Prospectus Supplement
(To Prospectus dated March 14, 1995)
CONSOLIDATED NATURAL GAS COMPANY
$150,000,000
6 7/8% DEBENTURES DUE OCTOBER 15, 2026
Interest on the Debentures offered hereby (the "New Debentures") is payable
semi-annually, on April 15 and October 15, commencing April 15, 1997. The New
Debentures will not be redeemable at the option of the Company prior to maturity
and will not be subject to any sinking fund. The New Debentures will be issued
only in book-entry form through the facilities of The Depository Trust Company
("Depositary" or "DTC").
The New Debentures will be purchased for cash by the Company at the option of
the Holders on October 15, 2006 (the "Purchase Date") at a Purchase Price equal
to 100% of the principal amount thereof plus accrued interest to the Purchase
Date. See "Supplemental Description of the New Debentures."
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.
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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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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PER DEBENTURE 100.875% .548% 100.327%
TOTAL $151,312,500 $822,000 $150,490,500
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(1) Plus accrued interest, if any, from October 21, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriters."
(3) 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 October 21, 1996 through the
facilities of DTC.
CHASE SECURITIES INC. UBS SECURITIES
The date of this Prospectus Supplement is October 16, 1996.
<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, 1995 (the "1995 Annual Report") and its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996, 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.
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, 1996 and 1997
capital expenditures of the Company and its subsidiary companies estimated to be
approximately $1 billion, 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 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 October 15, 2026. Each New Debenture will bear
interest from October 21, 1996 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 15 and October 15 commencing April 15,
1997, to the person in whose name such New Debenture is registered at the close
of business on the preceding April 1 and October 1, respectively.
The New Debentures will not be redeemable at the option of the Company
prior to maturity. The New Debentures will not be subject to any sinking fund.
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. See "Certain Terms and Descriptions of Debt
Securities and Indenture--Legal Defeasance and Convenant Defeasance" in the
accompanying Prospectus.
PURCHASE OF NEW DEBENTURES AT THE OPTION OF THE HOLDER
On October 15, 2006 (the "Purchase Date"), the Company will become
obligated to purchase for cash, at the option of the holder of New Debentures
("Holders"), any outstanding New Debenture for which a written Purchase Notice
has been delivered by the Holder to the office of the Paying Agent at any time
prior to the close of business on the Purchase Date and not withdrawn.
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A Purchase Notice shall state (i) the certificate numbers of the New
Debentures to be delivered by the Holder thereof for purchase by the Company,
and (ii) if a Holder elects to have only a portion of a New Debenture purchased,
the portion of the New Debenture to be purchased, which portion must be $1,000
or an integral multiple thereof. The giving of a Purchase Notice or withdrawal
thereof by a Holder shall be subject to the procedures of the Depositary and of
participants in the Depositary as summarized under "--Book-Entry Procedures."
Any Purchase Notice may be withdrawn by the Holder by a written withdrawal
notice delivered to the Paying Agent prior to the close of business on the
Purchase Date. A withdrawal notice shall state (i) the certificate numbers of
the New Debentures in respect of which such notice of withdrawal is being
submitted, (ii) the principal amount of the New Debentures with respect to which
such notice of withdrawal is being submitted, and (iii) the principal amount, if
any, of such New Debentures which remain subject to the Purchase Notice, and
have been or will be delivered for purchase by the Company.
The Purchase Price payable in respect of a New Debenture purchased by the
Company pursuant to a written Purchase Notice shall be 100% of the principal
amount thereof plus accrued interest to the Purchase Date.
The Company will give notice (the "Company Notice") not less than 30 days
but not more than 60 days before the Purchase Date (the "Company Notice Date")
to all Holders at their addresses shown in the register of the Registrar (and to
beneficial owners as required by applicable law) stating, among other things,
(i) the Purchase Date, (ii) that any Holder who elects to have the Company
purchase New Debentures as of the Purchase Date must complete and sign the
Purchase Notice on the back of the New Debenture or a similar notice and
surrender the New Debenture to the Paying Agent, and (iii) that this is the only
such right of Holders to elect to have the Company purchase New Debentures and
if any Holder elects not to have the Company purchase such Holder's New
Debentures as of the Purchase Date, such Holder will have no other such right.
The Company will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Securities Exchange Act of 1934 (the "Exchange
Act") which may then be applicable and will file Schedule 13E-4 or any other
schedule required thereunder in connection with the obligation of the Company to
purchase New Debentures at the option of Holders.
The Company's ability to purchase New Debentures with cash may be limited
by the terms of any then existing borrowing arrangements and by its financial
resources.
Payments of the Purchase Price for a New Debenture for which a Purchase
Notice has been delivered and not withdrawn is conditioned upon delivery of such
New Debenture (together with necessary endorsements) to the Paying Agent at its
office in the Borough of Manhattan, the City of New York, or any other office of
the Paying Agent maintained for such purpose, at any time (whether prior to, on
or after the Purchase Date) after delivery of such Purchase Notice. Payment of
the Purchase Price for such New Debenture will be made promptly following the
later of the Purchase Date or the time of delivery of such New Debenture. If the
Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Purchase Price of such New Debenture on the business day
following the Purchase Date, then, on and after such date, interest on such New
Debenture will cease to accrue, whether or not such New Debenture is delivered
to the Paying Agent, and all other rights of the Holder shall terminate (other
than the right to receive the Purchase Price upon delivery of the New
Debenture).
No New Debenture may be purchased if there has occurred and is continuing
an Event of Default described under "Certain Terms and Descriptions of Debt
Securities and Indenture--Defaults and Remedies" in the accompanying Prospectus
(other than a default in the payment of the Purchase Price with respect to such
New Debenture).
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.
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
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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 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
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
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<PAGE>
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 New Debentures will trade in the Same-Day Funds Settlement System of
the Depositary until maturity, and settlement for the New Debentures will be
made in immediately available funds. In connection therewith, all payments of
principal of and interest on the New Debentures will be made in immediately
available funds. Because the New Debentures will trade in the Depositary's
Same-Day Funds Settlement System, secondary market trading activity in the New
Debentures will be required by the Depositary to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the New Debentures.
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.
PRINCIPAL
UNDERWRITER AMOUNT
---------- --------
Chase Securities Inc............................... $ 75,000,000
UBS Securities..................................... 75,000,000
------------
$150,000,000
============
The Company has been advised by the Underwriters that they propose to make
a public offering of the New Debentures directly to the public at the public
offering price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of 0.35% of the
principal amount of the New Debentures. The Underwriters may allow, and such
dealers may reallow, a concession of 0.25% of the principal amount of the New
Debentures to certain other dealers. After the initial public offering, the
public offering price and such concessions may be changed.
Application has been made to list the New Debentures on the New York Stock
Exchange. The Company has been advised by the Underwriters that the Underwriters
presently intend to make a market in the New Debentures after the consummation
of the offering, although the Underwriters are under no obligation to do so and
the Underwriters may discontinue any such market making at any time in their
sole discretion. No assurance can be given as to the liquidity of the trading
market for the New Debentures or that an active trading market for the New
Debentures will develop.
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.
Affiliates of Chase Securities Inc. have engaged in general financing and
banking transactions with, and provide corporate trust services to, the Company
and/or its subsidiaries from time to time in the ordinary course of business,
and they may do so in the future.
S-5
<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 be addressed
to Ms. Laura J. McKeown, Secretary, Consolidated Natural Gas Company, CNG Tower,
625 Liberty Avenue, Pittsburgh, PA 15222-3199, (412) 227-1125.
<PAGE>
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.
<PAGE>
CERTAIN TERMS AND DESCRIPTIONS OF
DEBT SECURITIES AND INDENTURE
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 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
<PAGE>
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
interest or lien (collectively, "Lien") on Principal Property to secure a Debt
<PAGE>
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 Transaction
<PAGE>
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 the
<PAGE>
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
<PAGE>
on a series may be waived with the consent of the 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., CNG
Tower, Pittsburgh, Pennsylvania 15222-3199, and Norbert F. Chandler, counsel for
<PAGE>
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>
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
The Company and its Subsidiaries S-2
Use of Proceeds S-2
Supplemental Description of the
New Debentures S-2
Underwriters S-5
PROSPECTUS
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
Prospectus Supplement
CONSOLIDATED
NATURAL GAS
COMPANY
$150,000,000
6 7/8% Debentures
Due October 15, 2026
CHASE SECURITIES INC.
UBS SECURITIES
October 16, 1996
