<PAGE> 1
Filed pursuant to rule 424(b)(2)
Registration No. 33-51115
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 30, 1993)
$125,000,000
K N ENERGY, INC.
7.35% DEBENTURES DUE AUGUST 1, 2026
---------------------
Interest on the 7.35% Debentures due August 1, 2026 (the "Debentures") is
payable semiannually on February 1 and August 1 of each year, commencing
February 1, 1997. The Debentures will not be subject to any sinking fund. The
Debentures will be redeemable, as a whole or in part, at the option of K N
Energy, Inc. (the "Company" or "K N") at any time after August 1, 2006, at a
redemption price equal to the greater of (i) 100% of their principal amount or
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Yield (as defined herein) plus 12.5 basis points, plus in each case
accrued interest to the date of redemption. See "Description of Debentures --
Redemption by the Company." The Debentures will be redeemable at the option of
the registered holders thereof in integral multiples of $1,000 on August 1,
2006, at a redemption price of 100% of their principal amount plus accrued
interest thereon to the redemption date. Notice of such election must be made no
earlier than July 1, 2006 and no later than July 31, 2006, and, once given, such
notice will be irrevocable. See "Description of Debentures -- Redemption by the
Holders."
The Debentures will be represented by one global certificate registered in
the name of the nominee of The Depository Trust Company ("DTC") and such nominee
will be the sole holder of the Debentures. The Debentures will not be issued in
definitive registered form except in limited circumstances. Settlement for the
Debentures will be made in immediately available funds. The Debentures will
trade in DTC's Same-Day Funds Settlement System until maturity, and secondary
market trading activity in the Debentures will therefore settle in immediately
available funds. See "Description of Debentures -- Book-Entry Only System."
The Debentures are an issue of the Company's Securities described in the
accompanying Prospectus (the "Prospectus") to which this Prospectus Supplement
relates.
---------------------
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>
=================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(1)(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture..................... 100% .65% 99.35%
- -------------------------------------------------------------------------------------------------
Total............................. $125,000,000 $812,500 $124,187,500
=================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from July 26, 1996.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deducting estimated expenses of $150,000 payable by the Company.
---------------------
The Debentures are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other 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
delivery of the Debentures will be made through the book-entry facilities of DTC
on or about July 26, 1996.
---------------------
MERRILL LYNCH & CO.
J. P. MORGAN & CO.
SMITH BARNEY INC.
---------------------
The date of this Prospectus Supplement is July 23, 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 DEBENTURES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OPEN MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
INCORPORATION OF ADDITIONAL DOCUMENTS BY REFERENCE
In addition to the documents referred to in the Prospectus under
"Incorporation of Certain Documents by Reference," the Company incorporates
herein by reference the following documents filed by it with the Securities and
Exchange Commission (File No. 1-6446) pursuant to the Securities Exchange Act of
1934: (i) Annual Report on Form 10-K for the fiscal year ended December 31, 1995
and (ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Debentures offered
hereby (after deducting the underwriting discount and expenses payable by the
Company) are estimated at $124 million. The Company intends to apply the net
proceeds to fund capital expenditures, including the costs of acquiring a crude
oil pipeline (the "Pony Express Pipeline") running from Riverton, Wyoming to
Freeman, Missouri, near Kansas City, and converting it to natural gas service.
The Pony Express Pipeline will be subject to regulation by the Federal Energy
Regulatory Commission (the "FERC"); the pipeline is expected to be in service
during the first quarter of 1997; and its initial design capacity is 255,000
million British Thermal Units ("MMBtu") per day. The costs of acquiring and
converting the crude oil pipeline are anticipated to be less than $160 million
and include capital expenditures of $14.9 million to increase capacity of the
Company's interstate pipeline system in Wyoming to move gas from Wyoming to
markets in the midwestern United States. Excluding expenditures associated with
the Pony Express Pipeline, the Company's 1996 capital expenditures budget totals
$81 million, of which approximately $11 million had been funded through March
31, 1996. Pending such use, the net proceeds of the offering will be used to
reduce short-term indebtedness of the Company or to purchase short-term
investments. As of July 23, 1996, the Company had $116 million of short-term
indebtedness outstanding, with an approximate weighted average annual interest
rate of 5.71%.
The Company currently plans to offer to the public, later during its
current fiscal quarter, 1,250,000 shares of its Common Stock (excluding the
Underwriters' over-allotment option to purchase up to 465,000 additional shares
of Common Stock). The Company anticipates applying approximately $8 million of
the net proceeds from the offering of such shares of Common Stock to redeem and
cancel outstanding warrants expiring September 30, 1999 to purchase a total of
545,200 shares of K N's Common Stock. The Company would use the balance of the
net proceeds of such offering in the same manner as the net proceeds from the
sale of the Debentures offered hereby. There can be no assurance that the
Company will complete the proposed offering of its Common Stock. In the event it
does not complete such offering, the Company would not redeem and cancel such
warrants and anticipates it would seek additional debt or equity financing.
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<PAGE> 3
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. The ratios for 1991 and 1992
shown in the Prospectus have been restated to reflect K N's acquisition of
American Oil and Gas Corporation on July 13, 1994, which was accounted for as a
pooling of interests, as if the acquisition had occurred at the beginning of
each of those two years.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, --------------------------------------------------
1996 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
3.73 3.07 1.69 2.41 2.61 2.70
</TABLE>
The ratios of earnings to fixed charges were computed by dividing (a) the
sum of net income (from continuing operations), taxes and fixed charges by (b)
the sum of interest, amortization of debt discount, premium and expense,
preferred stock dividends of a subsidiary, and the estimated interest portion of
rental charges. The allowance for borrowed funds used during construction
recognized for gas utility operations has been added to fixed charges and is
included in earnings.
S-3
<PAGE> 4
THE COMPANY
BACKGROUND AND STRATEGIES FOR GROWTH
The Company is a natural gas and energy products and services provider,
doing business primarily in the Rocky Mountain, Mid-Continent and Texas areas.
In response to regulatory requirements, the Company no longer operates as a
single business unit that purchases, gathers, processes, stores, transports and
sells natural gas at retail and wholesale. Instead, in recent years the Company
has reorganized its operations and now operates its interstate transmission
pipeline and local distribution operations as separate business units.
Substantially all of the gathering and processing facilities and three of the
four storage facilities that were previously part of the Company's
FERC-regulated transmission operation are now operated by wholly-owned
subsidiaries that are not subject to FERC regulation. In addition, the Company
has significantly increased its presence as a gatherer, processor and marketer
through acquisitions.
The Company's objective is to be a world-class provider of integrated
energy services and solutions. The Company seeks to achieve that objective by:
- providing customers with superior service in a market place where they
have a choice of service providers in order to capture value for K N's
shareholders;
- improving facilities utilization and optimizing assets;
- growing the Company through internally generated opportunities and
prudent acquisitions;
- creating profitable alliances with partners that provide new
opportunities for growth and enhance the Company's existing operations;
and
- focusing on opportunities that strengthen the Company's competitive
position within its traditional Rocky Mountain and Mid-Continent regions
and position the Company as a national provider of integrated energy
services and solutions.
RECENT DEVELOPMENTS
On January 30, 1996, the Company entered into a binding letter of intent
with Amoco Pipeline Company to acquire the Pony Express Pipeline, a crude oil
pipeline running from Riverton, Wyoming to Freeman, Missouri, near Kansas City.
The Company plans to convert the pipeline for the purpose of transporting
natural gas from producing regions in Wyoming and Colorado to midwestern and
national consumer markets. Costs to acquire and convert the Pony Express
Pipeline, including the cost of expanding certain segments in Wyoming and a
lateral interconnecting with other interstate pipelines in Colorado (the
so-called "Rockport Lateral"), are anticipated to be less than $160 million. The
Pony Express Pipeline will be subject to FERC regulation and is expected to be
in service during the first quarter of 1997. The initial design capacity of the
Pony Express Pipeline is 255,000 MMBtu per day, and its capacity may be expanded
to over 300,000 MMBtu per day with additional compression. When operational, the
Pony Express Pipeline will improve the Company's access to downstream markets
and create gathering, processing and marketing opportunities. This project also
reflects the Company's ongoing strategy to balance regulated pipeline projects
with the corresponding potential for greater returns from other nonregulated
business segments.
In January 1996, the FERC granted the Company the authority to expand its
pipeline system in Wyoming. This $14.9 million project is designed to increase
the capacity of the system to move gas from Wyoming to markets in the midwestern
United States. The facilities are expected to be in service by November 1996.
This expansion project, along with the Pony Express Pipeline project, will
enable Wyoming natural gas producers to transport their product more efficiently
and to market their natural gas to a broader base of customers.
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<PAGE> 5
GATHERING, PROCESSING AND MARKETING SERVICES
The Company provides natural gas gathering, processing, marketing and
supply services, including transportation and storage, to a variety of
customers. Within this business segment, the Company owns and operates
approximately 9,400 miles of pipeline in seven states and operates 16 gas
processing plants and natural gas storage facilities in West Texas and on the
Texas Gulf Coast. This segment's total processing capacity is approximately 760
million cubic feet of natural gas per day. Further, the Company is one of the 20
largest processors of natural gas liquids ("NGLs") in the nation in terms of
NGLs produced.
Revenues from this business segment's gathering, processing, storage,
transporting and marketing activities are generated in four different ways.
First, the Company performs a merchant function whereby the Company purchases
gas at the wellhead, aggregates such gas with other supplies of gas, and markets
the aggregated gas to consumers. Second, the Company, for a fee, gathers,
transports and may process gas for producers or other third parties who retain
title to the gas. Third, the Company processes gas and markets NGLs. Fourth, the
Company provides gas marketing and supply services including certain storage
services, to various natural gas resellers and end-users either on or connected
to the Company's pipeline systems or on other pipeline facilities. The Company
works with producers and end-users on the pipeline systems to provide a wide
range of services. It arranges the purchase and transportation of producers'
excess or uncommitted gas to end-users, acts as shipper or agent for the
end-users, administers nominations and provides balancing assistance when
needed. Services provided by the Company within the traditional gathering,
processing, transporting and marketing activities have expanded due to increased
demand for gas and the result of FERC Order 636. Some of these services include
variable pricing and variable or firm receipt/delivery of gas. Additionally, the
Company provides storage services and transportation balancing arrangements to
assist customers in meeting peak demand needs and maximizing their use of
capacity on interstate pipelines.
This business segment also engages in price risk management activities
using energy financial instruments. The Company buys and sells natural gas and
crude oil futures positions on the New York Mercantile Exchange and Kansas City
Board of Trade and uses over-the-counter energy swaps and options for the
purpose of reducing adverse price exposure for gas supply costs or specific
market margins. Pursuant to its Board of Directors' approved guidelines, the
Company engages in these activities only as a hedging mechanism against
pre-existing or anticipated physical gas and condensate sales, gas purchases,
system use, and storage in order to protect profit margins, and is prohibited
from engaging in speculative trading.
Facilities used for and operations involving the production and gathering
of natural gas are exempt from FERC jurisdiction pursuant to the Natural Gas
Act. In 1994, as part of its corporate reorganization, K N transferred
substantially all of its gathering facilities to a wholly-owned subsidiary. The
FERC determined that the gathering facilities would be nonjurisdictional after
the transfer, but it reserved the right to reassert jurisdiction if the Company
were found to be operating the facilities in an anti-competitive manner or
contrary to the FERC's open access principles. State regulatory commissions in
several states where the Company provides gathering and processing services have
expressed interest in asserting jurisdiction over gathering activities, and the
Company is closely monitoring developments in this area.
The interstate gas marketing activities of the Company's various marketing
and pipeline subsidiaries are conducted either as unregulated first sales or
pursuant to blanket certificate authority granted by the FERC under the Natural
Gas Act. State regulatory commissions in the states where the Company operates
have authority to regulate the intrastate transportation, sale, delivery and
pricing of natural gas by intrastate pipeline and distribution systems.
One of the Company's business strategies is to become a "Total Energy
Manager" for its customers. In furtherance of this strategy, the Company has
filed for and received from the FERC certification as a Power Marketer. This is
a first step in the process of marketing electricity to wholesale electric
customers as well as developing opportunities for providing power to current
wholesale and local distribution company customers. To gain competitive
advantage in an increasingly competitive gas and NGLs market, the Company is
developing and marketing specific products and services that include
electricity. The Company has initially targeted utilities and municipalities for
these power opportunities as part of a comprehensive energy package, primarily
in areas the Company currently serves.
S-5
<PAGE> 6
RETAIL NATURAL GAS SERVICES
The Company provides retail natural gas services to residential,
commercial, agricultural and industrial customers for space heating, crop
irrigation and drying, and processing of agricultural products. Revenues from
this business segment are derived primarily from regulated natural gas sales and
transportation services.
The Company's retail natural gas business serves over 230,000 retail
customers and 300 communities in Colorado, Kansas, Nebraska and Wyoming through
distribution pipelines totaling approximately 8,400 miles at December 31, 1995.
In addition, within this business segment the Company operates intrastate
natural gas transmission, gathering and storage pipelines totaling approximately
1,500 miles at December 31, 1995. These intrastate pipeline systems serve
industrial customers and much of the Company's retail natural gas business in
Colorado and Wyoming.
The Company's retail operations in Kansas, Nebraska, Wyoming and
northeastern Colorado serve areas that are primarily rural and agriculturally
based. In much of Kansas and Nebraska, the winter heating load is balanced by
irrigation in summer months and grain drying in the fall. The economy in the
western Colorado service territory continues to grow as a result of growth in
mountain resort communities and development of retirement communities.
As a result of a more competitive environment for gas services in the
United States, the Company is looking to be a leader in providing customers a
choice in services. In that regard, the Company filed an application with the
Wyoming Public Service Commission in September 1995 to allow approximately
10,000 residential and commercial customers to choose their energy provider from
a qualified list of suppliers. The Company will continue to provide all other
utility services and will manage the gas supplies for customers in the program.
On February 16, 1996 the Wyoming Public Service Commission issued an order
allowing the Company to bring competition to these approximately 10,000
residential and commercial customers beginning June 1, 1996. This innovative
program is one of the first in the nation that allows essentially all customers
the opportunity to exercise energy choice for natural gas.
The Company's intrastate pipelines, distribution facilities and retail
sales in Colorado, Kansas and Wyoming are under the regulatory authority of each
state's utility commission. In Nebraska, retail gas sales rates for residential
and small commercial customers are regulated by each municipality served.
INTERSTATE TRANSPORTATION AND STORAGE SERVICES
The Company's interstate pipeline system provides transportation and
storage services to affiliates, third-party natural gas distribution utilities
and shippers. As of December 31, 1995, the Company's interstate pipeline system
provided transportation and storage services directly to utilities serving 293
communities, as follows:
<TABLE>
<CAPTION>
SERVED BY COLORADO KANSAS NEBRASKA WYOMING
--------- -------- ------ -------- -------
<S> <C> <C> <C> <C>
Affiliated Entities.............................. 12 52 177 10
Other Utilities.................................. 5 10 27 --
</TABLE>
When the Pony Express Pipeline commences operation, its results will be included
in this business segment.
Effective January 1, 1994, 1,691 miles of gathering lines and the products
extraction plant at Scott City, Kansas, were transferred to a gas gathering
subsidiary of K N as part of the corporate reorganization referred to above. As
of December 31, 1995, the interstate pipeline properties included transmission
and storage lines totaling over 6,000 miles, a storage field and one products
extraction plant.
The change from providing a merchant function to a FERC-regulated
transportation and storage service at cost of service-based rates has
substantially reduced this business segment's operating revenues and gas
purchase expenses. This has not, however, negatively impacted this business
segment's operating income since gas purchases were previously recoverable
dollar-for-dollar from customers as a result of purchased gas adjustment clauses
in the Company's tariffs. However, the transfer of gathering and products
extraction facilities described above has reduced this segment's operating
income. The use of straight fixed-variable rate
S-6
<PAGE> 7
design for FERC-regulated services results in this business segment collecting a
significant portion of its revenues from customers through demand charges
collected evenly throughout the year. Accordingly, fluctuations in operating
revenues resulting from seasonal variations in weather conditions are reduced.
Facilities for the transportation of natural gas in interstate commerce and
for gas storage services in interstate commerce are subject to regulation by the
FERC under the Natural Gas Act and the Natural Gas Policy Act of 1978. Through
agreements with its former wholesale customers, the Company was able to
formulate and implement a plan that resulted in its transition to FERC Order 636
services and avoided the need for any gas supply transition cost recovery
filings with the FERC.
TOM BROWN, INC. INVESTMENT
In 1995 and prior years, K N participated in the development and production
of gas and oil reserves through a wholly-owned subsidiary, K N Production
Company ("KNPC"). Effective December 31, 1995, K N merged the subsidiary into
Tom Brown, Inc., a publicly held independent oil and gas producer ("Tom Brown"),
in return for 1,000,000 shares of $25 stated value 7% convertible preferred
stock and 918,367 shares of common stock of Tom Brown, representing, on a fully
diluted basis, approximately 11.3% of that corporation's outstanding common
stock. As part of the transaction, K N and Tom Brown formed Wildhorse Energy
Partners, L.L.C. ("Wildhorse"), a joint venture limited liability company
55%-owned by K N and 45%-owned by Tom Brown, to provide gathering, processing,
storage, field and marketing services to Rocky Mountain gas and oil producers
and others. Pursuant to this joint venture, Tom Brown has dedicated all of its
uncommitted Rocky Mountain gas production to Wildhorse, and the Company has
contributed gas marketing contracts tied to the KNPC reserve base and storage
contracts associated with a western Colorado storage field. This joint venture
gives the Company access to opportunities relating to Tom Brown's approximately
180 billion cubic feet of natural gas reserves and one million undeveloped
acres.
S-7
<PAGE> 8
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures
(referred to 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. Capitalized terms defined in the
Prospectus have the same meanings when used here.
GENERAL
The maximum aggregate principal amount of Debentures which may be issued is
limited to $125,000,000. The Debentures will mature August 1, 2026. Interest at
the annual rate set forth on the cover page of this Prospectus Supplement is to
accrue from July 26, 1996, and is to be payable semiannually on February 1 and
August 1, commencing February 1, 1997, to the Persons in whose names the
Debentures are registered at the close of business on the preceding January 15
or July 15, respectively. All payments on the Debentures will be made in U.S.
dollars. Principal of, premium, if any, and interest on the Debentures will be
payable, and the Debentures will be transferable, at the office or agency of the
Company maintained for such purposes, which initially will be the corporate
trust office of the Trustee in Chicago, Illinois.
BOOK-ENTRY ONLY SYSTEM
The Debentures will be issuable only as Registered Securities and will be
represented by one certificate (the "Global Security") to be registered in the
name of the nominee of DTC or any successor depository (the "Depository"). The
Depository will maintain the Debentures in denominations of $1,000 and integral
multiples thereof through its book-entry facilities. See "Description of
Securities -- Global Securities" in the accompanying Prospectus for additional
information concerning the Global Security. In accordance with its normal
procedures, the Depository will record the interests of each Depository
participating firm ("Participant") in the Debentures, whether held for its own
account or as a nominee for another Person.
So long as the nominee of the Depository is the registered owner of the
Debentures, such nominee will be considered the sole owner or holder of the
Debentures for all purposes under the Indenture and any applicable laws. Except
as otherwise provided below, a Beneficial Owner, as hereinafter defined, of
interests in the Debentures will not be entitled to receive a physical
certificate representing such ownership interest and will not be considered an
owner or holder of the Debentures under the Indenture. A Beneficial Owner is the
Person who has the right to sell, transfer or otherwise dispose of an interest
in the Debentures and the right to receive the proceeds therefrom, as well as
interest, principal and premium (if any) payable in respect thereof. A
Beneficial Owner's interest in the Debentures will be recorded, in integral
multiples of $1,000, on the records of the Participant that maintains such
Beneficial Owner's account for such purpose. In turn, the Participant's interest
in such Debentures will be recorded, in integral multiples of $1,000, on the
records of the Depository. Therefore, the Beneficial Owner must rely on the
foregoing arrangements to evidence its interest in the Debentures. Beneficial
ownership of the Debentures may be transferred only by compliance with the
procedures of a Beneficial Owner's Participant (e.g., brokerage firm) and the
Depository. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the foregoing ability to transfer beneficial interests in the
Global Security.
All rights of ownership must be exercised through the Depository (including
the exercise of a right of redemption at the holder's option) and the book-entry
system and notices that are to be given to registered owners by the Company or
the Trustee will be given only to the Depository. It is expected that the
Depository will forward the notices to the Participants by its usual procedures,
so that Participants may forward such notices to the Beneficial Owners. Neither
the Company nor the Trustee will have any responsibility or obligation to assure
that any notices are forwarded by the Depository to any Participant or by any
Participant to the Beneficial Owners.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" 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
S-8
<PAGE> 9
Section 17A of the Securities Exchange Act of 1934. DTC was created to hold
securities of Participants and to facilitate the clearance and settlement of
securities transactions among Participants in such securities through electronic
book-entry changes in accounts of Participants, thereby eliminating the need for
physical movement of securities certificates. 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 DTC. Access to DTC'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. Persons who are not Participants may beneficially own
securities held by DTC only through Participants.
Settlement for the Debentures will be made in immediately available funds.
So long as the Debentures are subject to DTC's book-entry system, the Debentures
will trade in DTC's Same-Day Funds Settlement system until maturity, and
therefore DTC will require that secondary trading activity in the Debentures be
settled 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 Debentures.
REDEMPTION BY THE COMPANY
The Debentures will be redeemable, as a whole or in part, at the option of
the Company at any time after August 1, 2006, at a redemption price equal to the
greater of (i) 100% of their principal amount or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
(disregarding the holders' optional redemption right) discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Yield plus 12.5 basis points, plus in each
case accrued interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures. "Independent Investment Banker" means Merrill
Lynch, Pierce, Fenner & Smith Incorporated or, if such firm is unwilling or
unable to select the Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption
date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc. and Smith Barney Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
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<PAGE> 10
Holders of Debentures to be redeemed at the option of the Company will
receive notice thereof by first-class mail at least 30 and not more than 45 days
prior to the date fixed for redemption.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the Debentures or
portions thereof called for redemption.
The Debentures will not be subject to any sinking fund.
REDEMPTION BY THE HOLDERS
Any registered holder of the Debentures will have the right to require the
Company to redeem all or any portion (in integral multiples of $1,000) of such
registered holder's Debentures on August 1, 2006 (the "Put Redemption Date"), at
a redemption price of 100% of their principal amount plus accrued interest
thereon to the Put Redemption Date.
In order to exercise such an election, a holder must deliver to the
Trustee, at its corporate trust office in Chicago, the Debenture as to which an
election is being made, together with a duly signed and completed notice of
election to have such Debenture, or a portion thereof, redeemed by the Company.
Such Debenture and such notice of exercise of a redemption option must be
delivered to the Trustee no earlier than July 1, 2006 and no later than July 31,
2006.
Once made, the exercise of a redemption option by a holder of a Debenture
will be irrevocable. Such option may be exercised with respect to less than the
entire principal amount of a Debenture, but any such redemption in part must be
in integral multiples of $1,000.
So long as the Debentures are represented by the Global Security, the
Depository (or its nominee) will be the holder thereof entitled to exercise a
right to redemption. In order to ensure that the Depository (or its nominee)
will exercise in a timely manner a right to redemption with respect to a
particular Debenture, the Beneficial Owner of an interest in such Debenture must
instruct the broker or other direct or indirect Participant through which it
holds an interest in such Debenture to notify the Depository of its desire to
exercise a right to redemption. Different firms have different cut-off times for
accepting instructions from their customers and, accordingly, each such
Beneficial Owner should consult the broker or other direct or indirect
Participant through which it holds an interest in the Global Security in order
to ascertain the cut-off time by which such an instruction must be given in
order for timely notice to be delivered to the Depository.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of any Debenture for redemption will be determined by
the Company, whose determination will be final and binding.
DEFEASANCE
The Debentures will be subject to defeasance and discharge and to covenant
defeasance as provided under "Description of Securities -- Defeasance" in the
Prospectus.
TRUSTEE
First Trust of Illinois, National Association has succeeded to the
corporate trust business of Bank of America Illinois, formerly known as
Continental Bank, National Association, the original Trustee. First Trust of
Illinois, National Association is, therefore, the successor Trustee under the
Indenture. The corporate trust office of the Trustee is currently located at 400
N. Michigan Avenue, Floor 2S, Chicago, Illinois 60611.
S-10
<PAGE> 11
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") among the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc. and Smith Barney Inc. (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and the
Underwriters have severally agreed to purchase, the respective principal amounts
of the Debentures set forth after their names below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITERS OF
----------- DEBENTURES
------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................... 41,700,000
J.P. Morgan Securities Inc............................................. 41,650,000
Smith Barney Inc....................................................... 41,650,000
------------
Total...................................................... $125,000,000
============
</TABLE>
In the Purchase Agreement, the Underwriters have severally agreed, subject
to the terms and conditions set forth therein, to purchase all the Debentures
offered hereby if any Debentures are purchased. The Underwriters have advised
the Company that they propose initially to offer the Debentures 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 .4% of the principal amount. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of .25% of the principal amount to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The Debentures will not be listed on any securities exchange, and there can
be no assurance that there will be a secondary market for the Debentures. From
time to time the Underwriters may make a market in the Debentures. However, at
this time no determination has been made as to whether or not the Underwriters
will make a market in the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriters may be required to make in respect of
such liabilities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated is also acting as
underwriter in the Concurrent Offering for which it will receive customary
underwriting discounts. J.P. Morgan Securities Inc. is an affiliate of Morgan
Guaranty Trust Company of New York ("Morgan Guaranty"), which is a lender and
agent bank under the Company's primary revolving credit agreement, and in such
capacities Morgan Guaranty receives customary fees and other compensation. In
addition, the Underwriters and their respective affiliates may provide or have
provided banking, advisory and other financial services for the Company in the
ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Debentures will be passed upon for the Company by
Vinson & Elkins L.L.P., Houston, Texas, and for the Underwriters by Shearman &
Sterling, New York, New York. Vinson & Elkins L.L.P. and Shearman & Sterling
will rely as to matters of Kansas law on Polsinelli, White, Vardeman & Shalton,
Kansas City, Missouri.
S-11
<PAGE> 12
PROSPECTUS
K N ENERGY, INC.
$200,000,000
DEBT SECURITIES
---------------------
K N Energy, Inc. ("K N" 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 $200,000,000 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, interest 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 payment of additional amounts 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.
The Securities may be issued in registered form or bearer form with or
without interest coupons attached, or both. In addition, all or a portion of the
Securities of a series may be issuable in temporary or permanent global form.
Securities in bearer form are offered only to non-United States persons and to
offices located outside the United States of certain United States financial
institutions.
---------------------
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 NOVEMBER 30, 1993.
<PAGE> 13
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 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 60621; and New York Regional Office,
13th Floor, Seven World Trade Center, New York, New York 10048. Copies of such
material may be obtained by mail from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain securities of the Company are listed on the New York Stock
Exchange. Reports and other information concerning the Company can be inspected
and copied at the office of such exchange at 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 (the "Securities Act") with respect to the Securities
offered hereby. This Prospectus does not contain all of the information set
forth in such Registration Statement. Reference is made to such Registration
Statement and to the exhibits thereto for further information with respect to
the Company and the Securities offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents filed
by it with the Commission (File No. 1-6446) pursuant to the Exchange Act: Annual
Report on Form 10-K for the fiscal year ended December 31, 1992; Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
1993; and Current Reports on Form 8-K dated February 5, April 5 and September 8,
1993.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act 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.
The Company 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 the office of the Treasurer, K N
Energy, Inc., P.O. Box 281304, Lakewood, Colorado 80228-8304, telephone number
(303) 989-1740.
THE COMPANY
The Company and its subsidiaries constitute principally an integrated
natural gas enterprise with operations in the states of Colorado, Kansas,
Montana, Nebraska, Oklahoma, Texas and Wyoming. As an integrated organization,
the Company and its subsidiaries participate in all phases of the natural gas
business from reserve development and gas gathering to the gathering of field
supplies, transmission to markets and distribution to both industrial and retail
customers. In addition, certain of the Company's subsidiaries engage in gas
marketing and in the development and production of oil and gas for their own
account.
2
<PAGE> 14
K N was incorporated under the laws of the State of Kansas in 1927. The
address of the Company's principal executive offices is 370 Van Gordon Street,
P.O. Box 281304, Lakewood, Colorado 80228-8304, and its telephone number is
(303) 989-1740.
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 described 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>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1993 1992 1991 1990 1989 1988
- ------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
2.16 2.52 2.97 2.70 2.49 2.32
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings are the sum of net income (from
continuing operations), taxes and fixed charges. Fixed charges are interest,
amortization of debt discount and expense, and the estimated interest portion of
rental charges. The allowance for borrowed funds used during construction
recognized for gas utility operations has been added to fixed charges and is
included in earnings. A statement setting forth the computation of the ratios of
earnings to fixed charges is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part.
DESCRIPTION OF SECURITIES
The Securities will be issued under an indenture to be dated as of November
20, 1993 (the "Indenture") between the Company and Continental Bank, National
Association, as Trustee (the "Trustee"), a form of 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 nor does it restrict transactions between the Company and its
affiliates or dividends and other distributions by the Company to its
stockholders. The rights of the Company's creditors, including holders of the
Securities, will be limited to the assets of the Company and will not be an
obligation of 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
3
<PAGE> 15
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, unless the Company is required to secure the Securities pursuant
to the Indenture provisions described below under "Limitations on Liens."
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) whether the Offered Securities are to be issuable as
Registered Securities or Bearer Securities or both, whether any of the Offered
Securities are to be issuable initially in temporary global form and whether any
of the Offered Securities are to be in permanent global form; (4) the price or
prices (expressed as a percentage of the aggregate principal amount thereof) at
which the Offered Securities will be issued; (5) the date or dates on which the
Offered Securities will mature; (6) 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; (7) the
Interest Payment Dates on which any such interest on the Offered Securities will
be payable, the Regular Record Date for any interest payable on any Offered
Securities which are Registered Securities on any Interest Payment Date and the
extent to which, or the manner in which, any interest payable on a temporary
global Offered Security on an Interest Payment Date will be paid; (8) any
mandatory or optional sinking fund or analogous provisions; (9) each office or
agency where, subject to the terms of the Indenture as described below under
"Payment and Paying Agents," the principal of and any premium and interest on
the Offered Securities will be payable and each office or agency where, subject
to the terms of the Indenture as described below under "Form, Exchange,
Registration and Transfer," the Offered Securities may be presented for
registration of transfer or exchange; (10) the 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; (11) the denominations in which any Offered Securities
which are Registered Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof, and the denomination or denominations
in which any Offered Securities which are Bearer Securities will be issuable, if
other than the denomination of $5,000; (12) the currency or currencies
(including composite currencies) in which payment of principal of and any
premium and interest on the Offered Securities is payable; (13) any index used
to determine the amount of payments of principal of and any premium and interest
on the Offered Securities; (14) information with respect to book-entry
procedures, if any; and (15) any other terms of the Offered Securities not
inconsistent with the provisions of the Indenture. (Section 301) Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Securities.
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 issued in bearer
form, offered exclusively to United States Aliens or denominated in other than
United States dollars will be set forth in a Prospectus Supplement relating
thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in an applicable
Prospectus Supplement, Bearer Securities will have interest coupons attached.
(Section 201) The Indenture
4
<PAGE> 16
also will provide that Securities of a series may be issuable in temporary or
permanent global form. (Section 201).
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Securities of any
series are issuable as both Registered Securities and Bearer Securities, at the
option of the Holder, and subject to the terms of the Indenture, Bearer
Securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series will be exchangeable for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. Bearer Securities surrendered in exchange
for Registered Securities between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest and interest accrued as of
such date will not be payable in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the terms of the Indenture. Bearer
Securities will not be issued in exchange for Registered Securities. (Section
305)
Securities may be presented for exchange as provided above, and Registered
Securities may be presented 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 government 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 will serve initially 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, if Securities
of a series are issuable solely as Registered Securities, the Company will be
required to maintain a transfer agent in each Place of Payment for such series
and, if Securities of a series are also issuable as Bearer Securities, the
Company will be required to maintain (in addition to the Security Registrar) a
transfer agent in a Place of Payment for such series located outside the United
States. 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 (A) if Securities of the series are issuable only as Registered
Securities, the day of mailing of the relevant notice of redemption and (B) if
Securities of the series are issuable as Bearer Securities, the day of the first
publication of the relevant notice of redemption or, if Securities of the series
are also issuable as Registered Securities and there is no publication, the
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any Registered Security, or portion thereof, called for redemption,
except the unredeemed portion of any Registered Security being redeemed in part;
or (iii) exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like tenor
which is immediately surrendered for redemption. (Section 305)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time, in the manner indicated in such Prospectus Supplement. (Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
interest on Bearer Securities on any Interest Payment Date will be made only
against surrender to the Paying Agent of the coupon relating to such Interest
Payment Date. (Section 1001) No payment with respect to any Bearer Security will
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to any
5
<PAGE> 17
account maintained with a bank located in the United States. Notwithstanding the
foregoing, payments of principal of and any premium and interest on Bearer
Securities denominated and payable in U.S. dollars will be made at the office of
the Company's Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount thereof in U.S. dollars at all offices
or agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Securities will be
made at the office of such Paying Agent or Paying Agents as the 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 on or before the due date 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
Registered Securities will be made to the Person in whose name such Registered
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
Company, at its principal executive offices in Lakewood, Colorado will act as
its own Paying Agent for payments with respect to Securities which are issuable
solely as Registered Securities and the Company will maintain a Paying Agent
outside the United States for payments with respect to Securities (subject to
limitations described above in the case of Bearer Securities) which are issuable
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Any Paying Agents outside the United States and any other Paying
Agents in the United States 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, if Securities of a series are issuable solely as Registered
Securities, the Company will be required to maintain a Paying Agent in each
Place of Payment for such series and, if Securities of a series are issuable as
Bearer Securities, the Company will be required to maintain (i) a Paying Agent
in the Borough of Manhattan, The City of New York for principal payments with
respect to any Registered Securities of the series (and for payments with
respect to Bearer Securities of the series in the circumstances described above,
but not otherwise), and (ii) a Paying Agent in a Place of Payment located
outside the United States where Securities of such series and any coupons
appertaining thereto may be presented and surrendered for payment. (Section
1002)
All moneys paid by the Company to a Paying Agent for the payment of
principal of and 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 or any coupon will thereafter look
only to the Company for payment thereof. (Section 1003)
GLOBAL SECURITIES
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
depository identified in the Prospectus Supplement relating to such series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. (Section 203) Unless and until it is
exchanged in whole or in part for the individual Securities represented thereby,
a global Security may not be transferred except as a whole by the depository for
such global Security to a nominee of such depository or by a nominee of such
depository to such depository or another nominee of such depository or by the
depository or any nominee to a successor depository or any nominee of such
successor.
The specific terms of the depository arrangement with respect to a series
of Securities and certain limitations and restrictions relating to a series of
Bearer Securities in the form of one or more global Securities will be described
in the Prospectus Supplement relating to such series.
6
<PAGE> 18
CERTAIN DEFINITIONS
"Net Tangible Assets" means the total amount of assets appearing on a
consolidated balance sheet of the Company and its Subsidiaries less, without
duplication: (a) total current liabilities (excluding current maturities of
long-term debt and preferred stock); (b) all reserves for depreciation and other
assets valuation reserves but excluding reserves for deferred federal and state
income taxes; (c) all intangible assets such as goodwill, trademarks, trade
names, patents and unamortized debt discount and expense carried as an asset;
and (d) all appropriate adjustments on account of minority interests of other
Persons holding common stock in any Subsidiary. (Section 101)
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Principal Property" means any natural gas pipeline, natural gas
distribution system, natural gas gathering system or natural gas storage
facility 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.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency. (Section 101)
LIMITATION ON LIENS
The Company will covenant that it will not, nor will it permit any
Subsidiary to, issue, assume or guarantee any debt 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 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; or (e) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
mortgage referred to in any of the foregoing clauses (a)-(d). (Section 1006)
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 1006)
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<PAGE> 19
EVENTS OF DEFAULT
Any one of the following events will constitute 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 will provide 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 will 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 will be 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 1007)
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 will provide 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, maintenance of paying
agencies to hold moneys for payment in trust and payment of additional amounts,
if any, required in consequence of United States withholding taxes imposed on
payments to non-United States persons) 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,
8
<PAGE> 20
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 will provide 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 time 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 less 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.
MEETINGS, 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) change any obligation of the
Company to pay additional amounts, (e) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (f) change the coin or currency in which any Security or any premium or
interest thereon is payable, (g) change the redemption right of any Holder, (h)
impair the right to institute suit for the enforcement of any payment on or
9
<PAGE> 21
with respect to any Security, (i) 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, (j)
reduce the requirements contained in the Indenture for quorum or voting, (k)
change any obligation of the Company to maintain an office or agency in the
places and for the purposes required by the Indenture, or (l) 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 1008) 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 will provide 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 or are
present at a meeting of the Holders of Securities for quorum purposes, (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)
The Indenture will contain provisions for convening meetings of the Holders
of Securities of a series if Securities of that series are issuable as Bearer
Securities. (Section 1401) A meeting may be called at any time by the Trustee,
and also, upon request, by the Company or the Holders of at least 10% in
aggregate principal amount of the Outstanding Securities of such series, in any
such case upon notice given in accordance with "Notices" below. (Section 1402)
Except for any consent which must be given by the Holder of each Outstanding
Security affected thereby, as described above, any resolution presented at a
meeting (or adjourned meeting at which a quorum is present) may be adopted by
the affirmative vote of the Holders of a majority in principal amount of the
Outstanding Securities of that series; provided, however, that any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in aggregate principal
amount of the Outstanding Securities of a series may be adopted at a meeting (or
adjourned meeting duly reconvened at which a quorum is present) by the
affirmative vote of the Holders of such specified percentage in aggregate
principal amount of the Outstanding Securities of that series. Any resolution
passed or decision taken at any meeting of Holders of Securities of any series
duly held in accordance with the Indenture will be binding on all Holders of
Securities of that series and related coupons. The quorum at any meeting, and at
any reconvened meeting, will be Persons holding or representing a majority in
aggregate amount of the Outstanding Securities of a series. (Section 1404)
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)
10
<PAGE> 22
NOTICES
Except as otherwise provided in the Indenture, notices to Holders of Bearer
Securities will be given by publication at least twice in a daily newspaper in
The City of New York and in such other city or cities as may be specified in
such Securities. Notices to Holders of Registered Securities will be given by
mail to the addresses of such Holders as they appear in the Security Register.
(Section 106)
TITLE
Title to any Bearer Securities (including Bearer Securities in permanent
global form) and any coupons appertaining thereto will pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the
bearer of any Bearer Security and the bearer of any coupon and the registered
owner of any Registered Security as the owner thereof (whether or not such
Security or coupon 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 AND COUPONS
Any mutilated Security or a Security with a mutilated coupon appertaining
thereto will be replaced by the Company at the expense of the Holder upon
surrender of such Security to the Trustee. Securities or coupons that became
destroyed, stolen or lost will be replaced by the Company at the expense of the
Holder upon delivery to the Trustee of the Security and coupons or evidence of
destruction, loss or theft thereof satisfactory to the Company and the Trustee;
in the case of any coupon which becomes destroyed, stolen or lost, such coupon
will be replaced by issuance of a new Security in exchange for the Security to
which such coupon appertains. In the case of a destroyed, lost or stolen
Security or coupon, an indemnity satisfactory to the Trustee and the Company may
be required at the expense of the Holder of such Security or coupon before a
replacement Security will be issued. (Section 306)
GOVERNING LAW
The Indenture, the Securities and coupons will be governed by, and
construed in accordance with, the laws of the State of New York. (Section 113)
REGARDING THE TRUSTEE
Continental Bank, National Association, the Trustee under the Indenture, is
also trustee under another indenture under which several issues of the Company's
debt securities are outstanding, and transacts other banking business with the
Company in the normal course of business.
The Indenture will contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 613) The Trustee
will be permitted to engage in certain other transactions; however, if it
acquires any conflicting interest (as described in the Indenture), it must
eliminate such conflict or resign. (Section 608)
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, with 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.
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<PAGE> 23
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. 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 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 Offered Securities will be passed upon for the Company
by Vinson & Elkins L.L.P., Houston, Texas, who may rely on the opinion of the
law offices of Glaves, Irby and Rhoads, Wichita, Kansas, as to matters of Kansas
law, and will be passed upon for any agents, dealers or underwriters by counsel
named in the applicable Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedules, included or
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 31, 1992, which is incorporated by reference herein, have
been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports. Reference is made to such reports, which call attention
to certain changes in accounting principles during the periods reported thereon.
12
<PAGE> 24
===============================================================================
NO DEALER, SALESPERSON 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 OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUSES NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCE 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
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Additional Documents
by Reference........................ S-2
Use of Proceeds....................... S-2
Ratios of Earnings to Fixed Charges... S-3
The Company........................... S-4
Description of Debentures............. S-8
Underwriting.......................... S-11
Validity of Securities................ S-11
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 2
Use of Proceeds....................... 3
Ratios of Earnings to Fixed Charges... 3
Description of Securities............. 3
Plan of Distribution.................. 11
Validity of Securities................ 12
Experts............................... 12
</TABLE>
===============================================================================
===============================================================================
$125,000,000
K N ENERGY, INC.
7.35% DEBENTURES DUE
AUGUST 1, 2026
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
SMITH BARNEY INC.
JULY 23, 1996
===============================================================================
