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Filed pursuant to Rule 424 (b) (3)
Registration Nos. 333-55921
333-55921-01
PROSPECTUS
689,810 Shares
K N Energy, Inc.
COMMON STOCK
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This Prospectus relates to an aggregate of 689,810 shares of common stock,
par value $5.00 per share (the "Common Stock"), of K N Energy, Inc. ("K N" or
the "Company") held by Thermo LLC (the "Selling Stockholder"). See information
under the heading "Selling Stockholder."
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The methods of sale of the Common Stock offered hereby are described under
the heading "Plan of Distribution." The Company will receive none of the
proceeds from such sales. The Company will pay certain expenses incurred in
connection with the offering described in this Prospectus.
The Selling Stockholder and any broker-dealers that participate in the
distribution of the Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"), and any commission or profit on the resale of shares received by
such broker-dealers may be deemed to be underwriting commissions and discounts
under the 1933 Act. Upon the Company's being notified by the Selling Stockholder
that any material arrangement has been entered into with a broker or dealer for
the sale of the shares through a secondary distribution, or a purchase by a
broker or dealer, a supplemented Prospectus will be filed, if required,
disclosing among other things the names of such brokers and dealers, the number
of shares involved, the price at which such shares are being sold and the
commissions paid or the discounts or concessions allowed to such broker-dealers.
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The Common Stock is traded on the New York Stock Exchange (the "NYSE")
under the symbol "KNE."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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October 20, 1998
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and New York Regional Office, Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Website that contains reports,
proxy and information statements and other materials that are filed through the
Commission's Electronic Data Gathering Analysis and Retrieval System. The
Website can be accessed at http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company can be inspected at the
NYSE, 20 Broad Street, New York, New York 10005, on which exchange the Common
Stock is listed.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and the Trust with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus omits
certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company and the securities offered hereby. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-6446) pursuant to the Exchange Act are incorporated by reference and made a
part hereof:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998;
(c) the Company's Current Reports on Form 8-K dated January 5, 1998,
January 16, 1998, as amended by the Current Report on Form 8-K/A dated
February 12, 1998, March 6, 1998, April 24, 1998, June 5, 1998, October 7,
1998 and October 9, 1998; and
(d) the description of the Preferred Share Purchase Rights and the
Common Stock contained in the Company's Registration Statements on Form
8-A.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of this Prospectus and
prior to the termination of the offering of the Securities pursuant hereto,
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such document. Any statement contained herein or in a
document 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
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 will provide without charge to any person, including any
beneficial owner of Securities, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the documents
referred to above which have been incorporated by reference in this Prospectus
(other than
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exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Such requests should be directed to the
office of the Vice President and Treasurer, K N Energy, Inc., 370 Van Gordon
Street, P.O. Box 281304, Lakewood, Colorado 80228-8304, telephone number (303)
989-1740.
K N ENERGY, INC.
K N Energy is an integrated energy services provider whose operations
include the gathering, processing, transportation and storage of natural gas and
the marketing of natural gas and natural gas liquids. The Company also markets
innovative products and services, such as the Simple Choice(sm) menu of products
and call center services designed for residential consumers, utilities, and
small businesses through its 50% owned en-able(sm), LLC affiliate.
K N was incorporated under the laws of the State of Kansas in 1927. The
address of its principal executive offices is 370 Van Gordon Street, P. O. Box
281304, Lakewood, Colorado 80228-8304 and its telephone number is (303)
989-1740.
Additional information concerning the Company and its subsidiaries is
included in the Company reports and other documents incorporated by reference in
this Prospectus. See "Available Information" and "Incorporation of Certain
Documents by Reference."
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of any Common Stock
by the Selling Stockholder.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
K N is currently authorized by its Restated Articles of Incorporation, as
amended (the "K N Charter") to issue 150,000,000 shares of Common Stock, of
which 44,990,698 were outstanding on July 31, 1998; 200,000 shares of Class A
Preferred Stock, no par value ("Class A Preferred Stock"), of which 70,000
shares were outstanding as Class A $5.00 Cumulative Preferred Stock on such
date; and 2,000,000 shares of Class B Preferred Stock, no par value ("Class B
Preferred Stock"), none of which were outstanding on such date.
The Board of Directors of K N is authorized by the K N Charter to provide,
without further stockholder action, for the issuance of one or more series of
Class A Preferred Stock and Class B Preferred Stock. The Board of Directors has
the power to fix various terms with respect to each such series, including
voting power, designations, preferences, dividend rates, conversion and exchange
provisions, redemption provisions and, in the case of the Class B Preferred
Stock, the amounts which holders are entitled to receive upon any liquidation,
dissolution or winding up of K N. Class A Preferred Stock and Class B Preferred
Stock will rank prior to the Common Stock with respect to both dividends and
distribution of assets on liquidation, dissolution or winding up of K N.
In the event of any liquidation, dissolution or winding up of K N, whether
voluntary or involuntary, the holders of shares of Class A Preferred Stock of
each series shall be entitled to receive in full out of the assets of K N the
sum of $100 per share of Class A Preferred Stock, plus any arrearages in
dividends thereon to the date fixed for the payment in liquidation, before any
distribution shall be made to the holders of shares of any stock junior to the
Class A Preferred Stock. K N may, at the option of the Board of Directors,
redeem the whole or any part of the Class A Preferred Stock, or of any series
thereof at any time or from time to time within the period during which such
stock is, according to the K N Charter, or the resolutions of the Board of
Directors providing for the issue thereof, redeemable, by paying the redemption
price thereof, including any arrearages in dividends thereon to the date fixed
for redemption. The Class A $5.00 Cumulative Preferred Stock is redeemable, in
whole or in part, at the option of K N at any time, or from time to time, at the
price of $105 per share plus accrued and unpaid dividends. This series has no
sinking fund requirements. Holders of shares of Class A $5.00 Cumulative
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of K N, cumulative preferential cash dividends at the annual rate of
$5.00 per share prior to the payment of any dividends or other distributions on
(or purchase or redemption of) the Class B Preferred Stock or the Common Stock.
In the event of any liquidation, dissolution or winding up of K N, whether
voluntary or involuntary, the holders of shares of Class B Preferred Stock of
each series shall be entitled to receive, subject to the prior rights of the
holders of shares of Class A Preferred Stock, the full preferential amount fixed
by the K N Charter, or by the resolutions of the Board of Directors providing
for the issue thereof, including any arrearages in dividends thereon to the date
fixed for the payment in liquidation, before any distribution shall be made to
the holders of shares of any stock junior to the Class B Preferred Stock.
Dividends may not be declared or paid or set apart for payment on any series of
Class B Preferred Stock, unless there shall be no arrearages in dividends on any
series of Class A Preferred Stock entitled to cumulative dividends for any past
dividend period and dividends in full for the current dividend period have been
paid or declared or set aside for payment on all Class A Preferred Stock.
In addition, the holders of the Class A Preferred Stock then outstanding
have the right to vote separately as a class with respect to (i) certain
amendments to the K N Charter or the By-Laws of K N which adversely affect the
voting powers, rights or preferences of the holders of shares of Class A
Preferred Stock, (ii) the creation of any class of stock or any security
convertible into or exchangeable for or evidencing the right to purchase any
stock ranking prior to or on a parity with, either as to dividends or upon
liquidation, the Class A Preferred Stock, or (iii) certain mergers or
consolidations of K N with or into any other corporation. For such actions to be
taken by K N, including increasing the authorized amount of any class of stock
ranking prior to the Class A Preferred Stock, the affirmative vote of the
holders of at least 50% of the shares of the Class A Preferred Stock then
outstanding would be required. The affirmative vote of at least 50% of the
shares of any series of Class A Preferred Stock then outstanding is required for
K N to amend the K N Charter or
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resolutions of the Board of Directors of K N providing for the issue of such
series of Class A Preferred Stock so as to affect adversely the powers,
preferences or rights of holders of Class A Preferred Stock of such series. The
holders of Class B Preferred Stock then outstanding also have the right to a
separate vote regarding (a) the events described in the first sentence of this
paragraph with regard to such Class B Preferred Stock, requiring the affirmative
vote of at least 50% of the shares of Class B Preferred Stock then outstanding,
and (b) amendments to the K N Charter, or to resolutions of K N's Board of
Directors providing for the issue of any series of Class B Preferred Stock so as
to affect adversely the powers, preferences or rights of the holders of such
series, requiring the affirmative vote of at least 50% of the shares of such
series then outstanding.
If dividends are in arrears on the shares of any series of Class A
Preferred Stock to which the following provisions are made applicable pursuant
to the K N Charter or resolutions of K N's Board of Directors providing for the
issue of any such series (i) in an aggregate amount equal to three but less than
six full quarterly dividends, then the holders of the shares of all such series
of Class A Preferred Stock have the exclusive right, voting separately as a
class and without regard to series, to elect directors constituting one-third of
K N's Board of Directors or (ii) in an aggregate amount equal to six full
quarterly dividends, then such holders have the exclusive right, voting
separately as a class and without regard to series, to elect directors
constituting one-half of K N's Board of Directors plus one additional director,
in each case until all arrearages in dividends and dividends in full for the
current quarterly period have been paid on or declared and set aside for payment
on the shares of such series. These provisions are applicable to the Class A
$5.00 Cumulative Preferred Stock. The holders of any outstanding Class B
Preferred Stock would have the right to elect directors of K N similar to the
Class A $5.00 Cumulative Preferred Stock in the event of nondeclaration of
dividends, for the periods described above, on the Class B Preferred Stock if
the holders of the Class A $5.00 Cumulative Preferred Stock are not then
entitled to elect directors as described above.
All outstanding shares of Common Stock are, and any shares of Common Stock
newly issued under any Prospectus Supplement will be, validly issued, fully paid
and nonassessable. Holders of K N Common Stock and Class A $5.00 Cumulative
Preferred Stock are entitled to one vote for each share on all matters voted on
by stockholders. Holders of Common Stock, Class A Preferred Stock and Class B
Preferred Stock have no preemptive rights to subscribe for or purchase any
additional securities issued by K N. Subject to the preferential rights of the
holders of the Class A Preferred Stock and Class B Preferred Stock, the holders
of Common Stock are entitled to receive any dividends which may be declared by
the Board of Directors out of funds legally available therefor and to share pro
rata in the net assets of K N upon liquidation, dissolution or winding up.
Shares of Common Stock have no cumulative voting rights or redemption, sinking
fund or conversion privileges.
ANTI-TAKEOVER MATTERS
Charter and Bylaws. Certain provisions of the K N Charter and the By-Laws
of K N could have the effect of preventing a change in control of K N in certain
situations. These provisions generally provide for (a) the classification of the
Board of Directors of K N into three classes of as nearly an equal number as
possible, having staggered terms of three years each; (b) the removal of
directors only for cause or by unanimous vote of the remaining members of the
Board of Directors; (c) the filling of any vacancy on the Board of Directors by
the remaining directors then in office; (d) the limitation of the number of
directors to a minimum of nine and a maximum of 15, with the exact number to be
determined by the Board of Directors; (e) increasing the stockholder vote
required to amend, repeal or adopt any provision inconsistent with the foregoing
provisions under (a), (b) and (d) above to two-thirds of the outstanding voting
securities of K N; (f) the requirement that certain business combinations or
transactions involving K N and any beneficial owner of more than 5% of the
outstanding voting securities of K N be approved by holders of at least
two-thirds of the outstanding voting securities of K N, including those held by
such beneficial owner, unless the business combination or transaction is (I)
approved by the Board of Directors before such beneficial owner became a holder
of more than 5% of K N's outstanding voting securities or (II) approved by
sufficient members of the Board of Directors to constitute a majority of the
members of the full Board of Directors in office prior to the time such
beneficial owner became a holder of more than 5% of K N's voting securities, or
(III) with an entity of which a majority of the outstanding shares of voting
securities is owned by K N and its subsidiaries;
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(g) increasing the stockholder vote required to amend, repeal or adopt any
provision inconsistent with the foregoing provision under (f) above to
two-thirds or more of the then outstanding shares of voting securities of K N;
(h) the requirement that certain business combinations or transactions involving
K N and any beneficial owner of 10% or more of the outstanding voting securities
of K N be approved by holders of at least 80% of the outstanding voting
securities of K N, including those held by such beneficial owner, unless (I) the
business combination or transaction is approved by three-fourths of the Board of
Directors then in office who are not associated with or related to anyone who
beneficially owns, and do not themselves own, 10% or more of K N's voting
securities or (II) certain conditions relating generally to the fairness of the
price to be received by stockholders of K N in such business combination or
transaction are satisfied; (i) increasing the stockholder vote required to
amend, repeal or adopt any provision inconsistent with the foregoing provision
under (h) above to 80% or more of the outstanding voting securities of K N
unless approved by an affirmative vote of three-fourths of the Board of
Directors then in office who are not associated with or related to anyone who
beneficially owns, and do not themselves own, 10% or more of K N's voting
securities; (j) certain procedural requirements for stockholder nominations to
the Board of Directors; and (k) the requirement that special meetings of
stockholders may only be called by stockholders owning 51% or more of the
outstanding voting securities of K N, by a majority of the Board of Directors,
the Chairman of the Board of Directors or the President of K N.
Shareholder Rights Plan. On August 17, 1995, the Board of Directors of K N
declared a dividend of one preferred share purchase right (a "Right") with
respect to each outstanding share of Common Stock held of record on September
15, 1995 or issued thereafter and prior to the date the Rights become
exercisable. Until the Rights become exercisable, they will be evidenced by
certificates for shares of Common Stock and will automatically trade with the
Common Stock. If and when the Rights become exercisable, Rights certificates
will be distributed and the Rights will become separately tradable. The full
terms of the Rights are set forth in the Rights Agreement, dated as of August
21, 1995 (the "Rights Agreement"), between the Company and The Bank of New York,
as Rights Agent. A copy of the Rights Agreement is filed as an exhibit to the
Registration Statement.
Each Right entitles the holder thereof to purchase from the Company one
one-thousandth of a share of Class B Junior Participating Series Preferred
Stock, without par value (the "Preferred Shares"), for a price of $80 per one
onethousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The Rights become exercisable upon the earlier of (i) ten business
days following a public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 20% or more of the
outstanding voting shares of the Company or (ii) ten business days following the
commencement or announcement of an intention to commence a tender or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 20% or more of the outstanding voting shares of the Company.
The Rights will expire on the later of September 15, 2005 or the third
anniversary of the date on which the Rights became exercisable (the "Final
Expiration Date"), unless the Final Expiration Date is extended or the Rights
are earlier redeemed or exchanged by the Company as described below.
If a person or group were to acquire 20% or more of the voting shares of
the Company, each Right then outstanding (other than Rights beneficially owned
by the acquiring person, which would become null and void) would become a right
to buy that number of shares of Common Stock (or, under certain circumstances,
the equivalent number of one onethousandths of a Preferred Share) that at the
time of such acquisition would have a market value of two times the Purchase
Price of the Right. If the Company were acquired in a merger or other business
combination transaction or more than 50% of its consolidated assets or earning
power were sold, proper provision will be made so that holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
At any time after the acquisition by a person or group of beneficial
ownership of 20% or more of the outstanding voting shares of the Company and
before the acquisition by a person or group of 50% or more of the outstanding
voting shares of the Company, the Board of Directors may, at its option, issue
shares of Common Stock (or Preferred Shares) in mandatory redemption of, and in
exchange for, all or part of the then
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outstanding and exercisable Rights (other than Rights owned by such person or
group, which would become null and void) at an exchange ratio of one share of
Common Stock (or one one-thousandth of a Preferred Share) for each Right,
subject to adjustment. In addition, the Company is entitled to redeem all of the
outstanding Rights at a price of $0.01 per Right at any time prior to the first
public announcement that a person or group has become the beneficial owner of
20% or more of the outstanding voting shares of the Company.
Until a Right is exercised, the holder thereof, as such, has no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
KANSAS BUSINESS COMBINATION ACT
K N is subject to Sections 17-12,100 et seq. of the Kansas Statutes
Annotated (the "K.S.A."), which imposes a three-year moratorium on business
combinations between a Kansas corporation and an "interested stockholder" (in
general, a stockholder owning 15% or more of a corporation's outstanding voting
stock) or an affiliate or associate thereof unless (a) prior to an interested
stockholder becoming such, the board of directors of the corporation has
approved either the business combination or the transaction by which the
interested stockholder became such; (b) upon consummation of the transaction
resulting in an interested stockholder becoming such, the interested stockholder
owns 85% of the voting stock that was outstanding at the time the transaction
commenced (excluding, from the calculation of outstanding shares, shares
beneficially owned by management, directors and certain employees stock plans);
or (c) on or after the date an interested stockholder becomes such, the business
combination is approved by (i) the Board of Directors and (ii) the affirmative
vote of the holders of at least 66 2/3% of the outstanding shares (other than
those shares beneficially owned by the interested stockholder) at a meeting of
stockholders.
KANSAS CONTROL SHARE ACQUISITIONS ACT
K N is also subject to Sections 17-1286 et seq. of the K.S.A. (the "Kansas
Control Share Acquisitions Act"), which applies to public corporations
incorporated in Kansas that have certain other connections with the state. The
Kansas Control Share Acquisitions Act relates principally to the acquisition of
"control shares" in such a corporation. Under the Kansas Control Share
Acquisitions Act, a control share acquisition is one that, except for the
operation of the Act, would raise the acquiring person's voting power in the
election of directors of the subject corporation to or above any of three
thresholds: one-fifth or more but less than one-third of all voting power;
one-third or more but less than a majority of all voting power; and at least a
majority of all voting power. Whenever a control share acquisition occurs, the
acquiring person has no voting rights with respect to those shares unless both a
majority of all outstanding shares and a majority of all such shares excluding
all "interested shares" (in general, shares beneficially controlled by the
acquiring person or any officer or inside director of the subject corporation)
approve the acquisition. If the control shares are accorded voting rights, then
dissenters' rights are available under the Kansas Control Share Acquisitions Act
to stockholders who did not vote in favor of the control share acquisition and
who comply with certain prescribed procedures. If the stockholders vote not to
accord voting rights to the control shares, however, then the issuing
corporation has a 60-day option to redeem all such shares at market value.
OTHER MATTERS
First Chicago Trust Company of New York serves as registrar and transfer
agent for the Common Stock and for the Class A $5.00 Cumulative Preferred Stock.
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SELLING STOCKHOLDER
The Selling Stockholder is a Colorado limited liability company owned
directly or indirectly by James Monroe III, individually or in his capacity as
the trustee of a family trust, Curtis R. Jensen and Paul R. Steinway
(collectively, the "Thermo Principals"). The Selling Stockholder's principal
office is located in Denver, Colorado.
As of April 20, 1998, K N indirectly acquired from the Selling Stockholder
and the Thermo Principals (a) an operating interest in certain cogeneration
facilities (the "Cogeneration Interests"), (b) revenue streams and contractual
rights related to cogeneration facilities held or previously held, directly or
indirectly, by the Thermo Principals (the "Revenue Interests"), (c) the right to
acquire, upon the satisfaction of certain conditions, ownership interests in a
cogeneration facility (the "Contingent Cogeneration Purchase Right" and,
together with the Cogeneration Interests and the Revenue Interests, the
"Contributed Assets"), (d) certain assets relating to cogeneration operations
and gas marketing (the "Marketing Assets") and (e) the right to acquire, upon
the satisfaction of certain conditions, ownership interests in entities for use
in the management of cogeneration operations and gas marketing (the "Contingent
Marketing Interests" and, together with the Marketing Assets, the "Purchased
Assets"). Before its acquisition of the Contributed Assets and the Purchased
Assets, K N had no material relationship with the Selling Stockholder or the
Thermo Principals.
The Contributed Assets were acquired pursuant to a Contribution Agreement
whereby the Selling Stockholder contributed the Contributed Assets (the
"Contribution") to KN Thermo, LLC ("KN Thermo"), an entity initially owned 99%
by KN Cogeneration, a wholly-owned subsidiary of K N ("KNC"), and 1% by the
Selling Stockholder. In consideration for the Contribution, the Selling
Stockholder received certain instruments (the "Deferred Payment Instruments")
payable at certain future dates in Common Stock or cash that had been
contributed by KNC to KN Thermo in exchange for its interest in KN Thermo.
The first Deferred Payment Instrument provides for the payment of
approximately $34.5 million in Common Stock (the "Initial Contribution
Payment"), upon the effective date of the Registration Statement of which this
Prospectus is a part or within 10 days of such effective date if requested by
the Thermo Principals (the "Initial Payment Date"). The Initial Contribution
Payment consists of 689,810 shares of Common Stock.
The Purchased Assets were acquired pursuant to a Purchase Agreement,
whereby certain of the Thermo Principals and their wholly-owned affiliates sold
the Purchased Assets to KN Thermo Acquisition, Inc., a wholly-owned subsidiary
of KN ("KNTA"). In consideration for the Purchased Assets, the Selling
Stockholder received from KNTA an instrument (the "Deferred Purchase Instrument"
and, together with the Deferred Payment Instrument, the "Payment Instruments")
in the amount of approximately $2 million (the "Purchase Payment" and together
with the Initial Contribution Payment, the "Initial Payment"), of which
approximately $917,161.69 will be payable in the form of Common Stock on the
Initial Payment Date (the date of each payment under the Payment Instruments
being hereinafter referred to as a "Payment Date"). The Purchase Payment
consists of 18,459 shares of Common Stock.
All required payments of Common Stock under the Payment Instruments must be
in the form of shares covered by an effective registration statement for a
period of the shorter of 120 days or until all such shares are sold (with
respect to each payment of Common Stock an "Initial Registered Period"). In
addition, the Selling Stockholder will have piggyback rights and one demand
registration right for a period of 240 days immediately succeeding each Initial
Registered Period with respect to the shares of Common Stock paid on the
preceding Payment Date (the "Subsequent Registered Period" and, together with
the Initial Registered Period, the "Covered Registered Period").
The number of shares paid pursuant to the Payment Instruments will be based
on the average daily closing price of the Common Stock on the NYSE for the five
trading days immediately preceding each Payment Date, unless otherwise agreed
upon by the parties.
The following table sets forth, based on the Common Stock to be payable by
KNC and KNTA to the Selling Stockholder under the Initial Payment, the number of
shares of Common Stock owned by the Selling
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Stockholder, the number of shares being offered for sale by it, the number of
such shares to be owned by the Selling Stockholder after such sale and the
percentage of ownership of the outstanding shares of Common Stock as of October
19, 1998, represented by the holdings of the Selling Stockholder after such
sale:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TO CLASS TO BE
SHARES SHARES BE OWNED OWNED
OWNED* BEING SOLD* AFTER SALE* AFTER SALE*
- ------ ----------- ----------- -----------
<S> <C> <C> <C>
689,810 689,810 -- **
</TABLE>
- ---------------
* Excludes shares of Common Stock to be held by the Selling Stockholder upon
future payments on the Payment Instruments.
** Less than one percent.
The Prospectus Supplement relating to any Securities being offered by the
Selling Stockholder sets forth the number of shares of Common Stock being
offered for its account as well as the number of such shares and the percentage
of the outstanding Common Stock to be owned by the Selling Stockholder after
completion of the offering.
KNC has agreed to pay for registration fees as well as selling expenses
with respect to the resale of shares of Common Stock during the Covered
Registered Period, including brokers' fees up to an amount equal to 0.167% of
the aggregate consideration per share received by the Selling Stockholder upon
resale.
This Prospectus is not the exclusive means for resale of any Common Stock
of the Selling Stockholder registered hereunder. For example, the Selling
Stockholder may also sell Common Stock owned by it pursuant to Rule 144 under
the Securities Act. There can be no assurance that the Selling Stockholder will
sell any or all of its Common Stock offered hereunder.
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PLAN OF DISTRIBUTION
GENERAL
The Company has been advised that the distribution of the Common Stock by
the Selling Stockholder may be effected from time to time in one or more
transactions (which may involve block transactions) (i) on the NYSE in
transactions that may include special offerings and exchange distributions
pursuant to and in accordance with the rules of such exchanges, (ii) in the
over-the-counter market, or (iii) in transactions otherwise than on such
exchanges or in the over-the-counter market, or in a combination of any such
transactions. Such transactions may be effected by the Selling Stockholder at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices. The Selling
Stockholder may effect such transactions by selling the Common Stock to or
through broker-dealers and such broker-dealers will receive compensation in the
form of discounts or commissions from the Selling Stockholder and may receive
commissions from the purchasers of the Common Stock for whom they may act as
agent (which discounts or commissions from the Selling Stockholder or such
purchasers will not exceed those customary in the type of transactions
involved).
Any broker-dealers that participate with the Selling Stockholder in the
distribution of the Common Stock, may be deemed to be "underwriters" within the
meaning of the 1933 Act, and any commissions or discounts received by such
broker-dealers and any profit on the resale of the Common Stock by such broker-
dealers might be deemed to be underwriting discounts and commissions under such
act.
Upon the Company's being notified by the Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the sale
of the Common Stock through a secondary distribution, or a purchase by a broker
or dealer, a supplemented Prospectus will be filed, if required, pursuant to
Rule 424(b) under the 1933 Act, disclosing (a) the names of such broker-dealers,
(b) the number of shares involved, (c) the price at which such shares are being
sold, (d) the commission paid or the discounts or concessions allowed to such
broker-dealers, (e) where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this Prospectus, as supplemented, and (f) other facts material to the
transaction.
Under agreements which may be entered into by the Company or the Selling
Stockholder, underwriters, dealers and agents who participate in the
distribution of Common Stock may be entitled to indemnification by the Company
or the Selling Stockholder, as the case may be, against or contribution toward
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock will be passed upon Martha B. Wyrsch,
General Counsel of the Company, and will be passed upon for any agents, dealers
or underwriters by counsel named in the applicable Prospectus Supplement, if
any. As of August 31, 1998, Ms. Wyrsch owned 3,253 shares of Common Stock, 4,200
shares of restricted Common Stock and held options to purchase an additional
90,549 shares of Common Stock. Certain legal matters will be passed upon for the
Selling Stockholder by counsel named in the applicable Prospectus Supplement, if
any.
EXPERTS
The consolidated financial statements of K N Energy, Inc. and subsidiaries
as of December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, incorporated in this Prospectus and elsewhere in the
Registration Statement by reference to its Annual Report on Form 10-K for the
year ended December 31, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
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The consolidated financial statements of MidCon Corp. and subsidiaries as
of December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, incorporated in this Prospectus and elsewhere in the
Registration Statement by reference to the Current Report on Form 8-K/A filed
with the Commission on February 12, 1998, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
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