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Filed Pursuant to Rule 424(b)(3)
Registration No. 033-56113
PANHANDLE EASTERN CORPORATION
5400 WESTHEIMER COURT, P.O. BOX 1642
HOUSTON, TEXAS 77251-1642
November 29, 1994
To Our Stockholders:
As described in the Joint Proxy Statement/Prospectus of Panhandle Eastern
Corporation and Associated Natural Gas Corporation dated November 15, 1994
recently delivered to you, Panhandle, ANGC and the directors of ANGC are
defendants in certain litigation in the Delaware Court of Chancery filed on
behalf of stockholders of ANGC in connection with the proposed merger of a
subsidiary of Panhandle with ANGC.
As described in the accompanying Supplement, the parties have agreed to
settle the litigation, subject to certain conditions, including court approval.
As a result of the settlement, the Merger Agreement among Panhandle, its
subsidiary and ANGC has been amended in certain respects, and the parties have
agreed on certain other matters, all as described in the Supplement. A copy of
the amendment to the Merger Agreement is attached to the accompanying Supplement
as Appendix A thereto.
Please read the accompanying Supplement carefully. If you have any
questions prior to the Special Meeting or need further assistance, please call
Corporate Investor Communications, Inc., who is assisting in connection with the
Special Meeting, at 1-(800)-346-7885.
If you have not already done so, please complete and return the proxy or
voting instruction card previously delivered to you. Registered stockholders who
have misplaced their proxy card, or wish to change their vote and need another
proxy card, may call Panhandle's Shareholder Services Department at
1-(800)-225-5838 for assistance. Banks, brokers, dealers and other fiduciaries
may contact Corporate Investor Communications, Inc. at 1-(800)-346-7885.
Sincerely,
DENNIS R. HENDRIX
___________________________________
DENNIS R. HENDRIX
Chairman of the Board
and Chief Executive Officer
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PANHANDLE EASTERN CORPORATION
ASSOCIATED NATURAL GAS CORPORATION
JOINT PROXY STATEMENT/PROSPECTUS SUPPLEMENT
This Joint Proxy Statement/Prospectus Supplement (this "Supplement") amends
and supplements the Joint Proxy Statement/Prospectus of Panhandle Eastern
Corporation and Associated Natural Gas Corporation dated November 15, 1994 (the
"Joint Proxy Statement/Prospectus"). Capitalized terms used herein without
definition are defined in the Joint Proxy Statement/Prospectus and are used
herein as so defined.
On November 28, 1994, the Defendants in the Actions described under the
caption "Certain Litigation" in the Joint Proxy Statement/Prospectus and the
plaintiffs in those Actions, through their respective attorneys, signed a
Stipulation and Agreement of Compromise, Settlement & Release (the "Settlement
Agreement") settling the Actions, subject to certain conditions, including court
approval. Pursuant to the Settlement Agreement, the parties to the Agreement and
Plan of Merger dated as of October 9, 1994 (the "Merger Agreement") among
Panhandle Eastern Corporation ("Panhandle"), Panhandle Acquisition Two, Inc. and
Associated Natural Gas Corporation ("ANGC") have entered into an amendment to
the Merger Agreement, and Panhandle and ANGC have entered into an amendment to
the Stock Option Agreement dated as of October 9, 1994 (the "Stock Option
Agreement") between Panhandle and ANGC. The Defendants have also agreed not to
oppose an award of attorneys' fees to plaintiffs' counsel not in excess of
$400,000, and to reimburse certain expenses of the plaintiffs. All such
attorneys' fees and expenses will be paid by ANGC.
The amendment to the Merger Agreement provides for an additional condition
to the obligation of ANGC to consummate the Merger contemplated by the Merger
Agreement, which condition requires that ANGC receive the written opinion of
Dillon, Read & Co. Inc. (which may be in the form of a confirmation, as of the
date of the ANGC Special Meeting, of Dillon Read's opinion delivered to the
Board of Directors of ANGC on October 9, 1994) to the effect that, as of the
date of the ANGC Special Meeting, the consideration to be received by the
holders of ANGC Common Stock in the Merger is fair, from a financial point of
view, to such holders. Such amendment also provides ANGC the right to terminate
the Merger Agreement, as amended, if it does not receive such opinion, and
provides that if the Merger Agreement is so terminated and if at the time of the
ANGC Special Meeting there is a Competing Transaction, ANGC will pay to
Panhandle the previously negotiated termination fee of $20,000,000. A copy of
the amendment to the Merger Agreement is attached to this Supplement as Appendix
A, and is incorporated herein by reference. Certain terms of the Merger
Agreement are described under the caption "Certain Terms of the Merger
Agreement" in the Joint Proxy Statement/Prospectus, and a copy of the Merger
Agreement is attached as Appendix I thereto.
The amendment to the Stock Option Agreement provides that the exercise
price of $39.00 per share with respect to the 3,007,948 shares of ANGC Common
Stock covered thereby will be adjusted under certain circumstances so that the
excess of the Closing Price (as defined therein) of ANGC Common Stock over such
exercise price will not exceed $2.00 per share, instead of $3.50 per share as
originally set forth in the Stock Option Agreement. Additionally, the Stock
Option Agreement, as amended, would become exercisable upon a termination of the
Merger Agreement, as amended, by ANGC if ANGC did not receive the written
opinion of Dillon Read described above and if at the time of the ANGC Special
Meeting there is a Competing Transaction. The original terms of the Stock Option
Agreement are described under the caption "Stock Option Agreement" in the Joint
Proxy Statement/Prospectus.
Only holders of record of shares of Panhandle Common Stock at the close of
business on November 11, 1994 are entitled to vote at the Panhandle Special
Meeting, and only holders of record of shares of ANGC Common Stock at the close
of business on November 11, 1994 are entitled to vote at the ANGC Special
Meeting. Votes cast at the ANGC Special Meeting will be deemed cast with respect
to approval and adoption of the Merger Agreement, as amended, and votes cast at
the Panhandle Special Meeting will be deemed cast with respect to the issuance
and reservation for issuance of Panhandle Common Stock pursuant to the Merger
Agreement, as amended. If you have misplaced your copy of the Joint Proxy
Statement/Prospectus or accompanying proxy card, or if you have executed and
returned a proxy and wish to revoke it before it is voted at the appropriate
Special Meeting on December 15, 1994, you may receive another copy of the Joint
Proxy Statement/Prospectus or another proxy card by contacting, in the case of
Panhandle stockholders, Robert W. Reed, Secretary, Panhandle Eastern
Corporation, 5400 Westheimer Court, P.O. Box 1642, Houston, Texas 77251-1642
(telephone (713) 627-5400) or, in the case of ANGC stockholders, Erik B.
Carlson, General Counsel and Secretary, Associated Natural Gas Corporation, 370
17th Street, Suite 900, Denver, Colorado 80202 (telephone (303) 595-3331).
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THE DATE OF THIS SUPPLEMENT IS NOVEMBER 29, 1994
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APPENDIX A
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment to Agreement and Plan of Merger, dated as of November 28,
1994 (this "Amendment"), is by and among Panhandle Eastern Corporation, a
Delaware corporation ("PEC"), Panhandle Acquisition Two, Inc., a Delaware
corporation and wholly owned subsidiary of PEC ("Merger Sub"), and Associated
Natural Gas Corporation, a Delaware corporation ("ANGC").
WHEREAS, the parties hereto are parties to that certain Agreement and Plan
of Merger dated as of October 9, 1994 (the "Merger Agreement");
WHEREAS, PEC and ANGC are parties to that certain Stock Option Agreement
dated as of October 9, 1994 (the "PEC Option Agreement");
WHEREAS, pursuant to Section 8.03 of the Merger Agreement, the parties
desire to amend the Merger Agreement;
WHEREAS, pursuant to the terms of the PEC Option Agreement, the parties
thereto are, as of the date hereof, entering into an amendment to the PEC Option
Agreement (which PEC Option Agreement, as amended by such amendment, is referred
to herein as the "Amended PEC Option Agreement"); and
WHEREAS, the respective Boards of Directors of each of the parties have
approved this Amendment;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Capitalized terms used in this Amendment without definition are defined
in the Merger Agreement and are used herein with the same meanings ascribed to
such terms in the Merger Agreement.
2. Section 7.03 of the Merger Agreement is hereby amended by adding the
following subsection thereto:
"(g) Dillon, Read & Co. Inc. shall have delivered to ANGC its written
opinion (which may be in the form of a confirmation, as of the date of
the ANGC Stockholders Meeting, of its opinion referred to in Section
3.25 hereof) to the effect that, as of the date of the ANGC Stockholders
Meeting, the Merger Consideration to be received by the holders of ANGC
Common Stock in the Merger is fair, from a financial point of view, to
such holders."
3. Section 8.01 of the Merger Agreement is hereby amended by deleting the
word "or" at the end of subsection (h) thereof, by deleting the period at the
end of subsection (i) thereof and substituting the phrase "; or" in the place of
such period, and by adding the following subsection to Section 8.01:
"(j) by ANGC, if the condition set forth in Section 7.03 (g) hereof
shall not have been satisfied as of the date of the ANGC Stockholders
Meeting; provided, that ANGC shall not have taken any action, or omitted
to take any action, which would prevent such condition from being
satisfied."
4. Section 8.05(c) of the Merger Agreement is hereby amended by deleting
the word "or" at the end of clause (iv) thereof, by adding the word "or" at the
end of clause (v) thereof, and by adding the following clause (vi) immediately
following such clause (v):
"(vi) Section 8.01(j) and at the time of the ANGC Stockholders Meeting
there shall exist a Competing Transaction;"
5. All references to the PEC Option Agreement contained in the Merger
Agreement shall, unless the context otherwise requires, be deemed to be
references to the Amended PEC Option Agreement.
6. The Merger Agreement, as amended by this Amendment, shall remain in full
force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
PANHANDLE EASTERN CORPORATION
By: /s/ PAUL M. ANDERSON
_______________________________
PANHANDLE ACQUISITION TWO, INC.
By: /s/ PAUL M. ANDERSON
_______________________________
ASSOCIATED NATURAL GAS CORPORATION
By: /s/ DONALD H. ANDERSON
_______________________________
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