Filed Pursuant to Rule 424(b)(5)
Registration No. 33-46605
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 15, 1997
$45,000,000
MDU RESOURCES GROUP, INC.
SECURED MEDIUM-TERM NOTES, SERIES A
(A SERIES OF FIRST MORTGAGE BONDS)
DUE NOT LESS THAN 9 MONTHS FROM DATE OF ISSUE
MDU Resources Group, Inc. (the "Company") may offer from
time to time its Secured Medium-Term Notes, Series A (the
"Notes"), due not less than 9 months from the date of issue, in
an aggregate principal amount not to exceed $45,000,000.
Each Note will bear interest at the fixed or variable rate
or rates per annum set forth in the applicable supplement
("Pricing Supplement") accompanying this Prospectus Supplement,
and interest will be payable semiannually each April 1 and
October 1 and at maturity. See "Description of Notes."
The issue price and Maturity Date of each Note will be
established by the Company at the time of issuance of such Note
and will be set forth in the applicable Pricing Supplement. The
Notes will not be subject to any sinking fund unless otherwise
specified in the applicable Pricing Supplement and, unless an
Initial Redemption Date is specified in the applicable Pricing
Supplement, the Notes will not be redeemable prior to their
Maturity Date. If an Initial Redemption Date is so specified,
the Notes will be redeemable at the option of the Company at any
time after such date as described therein. See "Description of
Notes."
The Notes will be initially registered in the name of Cede &
Co. as registered owner and nominee for The Depository Trust
Company ("DTC"). DTC will act as a securities depository for the
Notes of each issue. Unless otherwise specified in the
applicable Pricing Supplement, sales of Notes will be made only
in book-entry form in denominations of $10,000 or any amount in
excess thereof that is an integral multiple of $10,000 and,
except under the limited circumstances described herein,
beneficial owners of interests in the Notes will not receive
certificates representing their interests in the Notes. Payments
of principal, premium, if any, and interest will be made through
DTC and its Participants and disbursements of such payments to
purchasers will be the responsibility of such Participants. See
"Description of Notes -Book-Entry System."
--------------------
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, ANY PRICING SUPPLEMENT THERETO OR
THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
<PAGE>
AGENTS'
DISCOUNTS
PRICE TO AND COMMISSIONS PROCEEDS TO THE
PUBLIC (1) (2) COMPANY (2)(3)
-------- --------------- ---------------
Per Note . 100% .125%-.875% 99.875%-99.125%
$56,250- $44,943,750-
Total . . . $45,000,000 $393,750 $44,606,250
-----------
(1) The Notes will be issued at 100% of their principal amount
unless otherwise specified in the applicable Pricing
Supplement.
(2) The Company will pay to Goldman, Sachs & Co., Lehman
Brothers, Lehman Brothers Inc., and Salomon Brothers Inc
(the "Agents"), a commission of from .125% to .875%,
depending on the Maturity Date, of the principal amount of
any Notes sold through them as Agents (or sold to such
Agents as principal in circumstances in which no other
discount is agreed). The Company has agreed to indemnify the
Agents against certain liabilities, including liabilities
under the Securities Act of 1933.
(3) Before deducting estimated expenses of $337,500 payable by
the Company, including expenses of the Agents to be
reimbursed by the Company.
--------------------
Offers to purchase Notes are being solicited, on a
reasonable best efforts basis, from time to time by the Agents on
behalf of the Company. Notes may be sold to the Agents on their
own behalf at negotiated discounts for resale to investors or
other purchasers. The Company reserves the right to sell Notes
directly on its own behalf. The Company also reserves the right
to withdraw, cancel or modify the offering contemplated hereby
without notice. No termination date for the offering of the Notes
has been established. The Company or the Agents may reject any
offer to purchase Notes, in whole or in part. See "Supplemental
Plan of Distribution."
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SALOMON BROTHERS INC
--------------------
The date of this Prospectus Supplement is September 15, 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF THE NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND
SHORT-COVERING TRANSACTIONS IN SUCH NOTES, AND THE IMPOSITION OF
A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION."
DESCRIPTION OF NOTES
The information herein concerning the Notes supplements and,
to the extent inconsistent therewith, replaces the statements
under "Description of Notes" in the accompanying Prospectus, to
which statements reference is hereby made. The Notes will be a
series of First Mortgage Bonds as defined in the Prospectus. The
following description will apply to the Notes unless otherwise
specified in the applicable Pricing Supplement.
GENERAL
The Notes are to be issued as a series of First Mortgage
Bonds under and secured by an Indenture of Mortgage, dated as of
May 1, 1939, from the Company to The New York Trust Company (The
Bank of New York, successor Corporate Trustee) and A.C. Downing
(W.T. Cunningham, successor Individual Trustee), as Trustees, and
indentures supplemental thereto, including the Forty-fifth
Supplemental Indenture, which contains a Restatement of
Indenture, relating to the Notes, all of which are collectively
referred to as the "Indenture." The Notes will be equally and
ratably secured with all other First Mortgage Bonds issued or to
be issued under the Indenture. For further information concerning
the security for the Notes, see "Description of Notes" in the
accompanying Prospectus. The Notes are limited to an aggregate
principal amount of $45,000,000.
The Notes will be offered on a continuing basis. Unless
previously redeemed, a Note will mature on the date ("Maturity
Date") not less than 9 months from the date of issue specified on
the face thereof and in the applicable Pricing Supplement. Prior
to maturity, the Notes may be subject to optional redemption by
the Company if so provided in the applicable Pricing Supplement
at the price or prices set forth therein. Each Note will bear
interest at the fixed or variable rate or rates per annum
specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the authorized denominations of the Notes will be
$10,000 or any larger amount that is an integral multiple
thereof. The Pricing Supplement relating to each Note will
describe the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Note will be issued; the
date on which such Note will be issued (the "Original Issue
Date"); any sinking fund for such Note prior to its Maturity
Date; and any other terms of such Note not inconsistent with the
provisions of the Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing
Supplement, each Note will bear interest from its Original Issue
Date or from the most recent Interest Payment Date, as defined
below, to which interest on such Note has been paid or duly
provided for at the fixed or variable rate or rates per annum
stated therein until the principal amount thereof is paid or made
available for payment. Interest on each Note will be payable
semiannually each April 1 and October 1 (each an "Interest
Payment Date") and at maturity or upon earlier redemption;
provided, however, that, unless otherwise specified in the
applicable Pricing Supplement, the first payment of interest on
any Note originally issued between a Record Date (March 15 for
interest payable April 1, and September 15 for interest payable
October 1) and an Interest Payment Date will be made on the next
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succeeding Interest Payment Date to the registered holder as of
the Record Date in respect of such succeeding Interest Payment
Date. Each payment of interest in respect of an Interest
Payment Date will include interest accrued to but excluding
such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
REDEMPTION AND REPURCHASE
The Notes will not be subject to any sinking fund, unless
otherwise specified in the applicable Pricing Supplement, and,
unless an Initial Redemption Date (as defined in the Indenture)
is specified in the applicable Pricing Supplement, will not be
redeemable prior to their Maturity Date. If an Initial Redemption
Date is so specified with respect to any Note, the applicable
Pricing Supplement will also specify one or more redemption
prices (expressed as a percentage of the principal amount of such
Note) ("Redemption Prices") and the redemption period or periods
("Redemption Periods") during which such Redemption Prices shall
apply. Unless otherwise specified in the Pricing Supplement, any
such Note shall be redeemable at the option of the Company at any
time on or after such specified Initial Redemption Date at the
specified Redemption Price applicable to the Redemption Period
during which such Note is to be redeemed, together with interest
accrued to the redemption date.
BOOK-ENTRY SYSTEM
DTC will act as securities depository for the Notes of each
issue. Except under the circumstances described below, the Notes
will be issued in the form of one or more fully registered notes
that will be deposited with, or on behalf of, DTC or such other
depository as may be subsequently designated ("Depository"), and
registered in the name of Cede & Co. (DTC's partnership nominee)
or such other Depository, or its nominee, as may be subsequently
designated.
So long as the Depository, or its nominee, is the registered
owner of the Notes, such Depository or such nominee, as the case
may be, will be considered the owner of such Notes for all
purposes under the Indenture, including notices and voting.
Payments of principal of, and premium, if any, and interest on,
the Notes will be made to the Depository or its nominee, as the
case may be, as the registered owner of such Notes. Except as
set forth below, owners of beneficial interests in the Notes will
not be entitled to have any individual Notes registered in their
names, will not receive or be entitled to receive physical
delivery of any such Notes, and will not be considered the owners
of the Notes under the Indenture. Accordingly, each person
holding a beneficial interest in a Note must rely on the
procedures of the Depository and, if such person is not a Direct
Participant (as hereinafter defined), on procedures of the Direct
Participant through which such person holds its interest, to
exercise any of the rights of the registered owner of such Note.
If the Depository is at any time unwilling or unable to
continue as depository and a successor depository is not
appointed by the Company, individual registered Notes will be
issued in exchange for the Notes held by the Depository. In
addition, the Company, at any time and in its sole discretion,
may determine not to have the Notes held by the Depository and,
in such event, individual registered Notes will be issued in
exchange for the Notes held by the Depository. In any such
instance, an owner of a beneficial interest in the Notes will be
entitled to physical delivery of individual Notes equal in
principal amount to such beneficial interest and to have such
Notes registered in its name. Individual Notes so issued will be
issued as registered Notes in denominations of $10,000 or any
amount in excess thereof that is an integral multiple of $10,000,
unless otherwise specified in the applicable Pricing Supplement.
The following is based solely on information furnished by
DTC:
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
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pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations ("Direct Participants"). DTC is owned by a number
of its Direct Participants and by The New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of the Notes under the DTC system must be made by
or through Direct Participants, which will receive a credit for
the Notes on DTC's records. The ownership interest of each
actual purchaser of each Note ("Beneficial Owner") is in turn to
be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC
of their purchase, but Beneficial Owners are expected to receive
written confirmation providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in the Notes, except in the event that use of the book-
entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by
Participants with DTC are registered in the name of Cede & Co.
The deposit of Notes with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the Notes; DTC's
records reflect only the identity of the Direct Participants to
whose accounts such Notes are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
If the Notes of any issue are redeemable prior to their
maturity date, redemption notices shall be sent to Cede & Co. If
less than all of the Notes of any issue are being redeemed, DTC's
practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect
to the Notes. Under its usual procedures, DTC mails an Omnibus
Proxy to the Company as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Notes
are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on
the date on which interest is payable in accordance with their
respective holdings shown on DTC's records, unless DTC has reason
to believe that it will not receive payment on such payment date.
Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of
such Participant and not of DTC, the Trustees or the Company,
subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium, if
any, and interest to DTC is the responsibility of the Company
or the Corporate Trustee (with funds provided by the Company).
Disbursement of such payments to Direct Participants
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shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing services as securities
depository with respect to the Notes at any time by giving
reasonable notice to the Company and the Trustees.
Neither the Company nor the Trustees will have any
responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests
in the Notes or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the
Distribution Agreement, dated April 9, 1992, as amended (the
"Distribution Agreement"), the Notes are being offered on a
continuing basis by the Company through the Agents, who have
agreed to use reasonable best efforts to solicit purchases of the
Notes. The Company will have the sole right to accept offers to
purchase Notes and may reject any proposed purchase of Notes as a
whole or in part. The Agents shall have the right, in their
discretion reasonably exercised, to reject any offer to purchase
Notes, as a whole or in part. The Company will pay the Agents a
commission of from .125% to .875% of the principal amount of
Notes, depending upon maturity, for sales made through them as
Agents.
The Company may also sell Notes to the Agents as principals
for their own accounts at a discount to be agreed upon at the
time of sale, or the purchasing Agents may receive from the
Company a commission or discount equivalent to that set forth on
the cover page hereof in the case of any such principal
transaction in which no other discount is agreed upon. Such Notes
may be resold at prevailing market prices, or at prices related
thereto, at the time of such resale, as determined by the Agents.
The Company reserves the right to sell Notes directly on its own
behalf. No commission will be payable on any Notes sold directly
by the Company.
The Agents, as agents or principals, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933
(the "Act"). The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under the Act,
or to contribute to payments that they may be required to make in
respect thereof. The Company has agreed to reimburse the Agents
for certain expenses. Goldman, Sachs & Co., Lehman Brothers,
Lehman Brothers Inc., and Salomon Brothers Inc may from time to
time perform various investment banking services for the Company.
Notes may also be sold by the Agents to or through dealers
who may resell them to investors. The Agents may pay all or part
of their discount or commission to such dealers. Such dealers may
be deemed to be "underwriters" within the meaning of the Act.
The Notes are a new issue of securities with no established
trading market and will not be listed on any securities exchange.
No assurance can be given as to the existence or liquidity of a
secondary market for the Notes.
In connection with the offering, the Agents may purchase and
sell the Notes in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases
to cover short positions created by the Agents in connection with
the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline
in the market price of the Notes; and short positions created by
the Agents involve the sale by the Agents of a greater number of
Notes than they are required to purchase from the Company in the
offering. The Agents also may impose a penalty bid, whereby
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selling concessions allowed to broker-dealers in respect of the
securities sold in the offering may be reclaimed by the Agents if
such securities are repurchased by the Agents in stabilizing or
covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Notes, which may be
higher than the price that might otherwise prevail in the open
market, and these activities, if commenced, may be discontinued
at any time. These transactions may be effected in the over-the-
counter market or otherwise.
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PROSPECTUS
----------
$45,000,000
SECURED MEDIUM-TERM NOTES
MDU RESOURCES GROUP, INC.
---------------------
MDU Resources Group, Inc. (the "Company") intends from time
to time to offer up to $45,000,000 aggregate principal amount of
its Secured Medium-Term Notes (the "Notes") as an additional
series of the Company's first mortgage bonds having maturities
ranging from 9 months to 35 years from the date of issuance. Each
Note will bear interest at a rate or rates determined by the
Company at or prior to the sale thereof. The aggregate principal
amount, interest rate or rates, interest payment dates, purchase
price, maturity and redemption terms, if any, of each issue of
the Notes will be set forth in a Prospectus Supplement or
Prospectus Supplements (the "Prospectus Supplement") including
Prospectus Supplements to be filed with respect to each issuance
and sale of Notes. The terms upon which each issuance and sale of
Notes are offered, together with the names of the agents (the
"Agents") and the Agents' commissions or discounts, if
applicable, will also be set forth in Prospectus Supplements.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
The Company may sell the Notes through underwriters, dealers
or Agents, or directly to one or more purchasers. The Prospectus
Supplement will set forth the names of underwriters, dealers or
Agents, if any, any applicable commissions or discounts, and the
net proceeds to the Company from the sale of the Notes. See
"Plan of Distribution" for possible indemnification and
contribution arrangements for the Agents.
--------------------
The date of this Prospectus is September 15, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy and
information statements, and other information with the Securities
and Exchange Commission (the "SEC"). Reports, proxy and
information statements, and other information filed by the
Company can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices at
Seven World Trade Center, Suite 1300, New York, New York, 10048,
and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The SEC maintains a
Web site (http://www.sec.gov) that contains reports, proxy and
information statements, and other information filed
electronically by the Company. The Company's common stock, par
value $3.33 (the "Common Stock"), and the appurtenant Preference
Share Purchase Rights, are listed for trading on the New York
Stock Exchange (the "NYSE") and on the Pacific Exchange.
Reports, proxy and information statements, and other information
concerning the Company can also be inspected at the offices of
the NYSE and the Pacific Exchange.
Security holders of the Company may obtain, upon request,
copies of an annual report to security holders containing
financial information that has been audited and reported upon,
with an opinion expressed by, an independent public accountant.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with
the SEC are hereby incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997; and
3. The Company's Current Reports on Form 8-K dated June
26, 1997 and August 25, 1997.
All documents subsequently filed by the Company with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated by reference in
this Prospectus.
Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall 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 is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any 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 or 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 copies of such documents
should be addressed to Office of the Treasurer, MDU Resources
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Group, Inc., 400 North Fourth Street, Bismarck, North Dakota
58501, telephone (701) 222-7900.
The information relating to the Company contained in this
Prospectus does not purport to be comprehensive and should be
read together with the information contained in any or all
documents which have been or may be incorporated in this
Prospectus by reference.
THE COMPANY
The Company is a diversified natural resource company
incorporated under the laws of the state of Delaware in 1924.
It's principal executive offices are at 400 North Fourth Street,
Bismarck, North Dakota 58501, telephone (701) 222-7900.
Montana-Dakota Utilities Co., the public utility division of
the Company, provides electric and/or natural gas and propane
distribution service at retail to 256 communities in North
Dakota, eastern Montana, northern and western South Dakota and
northern Wyoming, and owns and operates electric power generation
and transmission facilities. The Company, through its wholly
owned subsidiary, Centennial Energy Holdings, Inc.
("Centennial"), owns Williston Basin Interstate Pipeline Company
("Williston Basin"), Knife River Corporation ("Knife River"), the
Fidelity Oil Group ("Fidelity Oil") and Utility Services, Inc.
("Utility Services"). Williston Basin produces natural gas and
provides underground storage, transportation and gathering
services through an interstate pipeline system serving Montana,
North Dakota, South Dakota and Wyoming and, through its wholly
owned subsidiary, Prairielands Energy Marketing, Inc., seeks new
energy markets while continuing to expand present markets for
natural gas and propane. Knife River, through its wholly owned
subsidiary, KRC Holdings, Inc. and its subsidiaries, surface
mines and markets aggregates and related construction materials
in Oregon, California, Alaska and Hawaii. In addition, Knife
River surface mines and markets low sulfur lignite coal at mines
located in Montana and North Dakota. Fidelity Oil is comprised
of Fidelity Oil Co. and Fidelity Oil Holdings, Inc., which own
oil and natural gas interests throughout the United States, the
Gulf of Mexico and Canada through investments with several oil
and natural gas producers. Utility Services, through its wholly
owned subsidiaries, International Line Builders, Inc. and High
Line Equipment, Inc., installs and repairs electric transmission
and distribution lines in the western United States and Hawaii
and provides related construction supplies and equipment.
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CERTAIN FINANCIAL INFORMATION(1)
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- ------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
Income Summary:
Operating
revenues . $449,528 $464,246 $514,701 $236,742 $265,192
Operating
income . . 78,175 90,576 111,525 48,283 49,204
Net income . 39,845 41,633 45,470 21,735 23,337
DECEMBER 31,
1996 JUNE 30, 1997
--------------- ---------------
AMOUNT % AMOUNT %
-------- -- -------- --
Capital Structure:
Long-term debt
(including unamortized
discount) . . . . . . . . $280,666 43.3 $258,306 40.5
Preferred stock . . . . 16,800 2.6 16,800 2.6
Common stockholders'
investment . . . . . . . . 350,674 54.1 363,688 56.9
-------- ---- -------- ----
Total(2) . . . . . $648,140 100.0 $638,794 100.0
======== ===== ======== =====
(1) This information should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.
(2) Excludes amounts due within one year.
RATIO OF EARNINGS TO FIXED CHARGES
The consolidated Ratio of Earnings to Fixed Charges for the
twelve months ended June 30, 1997 was 2.83. The following table
sets forth the consolidated Ratio of Earnings to Fixed Charges
for the annual periods indicated:
YEARS ENDED DECEMBER 31,
1992 1993 1994 1995 1996
2.51 3.04* 2.95 3.10 2.75
* Before cumulative effect of accounting change of $5,521,000
(net of income taxes).
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USE OF PROCEEDS
The Company is offering hereby a maximum of $45,000,000
aggregate principal amount of Notes. Unless otherwise set forth
in a Prospectus Supplement, the net proceeds from the sale of the
Notes will be used for the refunding of outstanding obligations
(which may include the redemption of all $20,000,000 principal
amount of the Company's First Mortgage Bonds, 9-1/8% Series Due
October 1, 2016), for corporate development (including the
acquisition of business assets), and for other general corporate
purposes.
PLAN OF DISTRIBUTION
The Notes may be offered on a continuing basis by the
Company through the Agents, each of which will agree to use its
reasonable best efforts to solicit offers to purchase the Notes.
The Company may also sell the Notes to any of the Agents at
negotiated discounts for its own account or for resale to one or
more investors at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent, or for
resale to one or more dealers at a discount, as determined by
such Agent.
A Prospectus Supplement relating to an issue and sale of
Notes will set forth the terms of the offering of such Notes,
including the name or names of any Agents or dealers, the
purchase price of such Notes, the proceeds to the Company from
such sale, any discounts or commissions to Agents, any initial
public offering price and any discounts or concessions allowed or
reallowed or paid to dealers.
Under agreements that may be entered into by the Company
with the Agents, Agents who participate in the distribution of
the Notes may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribution by the Company with
respect to payments which the Agents may be required to make in
respect thereof.
DESCRIPTION OF NOTES
The Notes constitute a series of first mortgage bonds under
and secured by an Indenture of Mortgage dated as of May 1, 1939,
from the Company to The New York Trust Company (The Bank of New
York, successor Corporate Trustee) and A.C. Downing (W.T.
Cunningham, successor Individual Trustee), as Trustees, and
indentures supplemental thereto, including the Forty-fifth
Supplemental Indenture which contains a Restatement of the
Indenture, and which may include one or more supplemental
indentures relating to the Notes, all of which are collectively
referred to as the "Indenture." All of the first mortgage bonds
issued and outstanding under the Indenture, including the Notes,
are hereinafter referred to as "First Mortgage Bonds."
The Notes will be issuable only in registered form, without
coupons, in denominations of $10,000 and integral multiples
thereof unless otherwise specified in the applicable Pricing
Supplement, and will be exchangeable for other Notes of the same
series with the same interest rate or rates, maturity and other
terms, in equal aggregate amounts. No service charge will be
made to holders of Notes for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover
any tax or governmental charge incident to the transfer or
exchange. Transfers and exchanges of Notes may be made at the
Corporate Trust Office of The Bank of New York, New York, New
York.
Reference is made to the Prospectus Supplement for the
following terms relating to each of the Notes (among others): (i)
the designation, series and aggregate principal amount of the
Notes; (ii) the percentage of their principal amount at which
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such Notes will be issued; (iii) the date on which the Notes will
mature; (iv) the rate or rates per annum at which the Notes will
bear interest; (v) the dates on which such interest will be
payable; (vi) the place where the principal of and interest on
the Notes will be payable; (vii) redemption terms, if any; and
(viii) any other terms or provisions relating to such Notes which
are not inconsistent with the provisions of the Indenture.
The following statements are, in part, summaries of certain
provisions contained in the Indenture and do not purport to be
complete. Certain of the terms used herein without definition
are defined in the Indenture, to which reference is made for a
complete statement of the terms and conditions of the Notes.
REDEMPTION OF NOTES. Reference is made to the Prospectus
Supplement for the redemption terms of the Notes, if any. If, at
the time notice is given, the redemption monies are not on
deposit with the Corporate Trustee, the redemption may be made
subject to their receipt on or before the date fixed for
redemption and such notice shall be of no effect unless such
monies are received. (45th Supp. Ind., Part II, Art. V.)
SECURITY. In the opinion of the General Counsel for the
Company, the Notes will be secured, together with all other First
Mortgage Bonds now or hereafter issued under the Indenture, by a
valid and direct first mortgage lien on substantially all of the
fixed properties owned and all franchises held by the Company,
subject to the lien of taxes for the current year and the lien of
taxes and assessments not yet delinquent and to certain
exceptions and reservations which do not, in the opinion of such
counsel, materially affect the Company's title to or its right to
use such properties. There are excepted from the lien cash,
receivables and securities (including the capital stock of
Centennial, Williston Basin, Knife River, the companies
comprising Fidelity Oil, Utility Services and any other
subsidiaries); certain contracts; merchandise, appliances,
materials or supplies; electric energy, gas, steam and certain
other products; and automobiles, tractors, ships, railroad cars
and aircraft and various other transportation equipment. The
property of subsidiaries, including Centennial, Williston Basin,
Knife River, the companies comprising Fidelity Oil, Utility
Services and any other subsidiaries, is not subject to the lien
of the Indenture. The Company may release property subject to
the lien of the Indenture against various credits, including
property which is already also subject to the lien, but which has
not yet been used as a credit under any provisions of the
Indenture. Property not used as the basis for the issuance of
First Mortgage Bonds or otherwise as a credit under the Indenture
may in effect be released without substitution of equivalent
property.
The Indenture contains provisions for subjecting to the lien
thereof property which the Company may hereafter acquire, subject
to liens existing thereon at the date of acquisition, and to
limitations in the case of consolidation, merger or sale of
substantially all of the Company's assets. (Orig. Ind., Granting
Clauses; 45th Supp. Ind., Part II, Art. XII.)
ISSUANCE OF ADDITIONAL BONDS. The Company may issue
additional First Mortgage Bonds ranking equally with the Notes in
a principal amount equal to (a) 70% of the net bondable value of
property additions acquired by the Company, (b) the amount of
cash deposited with the Corporate Trustee, and (c) the amount of
refundable First Mortgage Bonds surrendered to the Corporate
Trustee. (45th Supp. Ind., Part II, Secs. 3.04, 3.05 and 3.06.)
The Notes will be issued against property additions,
refunded First Mortgage Bonds and/or the deposit of cash. On June
30, 1997, the Company had approximately $178.7 million of
available property additions and $133.6 million of refunded First
Mortgage Bonds. See "Description of Notes - Security."
With certain exceptions in the case of (c) above, additional
First Mortgage Bonds may be issued only if net earnings of the
Company available for interest after depletion, as defined in the
Indenture, for any twelve consecutive calendar months within the
fifteen calendar months immediately preceding the month in which
the application for such additional First Mortgage Bonds is made,
are in the aggregate equal to at least two times the amount of
the annual stated interest charges on all First Mortgage Bonds
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<PAGE>
thereafter to be outstanding, and on all permitted equal or prior
lien debt, if any. (45th Supp. Ind., Part II, Secs. 1.01 and
3.03.) For the twelve months ended June 30, 1997, the net
earnings of the Company available for interest after depletion
were $60.3 million or 5.49 times the annual stated interest
charges on all First Mortgage Bonds and permitted equal or prior
lien debt outstanding on that date, which would have permitted
the Company to issue approximately $256.0 million of First
Mortgage Bonds.
Property available for use as property additions includes
property useful in the energy business in any form (other than
gas but including gas distribution property) and water and steam
heat property. Such property may be located anywhere in the
United States of America or its coastal waters and may also
include space satellites (including solar power satellites),
space stations and other analogous facilities. (45th Supp. Ind.,
Part II, Sec. 1.01.)
RESTRICTIONS ON DIVIDENDS. So long as any of the Notes are
outstanding, the Company may declare and pay dividends in cash or
property on its Common Stock only out of Surplus, as defined, or
out of net profits for the fiscal year or the preceding fiscal
year. However, the Company may not pay dividends out of net
profits if the Capital of the Company, as defined, has been
diminished to a specified extent. (45th Supp. Ind., Part I, Sec.
2.01).
MAINTENANCE AND DEPRECIATION PROVISIONS. The Company is
required to make such expenditures as shall be necessary to
maintain the mortgaged property in good repair, except that the
Company may abandon any property, and to make provisions for
depreciation and for depletion of depletable fixed assets in
accordance with good accounting practices and in accordance with
any applicable rules of any regulatory authority having
jurisdiction. (45th Supp. Ind., Part II, Sec. 6.06.)
MODIFICATION OF THE INDENTURE. Modifications of the terms
of the Indenture may be made with the consent of the Company by
an affirmative vote of at least 60% in principal amount of
outstanding First Mortgage Bonds and of at least 60% in principal
amount of outstanding First Mortgage Bonds of any series
especially affected by such modification; but no such
modification may be made which will affect the terms of payment
of the principal at maturity of, or interest on, any First
Mortgage Bond. (45th Supp. Ind., Part II, Art. XV.)
EVENTS OF DEFAULT. "Events of default" include the failure
to pay principal, failure for 30 days to pay interest or to make
any required deposit in any fund for the purchase or redemption
of First Mortgage Bonds (including any sinking fund or
improvement and sinking fund), failure for 90 days after written
notice to perform any other covenant, and various events in
bankruptcy or insolvency. (45th Supp. Ind., Part II, Art. IX.)
The Trustees are required to give notice to Bondholders of
any continuing event of default known to them, but other than for
a default in the payment of principal or interest or a sinking
fund installment, the Trustees may withhold such notice if the
responsible officers of the Corporate Trustee in good faith
determine that such withholding is in the interests of the
Bondholders. (45th Supp. Ind., Part II, Sec. 13.03.)
The Company must file an annual certificate with the
Corporate Trustee as to compliance with the Indenture.
CONCERNING THE TRUSTEES. The Bank of New York acts as
Corporate Trustee under the Indenture. The Company may, in the
regular course of business, obtain short-term funds from several
banks, including The Bank of New York.
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<PAGE>
EXPERTS
The Company's audited consolidated financial statements
incorporated in this Prospectus by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996,
have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto,
and are incorporated herein in reliance upon such report and upon
the authority of said firm as experts in accounting and auditing.
The information set forth in the estimates, dated January 9
and 31, 1997, of Ralph E. Davis Associates, Inc. concerning oil
and natural gas reserves, appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have
been reviewed and verified by Ralph E. Davis Associates, Inc. and
have been incorporated herein in reliance upon the authority of
said firm as experts.
The information set forth in the report, dated May 9, 1994,
of Weir International Mining Consultants relating to lignite coal
reserves of Knife River, appearing in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996, has been
reviewed and verified by Weir International Mining Consultants
and has been incorporated herein in reliance upon the authority
of said firm as experts.
LEGAL OPINIONS
The validity of the Notes has been passed upon for the
Company by Lester H. Loble, II, Esq., General Counsel for the
Company, and also by Reid & Priest LLP, 40 West 57th Street, New
York, New York 10019, and for any Agent by Berlack, Israels &
Liberman LLP, 120 West 45th Street, New York, New York 10036.
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<PAGE>
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No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than
those contained in this Prospectus Supplement (including any
accompanying Pricing Supplement) and the Prospectus, in
connection with the offer contained herein, and, if given or
made, such information or representations must not be relied upon
as having been authorized by the Company or by any of the Agents.
Neither the delivery of this Prospectus Supplement (including any
accompanying Pricing Supplement) and the Prospectus nor any sale
made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the
Company since the date as of which information is given in this
Prospectus Supplement (including any accompanying Pricing
Supplement) and the Prospectus. This Prospectus Supplement
(including any accompanying Pricing 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.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Description of Notes . . . . . . . . . . . . . . . . . . . S-2
Supplemental Plan of Distribution . . . . . . . . . . . . . S-5
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certain Financial Information . . . . . . . . . . . . . . . . 4
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 5
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 5
Description of Notes . . . . . . . . . . . . . . . . . . . . 5
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 8
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$45,000,000
MDU RESOURCES
GROUP, INC.
SECURED MEDIUM-TERM NOTES,
SERIES A
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SALOMON BROTHERS INC
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