<PAGE> 1
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 22, 1996
$150,000,000
PANENERGY CORP
7% NOTES DUE 2006
Interest is payable semi-annually on April 15 and October 15, commencing
April 15, 1997. The Notes will mature on October 15, 2006. The Notes are not
redeemable prior to maturity and have no sinking fund provisions. See
"Description of the Notes" herein.
The Notes will be represented by one or more book-entry securities
registered in the name of a nominee of The Depository Trust Company, as
Depositary. Beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Except as described in the accompanying Prospectus, the Notes
will not be issued in definitive form.
------------------------
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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Note.......................... 99.25% .65% 98.60%
Total............................. $148,875,000 $975,000 $147,900,000
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from October 15, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $125,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriters. It is expected that delivery of the Notes will be made on or
about October 15, 1996, through the facilities of the Depositary, against
payment therefor in same-day funds.
CHASE SECURITIES INC.
BA SECURITIES, INC.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is October 9, 1996
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds received by PanEnergy Corp (the "Company") from the sale
of the Notes are estimated at $147,775,000. Such net proceeds will be used for
general corporate purposes, including capital expenditures, working capital,
debt repayments and advances to affiliates.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to herein as the "Notes" and in the Prospectus as the "Offered
Securities") supplements, and to the extent inconsistent therewith, replaces,
the description of the general terms and provisions of the Securities set forth
in the Prospectus, to which description reference is hereby made. The following
summary of the Notes is qualified in its entirety by reference to the Indenture
referred to in the Prospectus.
GENERAL
The Notes will be limited to $150,000,000 in aggregate principal amount.
The Notes will be issued in denominations of $1,000 and integral multiples of
$1,000, will bear interest from October 15, 1996 at the annual rate set forth on
the cover page of this Prospectus Supplement, and will mature on October 15,
2006. Interest will be payable semi-annually on April 15 and October 15,
commencing April 15, 1997, to the Persons in whose names the Notes (or any
predecessor Notes) are registered in the Security Register at the close of
business on the applicable Regular Record Date, which is the October 1 or April
1 next preceding such Interest Payment Date.
Principal of and interest on the Notes will be payable, and the Notes will
be exchangeable and transfers thereof will be registrable, at the Corporate
Trust Office of the Trustee in Boston, Massachusetts or at any other office or
agency of the Company designated as a Place of Payment; provided, however, that,
at the option of the Company, in the event the Notes do not remain in book-entry
form, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered
Book-Entry Notes (referred to herein as the "Book-Entry Notes" and in the
Prospectus as the "Book-Entry Securities") which will be deposited with, or on
behalf of, the Depositary and registered in the name of the Depositary's
nominee. The Depository Trust Company ("DTC") will be the Depositary for the
Notes. Except as set forth in the Prospectus, the Book-Entry Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows: the
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, 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 pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the 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
S-2
<PAGE> 3
dealers (including the Underwriters), banks (including the Trustee), 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.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
Depositary's or any participant's records relating to, or payments made on
account of, beneficial interests in the Book-Entry Notes, or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
See "Description of Securities--Form, Exchange, Registration and Transfer"
and "Description of Securities--Book-Entry Securities" in the accompanying
Prospectus for additional information concerning the arrangements for book-entry
registration and transfer of the Notes.
Settlement for the Notes will be made in same-day funds. All payments of
principal and interest will be made by the Company in funds available on the due
date. To the extent any Notes are held by DTC, such Notes will trade in DTC's
Same-Day Funds Settlement System until maturity, and therefore DTC will require
secondary trading activity in the Notes to be settled in immediately available
funds.
REDEMPTION
The Notes will not be subject to redemption prior to maturity. The Notes
will not be subject to a sinking fund.
DEFEASANCE
The Notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Securities--Defeasance"
in the Prospectus.
S-3
<PAGE> 4
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
--------------------------------------------------------------------- -------------
<S> <C>
Chase Securities Inc. ............................................... $ 37,500,000
BA Securities, Inc. ................................................. 37,500,000
Lehman Brothers Inc. ................................................ 37,500,000
Morgan Stanley & Co. Incorporated ................................... 37,500,000
-------------
Total...................................................... $ 150,000,000
=============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are obligated to take and pay for all the Notes if any are taken.
The Underwriters propose to offer the Notes directly to the public at the
initial 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 .40% of the principal amount. The Underwriters may allow, and such dealers
may re-allow, a concession not in excess of .25% of the principal amount to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Company.
Affiliates of Chase Securities Inc. and BA Securities, Inc. are commercial
bank lenders to the Company and its subsidiaries.
Harold S. Hook, a director of the Company, serves on the boards of
directors of The Chase Manhattan Corporation, The Chase Manhattan Bank and Texas
Commerce Bank National Association, affiliates of Chase Securities Inc. Charles
W. Duncan, a director of the Company, serves on the board of directors of Texas
Commerce Bank National Association.
S-4
<PAGE> 5
PROSPECTUS
PANENERGY CORP
$300,000,000
DEBT SECURITIES
---------------------
PanEnergy Corp ("PanEnergy" or the "Company") may offer from time to time
its unsecured debt securities consisting of notes, debentures or other evidences
of indebtedness (the "Securities") at an aggregate initial offering price of not
more than $300,000,000 or, if applicable, the equivalent thereof in any other
currency or currency unit. The Securities may be offered as separate series in
amounts, at prices and on terms to be determined in light of market conditions
at the time of sale and set forth in a Prospectus Supplement.
The terms of each series of Securities, including, where applicable, the
specific designation, aggregate principal amount, authorized denominations,
maturity, rate or rates (or method of determining the same) and time or times of
payment of any interest, any terms for optional or mandatory redemption, which
may include redemption at the option of holders upon the occurrence of certain
events, or any sinking fund provisions, any initial public offering price, the
proceeds to the Company and any other specific terms in connection with the
offering and sale of such series (the "Offered Securities") will be set forth in
a Prospectus Supplement. As used herein, Securities shall include securities
denominated in United States dollars or, at the option of the Company if so
specified in an applicable Prospectus Supplement, in any other currency or
currency unit, or in amounts determined by reference to an index.
The Securities may be sold directly by the Company to investors, through
agents designated from time to time or to or through underwriters or dealers.
See "Plan of Distribution". If any agents of the Company or any underwriters are
involved in the sale of any Securities in respect of which this Prospectus is
being delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement.
---------------------
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.
---------------------
This Prospectus may not be used to consummate sales of the Securities
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS AUGUST 22, 1996.
<PAGE> 6
AVAILABLE INFORMATION
PanEnergy is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission ("Commission"). Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at
the following Regional Offices of the Commission: Chicago Regional Office, Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and New
York Regional Office, Suite 1300, 7 World Trade Center, New York, New York
10048. Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Certain securities of PanEnergy are listed on the New York
Stock Exchange and the Pacific Stock Exchange. Reports, proxy statements and
other information concerning PanEnergy can be inspected and copied at the office
of the New York Stock Exchange at 20 Broad Street, New York, New York and at the
office of the Pacific Stock Exchange at 301 Pine Street, San Francisco,
California. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
PanEnergy incorporates herein by reference the following documents filed by
it with the Commission pursuant to the Exchange Act: Annual Report on Form 10-K
for the year ended December 31, 1995 and Quarterly Reports on Form 10-Q for the
quarters ended March 31 and June 30, 1996 (File No. 1-8157).
Each document filed by PanEnergy 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 Securities shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
of such document. Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the Prospectus Supplement modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
PanEnergy hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any and
all of the documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents.
Requests for such copies should be directed to Mr. Robert W. Reed, Secretary, at
5400 Westheimer Court, P.O. Box 1642, Houston, Texas 77251-1642 (tel.
713-627-5400).
2
<PAGE> 7
THE COMPANY
PanEnergy is a holding company whose subsidiaries are primarily engaged in
the interstate transportation and storage of natural gas, in the gathering,
processing, marketing and intrastate transportation and storage of natural gas,
natural gas liquids ("NGLs") and crude oil, and in electric power marketing and
risk-management services.
Services relating to the interstate transportation and storage of natural
gas are provided by the Company's natural gas transmission group. This group
includes four major interstate pipeline subsidiaries of PanEnergy -- Texas
Eastern Transmission Corporation, Algonquin Gas Transmission Company, Panhandle
Eastern Pipe Line Company ("PEPL") and Trunkline Gas Company. Together, these
subsidiaries own and operate one of the nation's largest gas transmission
networks. This fully interconnected 22,000-mile system can receive natural gas
from most major North American producing regions for delivery to markets
throughout the Mid-Atlantic, New England and Midwest states.
Services relating to the gathering, processing, marketing, intrastate
transportation and storage of natural gas, NGLs and crude oil, as well as the
electric power marketing and risk-management services, are provided by the
Company's energy services group. This group operates through PanEnergy Services,
Inc. and its subsidiaries.
PanEnergy also owns subsidiaries engaged in domestic and international
energy development, importation of liquefied natural gas ("LNG") from Algeria,
and the transportation, storage and regasification of LNG. In addition,
PanEnergy, through subsidiaries, owns interests in a partnership operating a
cogeneration facility, in a joint venture that owns and operates a
chemical-grade methanol plant and an MTBE (methyl tertiary butyl ether) plant in
Saudi Arabia and in master limited partnerships engaged in the transportation of
natural gas in interstate commerce and in the transportation and storage of
petroleum products.
PanEnergy is a Delaware corporation organized in 1981 in connection with
the corporate restructuring of PEPL, which was incorporated in 1929. Executive
offices of PanEnergy are located at 5400 Westheimer Court, Houston, Texas
77056-5310, and the telephone number is (713) 627-5400.
USE OF PROCEEDS
Except as may otherwise be described in the Prospectus Supplement relating
to an offering of Securities, the net proceeds from the sale of the Securities
will be used for general corporate purposes. Any specific allocation of the net
proceeds of an offering of Securities to a specific purpose will be determined
at the time of such offering and will be discussed in the related Prospectus
Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
SIX MONTHS ENDED ----------------------------------------------------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
3.34 2.93 2.37 1.96 2.04 1.46
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income from continuing
operations before income taxes and fixed charges of the Company and its
subsidiaries, less the Company's share of undistributed income of less than
50%-owned entities. Fixed charges consist of the Company's and its subsidiaries'
interest expense (including interest costs capitalized), dividend requirements
on preferred stock of subsidiaries and the portion of rent expense
representative of an interest factor.
3
<PAGE> 8
DESCRIPTION OF SECURITIES
The Securities will be issued under an indenture dated as of November 1,
1994 (the "Indenture") between Panhandle Eastern Corporation (now PanEnergy) and
The First National Bank of Boston, as Trustee, which has been succeeded by State
Street Bank and Trust Company (the "Trustee"), which Indenture is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
statements under this caption are brief summaries of certain provisions of the
Indenture, do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms. Wherever particular Sections
of the Indenture or terms not defined herein that are defined in the Indenture
are referred to herein or in a Prospectus Supplement, it is intended that such
Sections or defined terms shall be incorporated by reference herein or therein,
as the case may be.
The Securities may be issued from time to time in one or more series. The
particular terms of each series of Securities offered by any Prospectus
Supplement or Prospectus Supplements will be described in such Prospectus
Supplement or Prospectus Supplements relating to such series.
GENERAL
The Indenture does not limit the amount of Securities, debentures, notes or
other evidences of indebtedness that may be issued by the Company or any of its
subsidiaries. In addition, other than as set forth under "Limitation on Liens",
there are no provisions of the Indenture which afford holders of the Securities
protection in the event of either a change in control of the Company or a highly
leveraged transaction involving the Company.
Securities may be issued under the Indenture from time to time in separate
series up to the aggregate amount from time to time authorized by the Company
for such series. The Securities will be unsecured obligations of the Company and
will rank on a parity with all other unsecured and unsubordinated indebtedness
of the Company.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Offered Securities: (1) the title of the
Offered Securities; (2) any limit on the aggregate principal amount of the
Offered Securities; (3) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Offered Securities will be
issued; (4) the date or dates on which the Offered Securities will mature; (5)
the rate or rates per annum (or the method by which such will be determined) at
which the Offered Securities will bear interest, if any, and the date from which
any such interest will accrue and whether, and under what circumstances,
additional amounts with respect to such Securities shall be payable; (6) the
Interest Payment Dates on which any such interest on the Offered Securities will
be payable and the Regular Record Date for any interest payable on any Offered
Securities on any Interest Payment Date; (7) any mandatory or optional sinking
fund or analogous provisions; (8) each office or agency where the principal of
and any premium and interest on the Offered Securities will be payable and each
office or agency where the Offered Securities may be presented for registration
of transfer or exchange, if other than as described below under "Form, Exchange,
Registration and Transfer" or "Payment and Paying Agents"; (9) any obligation of
the Company to redeem the Offered Securities and any right of the Company to
redeem the Offered Securities at its option and the period or periods, if any,
within which and the price or prices at which the Offered Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed, in
whole or in part, and the other detailed terms and provisions of any such
optional or mandatory redemption; (10) the denominations in which any Offered
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (11) if other than the currency of the United States
of America, the currency or currencies (including composite currencies) in which
payment of principal of and any premium and interest on the Offered Securities
is payable; (12) any index used to determine the amount of payments of principal
of and any premium and interest on the Offered Securities; (13) information with
respect to book-entry procedures, if any; and (14) any other terms of the
Offered Securities not inconsistent with the provisions of the Indenture.
(Section 301)
4
<PAGE> 9
Securities may be issued as Original Issue Discount Securities. An Original
Issue Discount Security is a Security, including any Zero-Coupon Security, which
is issued at a price lower than the amount payable upon the Stated Maturity
thereof and which provides that upon redemption or acceleration of the maturity
thereof an amount less than the amount payable upon the Stated Maturity thereof
and determined in accordance with the terms of such Security shall become due
and payable. Special United States federal income tax considerations applicable
to Securities issued at an original issue discount, including Original Issue
Discount Securities, and special United States tax considerations and other
terms and restrictions applicable to any Securities which are denominated in
other than United States dollars, will be set forth in a Prospectus Supplement
relating thereto.
The Company is a holding company, conducting business only through
subsidiaries. Accordingly, the ability of the Company to meet its obligations
under the Indenture and the Securities will be dependent on the earnings and
cash flows of its subsidiaries and the ability of its subsidiaries to pay
dividends or to advance or repay funds to the Company. In addition, the
Company's rights and the rights of its creditors, including the holders of
Securities, to participate in the assets of any subsidiary upon the latter's
liquidation or recapitalization will be subject to the prior claims of such
subsidiary's creditors. Of the $2.299 billion of the Company's consolidated debt
at June 30, 1996, approximately $1.275 billion represented claims of the
creditors of the Company's subsidiaries. Further, as of June 30, 1996, net
advances and notes owed by the Company to its subsidiaries aggregated
approximately $101 million.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Book-Entry Securities, Securities of any series will
be exchangeable for other Securities of the same series of any authorized
denomination and of a like aggregate principal amount and tenor. (Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Book-Entry Securities, Securities may be presented for exchange as provided
above and for registration of transfer (with the form of transfer endorsed
thereon duly executed) at the office of the Security Registrar or at the office
of any transfer agent designated by the Company for such purpose with respect to
any series of Securities and referred to in an applicable Prospectus Supplement,
without service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the Security Registrar or such transfer agent, as the case may be,
being satisfied with the documents of title and identity of the person making
the request. The Company has appointed the Trustee as Security Registrar.
(Section 305) If a Prospectus Supplement refers to any transfer agents (in
addition to the Security Registrar) initially designated by the Company with
respect to any series of Securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for such series.
The Company may at any time designate additional transfer agents with respect to
any series of Securities. (Section 1002)
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Securities of that series for redemption and ending on the close of
business on the day of mailing of the relevant notice of redemption; or (ii)
register the transfer of or exchange any Security, or portion thereof, called
for redemption, except the unredeemed portion of any Security being redeemed in
part. (Section 305)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Securities will be made at the
office of such Paying Agent or Paying Agents as the
5
<PAGE> 10
Company may designate from time to time, except that at the option of the
Company payment of any interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register. (Sections 307, 1002) Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on Securities will
be made to the Person in whose name such Security is registered at the close of
business on the Regular Record Date for such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee at its Corporate Trust Office will be designated as a Paying Agent for
the Company for payments with respect to Securities of each series. Any
additional Paying Agents initially designated by the Company for the Securities
will be named in an applicable Prospectus Supplement. The Company may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that the Company will be required to maintain a Paying Agent in each
Place of Payment for such series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
principal of or any premium or interest on any Security which remain unclaimed
at the end of two years after such principal, premium or interest shall have
become due and payable will (subject to applicable escheat laws) be repaid to
the Company, and the Holder of such Security will thereafter look only to the
Company for payment thereof. (Section 1003)
BOOK-ENTRY SECURITIES
Some or all of the Securities of any series may be represented, in whole or
in part, by one or more Book-Entry Securities which will have an aggregate
principal amount equal to that of the Securities represented thereby. Each
Book-Entry Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable Prospectus Supplement, will be deposited
with such Depositary or nominee or a custodian therefor and will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any such other matters as may be provided for pursuant to
the Indenture.
Notwithstanding any provision of the Indenture or any Security described
herein, any Book-Entry Security shall be exchangeable for Securities registered
in the name of, and a transfer of a Book-Entry Security of any series may be
registered to, any Person other than the Depositary for such Book-Entry Security
or any nominee of such Depositary only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such
Book-Entry Security or ceases to be qualified to act as such as required by the
Indenture, (ii) the Company executes and delivers to the Trustee a Company Order
that such Book-Entry Security shall be so exchangeable and the transfer thereof
so registrable, (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities of such series or (iv) there shall exist
such circumstances, if any, in addition to or in lieu of those described above
as may be described in the applicable Prospectus Supplement. All Securities
issued in exchange for a Book-Entry Security or any portion thereof will be
registered in such names as the Depositary may direct. (Sections 203 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Book-Entry Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Book-Entry Security and the
Securities represented thereby for all purposes under the Securities and the
Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Book-Entry Security will not be entitled to have such
Book-Entry Security or any Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Securities in exchange therefor and will not be considered to be
the owners or Holders of such Book-Entry Security or any Securities represented
thereby for any purpose under the Securities or the Indenture. All payments of
principal of and any premium and interest on a Book-Entry Security will be made
to the Depositary or its nominee, as the case may be, as the Holder thereof. The
laws of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a Book-Entry Security.
Ownership of beneficial interests in a Book-Entry Security will be limited
to institutions that have accounts with the Depositary or its nominee
("participants") and to Persons that may hold beneficial interests
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<PAGE> 11
through participants. In connection with the issuance of any Book-Entry
Security, the Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of Securities represented by
the Book-Entry Security to the accounts of its participants. Ownership of
beneficial interests in a Book-Entry Security will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by the Depositary (with respect to participants' interests) or any
such participant (with respect to interests of Persons held by such participants
on their behalf). Payments, transfers, exchanges and others matters relating to
beneficial interests in a Book-Entry Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the Company,
the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Book-Entry Security, or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
CERTAIN DEFINITIONS
"Net Tangible Assets" means the aggregate amount of assets (less applicable
reserves and other properly deductible items) after deducting therefrom (i) all
current liabilities and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense (to the extent included in such aggregate
amount of assets) and other like intangibles. (Section 101)
"Principal Property" means any natural gas pipeline, natural gas gathering
system, natural gas storage facility or natural gas processing plant located in
the United States, except any such property that in the opinion of the Board of
Directors is not of material importance to the business conducted by the Company
and its consolidated Subsidiaries taken as a whole. (Section 101)
"Principal Subsidiary" means any Subsidiary which owns a Principal
Property. (Section 101)
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
(Section 101)
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not permit any
Subsidiary to, issue, assume or guarantee any indebtedness for money borrowed
("Debt") if such Debt is secured by a mortgage, pledge, security interest or
lien (a "mortgage" or "mortgages") upon any Principal Property of the Company or
any Principal Subsidiary or upon any shares of stock or indebtedness of any
Principal Subsidiary (whether such Principal Property, shares of stock or
indebtedness is now owned or hereafter acquired) without in any such case
effectively providing that the Securities shall be secured equally and ratably
with (or prior to) such Debt, except that the foregoing restrictions shall not
apply to: (a) mortgages on any property acquired, constructed or improved by the
Company or any Principal Subsidiary after the date of the Indenture which are
created within 180 days after such acquisition (or in the case of property
constructed or improved, after the completion and commencement of commercial
operation of such property, whichever is later) to secure or provide for the
payment of the purchase price or cost thereof, provided that in the case of such
construction or improvement the mortgages shall not apply to any property
theretofore owned by the Company or any Subsidiary other than theretofore
unimproved real property; (b) existing mortgages on property acquired (including
mortgages on any property acquired from a Person which is consolidated with or
merged with or into the Company or a Subsidiary) or mortgages outstanding at the
time any corporation becomes a Subsidiary; (c) mortgages in favor of domestic or
foreign governmental bodies to secure advances or other payments pursuant to any
contract or statute or to secure indebtedness incurred to finance the purchase
price or cost of constructing or improving the property subject to such
mortgages, including mortgages to secure Debt of the pollution control or
industrial revenue bond type; (d) mortgages in favor of the Company or any
Principal Subsidiary; (e) mortgages to secure loans to the Company or any
Principal Subsidiary maturing within 12 months from the creation thereof and
made in the ordinary course of business; (f) mortgages on property held or used
by the Company or any Principal Subsidiary in connection with the exploration
for, development of or production of, natural gas, oil or other minerals
(including liquefied gas and synthetic gas);
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<PAGE> 12
or (g) any extension, renewal or replacement (or successive extensions, renewals
or replacements), in whole or in part, of any mortgage referred to in the
foregoing clauses (a), (b), (c), (d) or (f). (Section 1004)
Notwithstanding the foregoing, the Company and any Subsidiary may, without
securing the Securities, issue, assume or guarantee secured Debt (which would
otherwise be subject to the foregoing restrictions) in an aggregate amount
which, together with all other such Debt, does not exceed 10% of the Net
Tangible Assets, as shown on a consolidated balance sheet as of a date not more
than 90 days prior to the proposed transaction prepared by the Company in
accordance with generally accepted accounting principles. (Section 1004)
EVENTS OF DEFAULT
Any one of the following events constitutes an Event of Default under the
Indenture with respect to Securities of any series: (a) failure to pay any
interest on any Security of that series when due, continued for 30 days; (b)
failure to pay principal of or any premium on any Security of that series when
due; (c) failure to deposit any sinking fund payment, when due, in respect of
any Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture solely
for the benefit of series of Securities other than that series), continued for
90 days after written notice as provided in the Indenture; (e) certain events in
bankruptcy, insolvency or reorganization involving the Company; and (f) any
other Event of Default provided with respect to Securities of that series.
(Section 501)
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities of that
series by notice as provided in the Indenture may declare the principal amount
(or, if the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) of all the Securities of that series to be due and payable immediately.
At any time after a declaration of acceleration with respect to Securities of
any series has been made, but before a judgment or decree for payment of money
has been obtained by the Trustee, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502)
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601, 603) Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Securities of any series have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities of that series; provided, however,
that the Trustee shall not be obligated to take any action unduly prejudicial to
Holders not joining in such direction or involving the Trustee in personal
liability. (Section 512)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of its obligations under the Indenture and as
to any default in such performance. (Section 1005)
DEFEASANCE
If so specified with respect to any particular series of Securities, the
Company may discharge its indebtedness and its obligations or certain of its
obligations under the Indenture with respect to such series by depositing funds
or obligations issued or guaranteed by the United States of America with the
Trustee.
Defeasance and Discharge
The Indenture provides that, if so specified with respect to the Securities
of any series, the Company will be discharged from any and all obligations in
respect of the Securities of such series (except for certain obligations
relating to temporary Securities and exchange of Securities, registration of
transfer or exchange of Securities of such series, replacement of stolen, lost
or mutilated Securities of such series and maintenance of
8
<PAGE> 13
paying agencies to hold moneys for payment in trust) upon the deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of (and
premium, if any), and each installment of interest on, the Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and the Securities of such series. (Sections 1302, 1304) Such a
trust may only be established if, among other things, the Company has delivered
to the Trustee an Opinion of Counsel to the effect that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of the Indenture there has been a change in
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of Securities of
such series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge, and will be
subject to federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred. (Section 1304) In the event of any such defeasance
and discharge of Securities of such series, Holders of Securities of such series
would be entitled to look only to such trust fund for payment of principal of
and any premium and any interest on their Securities until Maturity.
Defeasance of Certain Obligations
The Indenture provides that, if so specified with respect to the Securities
of any series, the Company may omit to comply with certain restrictive
covenants, including the covenant described under "Limitation on Liens" above,
and any such omission shall not be an Event of Default with respect to the
Securities of such series, upon the deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any), and each
installment of interest on, the Securities of such series on the Stated Maturity
of such payments in accordance with the terms of the Indenture and the
Securities of such series. The obligations of the Company under the Indenture
and the Securities of such series other than with respect to such covenants
shall remain in full force and effect. (Section 1303) Such a trust may be
established only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the Holders of the Securities
of such series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred. (Section 1304)
Although the amount of money and U.S. Government Obligations on deposit
with the Trustee would be intended to be sufficient to pay amounts due on the
Securities of such series at the time of their Stated Maturity, in the event the
Company exercises its option to omit compliance with the covenants defeased with
respect to the Securities of any series as described above and the Securities of
such series are declared due and payable because of the occurrence of any Event
of Default, such amount may not be sufficient to pay amounts due on the
Securities of such series at the time of the acceleration resulting from such
Event of Default. The Company shall in any event remain liable for such payments
as provided in the Indenture.
Federal Income Tax Consequences
Under current United States federal income tax law, defeasance and
discharge would likely be treated as a taxable exchange of Securities to be
defeased for an interest in the defeasance trust. As a consequence, a holder
would recognize gain or loss equal to the difference between the holder's cost
or other tax basis for such Securities and the value of the holder's interest in
the defeasance trust, and thereafter would be required to include in income a
share of the income, gain or loss of the defeasance trust. Under current United
States federal income tax law, covenant defeasance would ordinarily not be
treated as a taxable exchange of such Securities.
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<PAGE> 14
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, (b) change the
Redemption Date with respect to any Security, (c) reduce the principal amount
of, or premium or interest on, any Security, (d) reduce the amount of principal
of an Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (e) change the coin or currency in which any Security or any premium or
interest thereon is payable, (f) change the redemption right of any Holder, (g)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Security, (h) reduce the percentage in principal amount of
Outstanding Securities of any series, the consent of whose Holders is required
for modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults, or (i)
modify any of the above provisions. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of the Holders of all Securities of
that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1006) The
Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Securities of that
series, waive any past default under the Indenture with respect to any
Securities of that series, except a default (a) in the payment of principal of,
or premium, if any, or any interest on any Security of such series or (b) in
respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the Holder of each Outstanding Security of such
series affected. (Section 513)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver thereunder as of any
date, (i) the principal amount of an Original Issue Discount Security that shall
be deemed to be Outstanding shall be the amount of the principal that would be
due and payable as of the date of such determination upon acceleration of the
Maturity thereof, and (ii) the principal amount of a Security denominated in a
foreign currency or currency units shall be the U.S. dollar equivalent,
determined on the date of original issuance of such Security, of the principal
amount of such Security or, in the case of an Original Issue Discount Security,
the U.S. dollar equivalent, determined on the date of original issuance of such
Security, of the amount determined as provided in (i) above. (Section 101)
Certain Securities, including those for whose payment or redemption money has
been deposited or set aside in trust for the Holders and those that have been
fully defeased pursuant to Section 1302 of the Indenture, will not be deemed to
be Outstanding. (Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Securities under the Indenture, may consolidate with or merge into, or convey,
transfer or lease its assets substantially as an entirety to, any Person which
is a corporation, partnership or trust organized and validly existing under the
laws of any domestic jurisdiction, provided that any successor Person assumes
the Company's obligations on the Securities and under the Indenture, that after
giving effect to the transaction no Event of Default, and no event which, after
notice or lapse of time, would become an Event of Default, shall have occurred
and be continuing, and that certain other conditions are met. (Section 801)
NOTICES
Notices to Holders of Securities will be given by mail to the addresses of
such Holders as they appear in the Security Register. (Section 106)
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<PAGE> 15
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the registered owner of any Security as the owner thereof (whether or not
such Security shall be overdue and notwithstanding any notice to the contrary)
for the purpose of making payment and for all other purposes. (Section 308)
REPLACEMENT OF SECURITIES
Any mutilated Security will be replaced by the Company at the expense of
the Holder upon surrender of such Security to the Trustee. Securities that
become destroyed, stolen or lost will be replaced by the Company at the expense
of the Holder upon delivery to the Trustee of the Security or evidence of
destruction, loss or theft thereof satisfactory to the Company and the Trustee.
In the case of a destroyed, lost or stolen Security, an indemnity satisfactory
to the Trustee and the Company may be required at the expense of the Holder of
such Security before a replacement Security will be issued. (Section 306)
GOVERNING LAW
The Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 113)
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities to or through underwriters or dealers, and
also may sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933 ("Securities Act"). Any such person who may be deemed to
be an underwriter will be identified, and any such compensation received from
the Company will be described, in the Prospectus Supplement.
The Securities, when first issued, will have no established trading market.
Any underwriters or agents to or through whom Securities are sold by the Company
for public offering and sale may make a market in such Securities, but such
underwriters or agents will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any Securities.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against or contribution toward
certain liabilities, including liabilities under the Securities Act.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases will be subject to the
11
<PAGE> 16
approval of the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of any
jurisdiction to which such purchaser is subject. The underwriters and such
agents will not have any responsibility in respect of the validity or
performance of such contracts.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by
Sullivan & Cromwell, Los Angeles, California and for any underwriters, dealers
or agents by Vinson & Elkins L.L.P., Houston, Texas. Vinson & Elkins L.L.P. also
acts as counsel to the Company and certain of its affiliates in connection with
matters unrelated to the offering of the Securities.
EXPERTS
The consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 have been incorporated
by reference herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds....................... S-2
Description of the Notes.............. S-2
Underwriting.......................... S-4
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratios of Earnings to Fixed Charges... 3
Description of Securities............. 4
Plan of Distribution.................. 11
Validity of Securities................ 12
Experts............................... 12
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
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$150,000,000
PANENERGY CORP
7% NOTES
DUE 2006
---------------------------
PROSPECTUS
SUPPLEMENT
---------------------------
CHASE SECURITIES INC.
BA SECURITIES, INC.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
OCTOBER 9, 1996
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