portion of
principal payable upon acceleration of a Discounted Security (as defined
below); (13) whether and upon what terms Debt Securities may be defeased; (14)
any events of default or restrictive covenants in addition to or in lieu of
those set forth in the Indenture; (15) provisions for electronic issuance of
Debt Securities or for Debt Securities in uncertificated form; and (16) any
additional provisions or other special terms not inconsistent with the
provisions of the Indenture, including any terms that may be required or
advisable under United States or other applicable laws or regulations, or
advisable in connection with the marketing of the Debt Securities. (Section
2.01)
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global Securities that will be deposited with, or on
<PAGE>
behalf of, a Depositary identified in the Prospectus Supplement relating to
the series. Global Securities may be issued in registered or uncertificated
form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for Debt Securities in definitive form, a global
Security may not be transferred except as a whole by the Depositary to a
nominee or a successor depositary. (Section 2.12) The specific terms of the
depositary arrangement with respect to any Debt Securities of a series will be
described in the Prospectus Supplement relating to the series.
Debt Securities of any series may be issued as Registered Securities or
uncertificated securities, as specified in the terms of the series. (Section
2.01) Unless otherwise indicated in the Prospectus Supplement, Registered
Securities will be issued in denominations of $1,000 and whole multiples
thereof. One or more global Securities will be issued in a denomination or
aggregate denominations equal to the aggregate principal amount of outstanding
Debt Securities of the series to be represented by such global Security or
Securities.
Debt Securities may be issued under the Indenture as Discounted
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special United States federal income tax and other
considerations applicable thereto will be described in the Prospectus
Supplement relating to such Discounted Securities.
"Discounted Security" means a Debt Security where the amount of
principal due upon acceleration is less than the stated principal amount.
Certain Covenants
The Debt Securities will not be secured by any properties or assets and
will represent unsecured debt of the Company. The Indenture does not limit
the amount of unsecured debt that the Company can incur.
As discussed below, the Indenture includes certain limitations on the
Company's ability to create liens and to enter into sale and leaseback
transactions. However, such limitations will apply only to the extent the
Securities Resolution establishing the terms of a series so provides and, if
applicable, the limitations are subject to a number of qualifications and
exceptions. Accordingly, the covenants described below will apply unless
otherwise indicated in a Prospectus Supplement, and any obligations thereunder
are subject to termination upon defeasance. See "Legal Defeasance and
Covenant Defeasance" below. Also, unless otherwise indicated in a Prospectus
Supplement, the covenants contained in the Indenture, if applicable, do not
afford holders of the Debt Securities protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Debt Securities.
Limitation on Liens
Unless the Securities Resolution establishing the terms of a series
otherwise provides, the Debt Securities will be entitled to the benefit of a
covenant in the Indenture which provides that the Company shall not, and shall
not permit any Restricted Subsidiary to, incur any mortgage, pledge, security
<PAGE>
interest or lien (collectively, "Lien") on Principal Property to secure a Debt
unless: (1) the Lien equally and ratably secures the Debt Securities and the
Debt provided that the Lien may not secure an obligation of the Company that
is subordinated to the Debt Securities; (2) the Lien secures Debt incurred to
finance all or some of the purchase price or the cost of construction or
improvement of property of the Company or a Restricted Subsidiary and does not
extend to any other Principal Property (other than to unimproved real property
used for the construction or improvement) owned by the Company or a Restricted
Subsidiary at the time the Lien is incurred and which Lien may not be incurred
more than one year after the later of the (a) acquisition, (b) completion of
construction or improvement, or (c) commencement of full operation, of the
property subject to the Lien; (3) the Lien is on property of a corporation at
the time the corporation merges into or consolidates with the Company or a
Restricted Subsidiary; (4) the Lien is on property at the time the Company or
a Restricted Subsidiary acquires the property; (5) the Lien is on property of
a corporation at the time the corporation becomes a Restricted Subsidiary; (6)
the Lien secures Debt of a Restricted Subsidiary owing to the Company or
another Restricted Subsidiary; (7) the Lien is in favor of a government or
governmental entity and secures (a) payments pursuant to a contract or
statute, (b) the ability of the Company to maintain self-insurance under or
participate under any State insurance fund under legislation designated to
insure employees of the Company against injury or occupational diseases, or
(c) Debt incurred to finance all or some of the purchase price or cost of
construction or improvement of the property subject to the Lien; (8) the Lien
secures Debt which is payable, both with respect to principal and interest,
solely out of the proceeds of oil, gas, coal or other minerals to be produced
from the property subject thereto and to be sold or delivered by the Company
or a Subsidiary, including any interest of the character commonly referred to
as a "production payment"; (9) the Lien is created or assumed by a Subsidiary
on oil, gas, coal or other mineral property owned or leased by a Subsidiary to
secure Debt of such Subsidiary for the purposes of developing such properties,
including any interest of the character commonly referred to as a "production
payment"; provided, however, that neither the Company nor any other Subsidiary
shall assume or guarantee such Debt or otherwise be liable in respect thereto;
(10) the Lien extends, renews or replaces in whole or in part a Lien
("existing Lien") permitted by any of clauses (1) through (9) provided that
the Debt secured by the Lien may not exceed the Debt secured at the time by
the existing Lien unless the existing Lien or a predecessor Lien was incurred
under clause (1) or (6) and the Lien may not extend beyond (a) the property
subject to the existing Lien (other than property that at the time is not
Principal Property) and (b) improvements and construction on such property;
(11) the Debt plus all other Debt secured by Liens on Principal Property at
the time does not exceed 10% of Consolidated Net Tangible Assets (excluding
from all other Debt in the determination: (a) Debt secured by a Lien
permitted by any of clauses (1) through (10) and (12) and (b) Debt secured by
a Lien incurred prior to the date of the Indenture that would have been
permitted by any of those clauses if the Indenture had been in effect at the
time the Lien was incurred), provided that Attributable Debt for any lease
permitted by clause (3) under "Limitation on Sale and Leaseback" below must be
included in the determination and treated as Debt secured by a Lien on
Principal Property not otherwise permitted by any of clauses (1) through (10)
or (12); or (12) the Lien is a Permitted Lien. (Section 4.04)
<PAGE>
"Attributable Debt" for a lease means, as of the date of determination,
the present value of net rent for the remaining term of the lease. Rent shall
be discounted to present value at a discount rate that is compounded
semiannually. The discount rate shall be 10% per annum or, if the Company
elects, the discount rate shall be equal to the weighted average Yield to
Maturity of the Debt Securities. Such average shall be weighted by the
principal amount of the Debt Securities of each series or, in the case of
Discounted Securities, the amount of principal that would be due as of the
date of determination if payment of the Debt Securities were accelerated on
that date. (Section 4.01)
"Consolidated Net Tangible Assets" means total assets less (a) total
current liabilities (excluding short-term Debt and payments due within one
year on Long-Term Debt) and deferred credits, (b) intangible assets,
including, without limitation, goodwill, copyrights, trademarks, trade names,
patents and unamortized debt discount and expense, (c) reserves, including
reserves for estimated rate refunds pending the outcome of a rate proceeding
to the extent such refunds have not been finally determined, but excluding
reserves for deferred differences, (d) advances to finance oil and natural gas
exploration and development to the extent that the Debt related thereto is
excluded from Long-Term Debt, (e) an amount equal to the amount excluded from
Long-Term Debt representing "production payment" financing of oil or natural
gas exploration and development by the Company or its consolidated
Subsidiaries, and (f) minority interests in common stocks and surplus in
Subsidiaries, in each case as reflected in the Company's most recent
consolidated balance sheet preceding the date of a determination under clause
(11) of the first paragraph under "Limitation on Liens" above. (Section 4.01)
"Permitted Liens" include, among other items, the pledge or assignment
in the ordinary course of business of gas inventory, accounts receivable or
customers' installment paper. (Section 4.01)
"Principal Property" means any property or asset used in connection with
or relating to the transmission, distribution, exploration or production of
natural gas whether now or hereafter owned, located in the United States
(excluding territories and possessions), the net depreciated book value of
which on the date as of which the determination is being made exceeds 3% of
the Consolidated Net Tangible Assets of the Company, except any such property
or asset that in the opinion of the Board or Company management (evidenced by
a certified Board resolution or an Officers' Certificate delivered to the
Trustee) is not of material importance to the total business conducted by the
Company and its consolidated Subsidiaries. (Section 4.01)
"Restricted Subsidiary" means a Wholly Owned Subsidiary that has
substantially all of its assets located in the United States (excluding
territories and possessions) and owns a Principal Property. (Section 4.01)
Limitation on Sale and Leaseback
Unless the Securities Resolution establishing the terms of a series
otherwise provides, the Debt Securities will be entitled to the benefit of a
covenant in the Indenture which provides that the Company shall not, and shall
not permit any Restricted Subsidiary to, enter into a Sale-Leaseback
<PAGE>
Transaction with respect to any Principal Property acquired or placed into
service more than 180 days before the effective date of such lease unless:
(1) the lease has a term of three years or less; (2) the lease is between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries; (3)
the Company or a Restricted Subsidiary under any of clauses (2) through (11)
under "Limitation on Liens" above could create a Lien on the property to
secure Debt at least equal in amount to the Attributable Debt for the lease;
or (4) the Company or a Restricted Subsidiary within 180 days of the effective
date of the lease retires Long-Term Debt of the Company or a Restricted
Subsidiary at least equal in amount to the Attributable Debt for the lease. A
Debt is retired when it is paid or cancelled. However, the Company or a
Restricted Subsidiary may not receive credit for retirement of: (1) Debt of
the Company that is subordinated to the Debt Securities; or (2) Debt, if paid
in cash, that is owned by the Company or a Restricted Subsidiary. (Section
4.05)
"Sale-Leaseback Transaction" means an arrangement pursuant to which the
Company or a Restricted Subsidiary now owns or hereafter acquires a Principal
Property, transfers it to a person, and leases it back from the person.
(Section 4.01)
Successor Obligor
Unless the Securities Resolution establishing the terms of a series
otherwise provides, the Debt Securities will be entitled to the benefit of a
covenant in the Indenture which provides that the Company will not consolidate
with or merge into, or transfer all or substantially all of its assets to, any
person, unless: (1) the person is organized under the laws of the United
States or a State thereof; (2) the person assumes by supplemental indenture
all the obligations of the Company under the Indenture and the Debt
Securities; (3) immediately after the transaction no Default (as defined)
exists; and (4) if as a result of the transaction, a Principal Property would
become subject to a Lien not permitted by the provisions described under
"Limitation on Liens" above, to the extent applicable, the Company or such
person secures the Debt Securities equally and ratably with or prior to all
obligations secured by the Lien. The successor will be substituted for the
Company, and thereafter all obligations of the Company under the Indenture and
the Debt Securities shall terminate. (Section 5.01)
Exchange of Securities
Registered Securities may be exchanged for an equal aggregate principal
amount of Registered Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the
Registered Securities at an agency of the Company maintained for such purpose
and upon fulfillment of all other requirements of the Transfer Agent.
(Section 2.07)
Defaults and Remedies
Unless the Securities Resolution establishing the terms of a series
otherwise provides, an "Event of Default" with respect to the series of Debt
Securities will occur if: (1) the Company defaults in any payment of interest
on any Debt Securities of the series when the same becomes due and payable and
<PAGE>
the Default continues for a period of 60 days; (2) the Company defaults in the
payment of the principal of any Debt Securities of the series when the same
becomes due and payable at maturity or upon redemption, acceleration or
otherwise; (3) the Company defaults in the payment or satisfaction of any
sinking fund obligation with respect to any Debt Securities of a series as
required by the Securities Resolution establishing the terms of such series
and the Default continues for a period of 60 days; (4) the Company defaults in
the performance of any of its other agreements applicable to the series and
the Default continues for 120 days after the notice specified in the
Indenture; (5) the Company pursuant to or within the meaning of any Bankruptcy
Law: (a) commences a voluntary case, (b) consents to the entry of an order
for relief against it in an involuntary case, (c) consents to the appointment
of a Custodian for it or for all or substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors; or (6) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that: (a) is for relief against the Company in an involuntary case,
(b) appoints a Custodian for the Company or for all or substantially all of
its property, or (c) orders the liquidation of the Company; and the order or
decree remains unstayed and in effect for 60 days. (Section 6.01)
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law.
A Default under clause (4) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the series notify the
Company of the Default and the Company does not cure the Default within the
time specified after receipt of the notice. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Debt Securities of
the series. Subject to certain limitations, holders of a majority in
principal amount of the Debt Securities of the series may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders
of the series notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
The failure to redeem any Debt Security subject to a Conditional
Redemption is not an Event of Default if any event on which such redemption is
so conditioned does not occur before the redemption date.
The Indenture does not have a cross-default provision. Thus, a default
by the Company on any other debt (including any other series of Debt
Securities outstanding under the Indenture) would not constitute an Event of
Default.
Amendments and Waivers
The Indenture and the Debt Securities may be amended, and any default
may be waived as follows: The Debt Securities and the Indenture may be
amended with the consent of the holders of a majority in principal amount of
the Debt Securities of all series affected voting as one class.
(Section 9.02) A default on a series may be waived with the consent of the
<PAGE>
holders of a majority in principal amount of the Debt Securities of the
series. (Section 6.04) However, without the consent of each Holder affected,
no amendment or waiver may (1) reduce the amount of Debt Securities whose
holders must consent to an amendment or waiver, (2) reduce the interest on or
change the time for payment of interest on any Debt Security, (3) change the
fixed maturity of any Debt Security, (4) reduce the principal of any Debt
Security or reduce the amount of principal of any Discounted Security that
would be due on acceleration thereof, (5) change the currency in which
principal or interest on a Debt Security is payable or (6) waive any default
in payment of interest on or principal of a Debt Security. (Section 9.02)
Without the consent of any Holder, the Indenture or the Debt Securities may be
amended (1) to cure any ambiguity, omission, defect or inconsistency, (2) to
provide for assumption of Company obligations to Holders in the event of a
merger or consolidation requiring such assumption, (3) to provide that
specific provisions of the Indenture not apply to a series of Debt Securities
not previously issued, (4) to create a series and establish its terms, (5) to
provide for a separate Trustee for one or more series, or (6) to make any
change that does not materially adversely affect the rights of any Holder.
(Section 9.01)
Legal Defeasance and Covenant Defeasance
Debt Securities of a series may be defeased in accordance with their
terms and, unless the Securities Resolution establishing the terms of the
series otherwise provides, as set forth below. The Company at any time may
terminate as to a series all of its obligations (except for certain
obligations with respect to the defeasance trust and obligations to register
the transfer or exchange of a Debt Security, to replace destroyed, lost or
stolen Debt Securities and to maintain agents in respect of the Debt
Securities) with respect to the Debt Securities of the series and the
Indenture ("legal defeasance"). The Company at any time may terminate as to a
series its obligations with respect to the Debt Securities of the series under
the covenants described under "Certain Covenants" or other covenants which may
be added for the benefit of a particular series of Debt Securities ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises
its legal defeasance option, a series may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option, a
series may not be accelerated by reference to the covenants described under
"Certain Covenants" or other covenants which may be added for the benefit of a
particular series of Debt Securities. (Section 8.01)
To exercise its legal defeasance option as to a series, the Company must
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest on the Debt Securities of the series to redemption or maturity and
must comply with certain other conditions. In particular, the Company must
obtain an opinion of tax counsel that the defeasance will not result in
recognition of any gain or loss to Holders for Federal income tax purposes.
<PAGE>
"U.S. Government Obligations" are direct obligations of the United
States of America which have the full faith and credit of the United States of
America pledged for payment and which are not callable at the issuer's option,
or certificates representing an ownership interest in such obligations.
(Section 8.02)
Trustee
United States Trust Company of New York will act as Trustee and
Registrar for Debt Securities issued under the Indenture and, unless otherwise
indicated in a Prospectus Supplement, the Trustee will also act as Transfer
Agent and Paying Agent with respect to the Debt Securities. (Section 2.03)
The Company may remove the Trustee with or without cause if the Company so
notifies the Trustee six months in advance and if no Default occurs or is
continuing during the six-month period. (Section 7.07)
PLAN OF DISTRIBUTION
The Company may solicit offers from time to time to sell the Debt
Securities to, for reoffer to the public through, underwriting syndicates led
by one or more managing underwriters or through one or more underwriters
acting alone. The Debt Securities may be sold upon receipt of proposals
pursuant to competitive bidding, or as may otherwise be permitted, under the
Holding Company Act. The Company has also been authorized by the Commission
acting under the Holding Company Act to sell the Debt Securities through
negotiated transactions in public offerings through underwriters and
investment bankers, or to institutional investors in private placements. The
Company may also sell the Debt Securities through dealers or agents.
Any specific managing underwriter or underwriters with respect to the
offer and sale of the Debt Securities and the members of the underwriting
syndicate, if any, will be named in a Prospectus Supplement. Underwriters
will not be obligated to make a market in any of the Debt Securities. Unless
otherwise set forth in a Prospectus Supplement, underwriters will be obligated
to purchase all of the Debt Securities offered, subject to certain conditions
precedent.
The Prospectus Supplement will describe the discounts and commissions to
be allowed or paid to underwriters, if any, all other items constituting
underwriting compensation, the discounts and commissions to be allowed or paid
to dealers and agents, if any, and the exchanges, if any, on which the Debt
Securities will be listed.
Underwriters, dealers and agents may be entitled, under agreements to be
entered into with the Company, to indemnification against or to contribution
with respect to certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the Company
by Stephen E. Williams, Senior Vice President and General Counsel of the
Company and of its subsidiary, Consolidated Natural Gas Service Company, Inc.,
<PAGE>
CNG Tower, Pittsburgh, Pennsylvania 15222-3199, and Norbert F. Chandler,
counsel for the Company and a General Attorney of such subsidiary, CNG Tower,
Pittsburgh, Pennsylvania 15222-3199, or either of them. At January 31, 1995,
Mr. Williams owned directly and/or beneficially 11,935 shares of the Company's
common stock and has been granted pursuant and subject to the terms of the
Company's long-term incentive plans, restricted stock awards of 508 shares and
options on 25,370 shares. As of the same date, Mr. Chandler directly and/or
beneficially owned 3,330 shares of the Company's common stock and options on
8,370 shares under such long-term incentive plans. Certain legal matters in
connection with the Debt Securities will be passed upon by Cahill Gordon &
Reindel, a partnership including a professional corporation, Eighty Pine
Street, New York, New York 10005, for the underwriters or purchasers.
EXPERTS
The consolidated financial statements of Consolidated Natural Gas
Company and its Subsidiaries, which are incorporated by reference in this
Prospectus from the Company's Annual Report on Form 10-K, have been so
incorporated in reliance on the report of Price Waterhouse, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The estimates of gas and oil reserves included in such Annual Report are
incorporated in this Prospectus by reference in reliance upon the report of
Ralph E. Davis Associates, Inc., independent geologists, as experts.
The estimates of recoverable raw coal reserves included in such Annual
Report are incorporated in this Prospectus by reference in reliance upon the
report of John T. Boyd Company, mining engineers and geologists, as experts.
<PAGE>
<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 OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE CONSOLIDATED
NATURAL GAS PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALES 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
PAGE
The Company and its Subsidiaries.............. S-2
Recent Developments........................... S-2
Use of Proceeds............................... S-3
Supplemental Description of the
New Debentures.............................. S-3
Underwriters.................................. S-5
PROSPECTUS
PAGE
Available Information......................... 2
Documents Incorporated by Reference........... 2
The Company and its Subsidiaries.............. 2
Use of Proceeds............................... 3
Certain Terms and Descriptions of
Debt Securities and Indenture............... 3
Plan of Distribution.......................... 8
Legal Opinions................................ 9
Experts....................................... 9
================================================================================
================================================================================
$150,000,000
CONSOLIDATED NATURAL GAS
COMPANY
7 3/8% DEBENTURES
DUE APRIL 1, 2005
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
APRIL 12, 1995
