Filed Pursuant to Rule 424(b)(5)
Registration No. 333-48647
PROSPECTUS SUPPLEMENT
---------------------
(To Prospectus dated April 2, 1998)
2,100,000 SHARES
MDU RESOURCES GROUP, INC.
Common Stock
Par Value, $3.33 per share
-------------------
MDU Resources Group, Inc. (the "Company") is offering hereby
2,100,000 shares of its common stock, par value $3.33 per share
(the "Common Stock"), and the appurtenant Preference Share
Purchase Rights (the "Rights", and together with the 2,100,000
shares of Common Stock, the "Shares"), of which 869,068 Shares
are being offered for sale by the Company and 1,230,932 Shares
are being offered for sale by certain shareholders of the Company
(the "Selling Shareholders"). The Common Stock and the
appurtenant Rights (including the Shares offered by the Selling
Shareholders) are listed on the New York Stock Exchange (the
"NYSE") and the Pacific Exchange under the symbol MDU. On April
21, 1998, the last reported sale price for the Common Stock on
the NYSE was $35 5/8 per share.
-------------------
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.
========================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS PROCEEDS TO SELLING
PUBLIC (1) COMPANY(2) SHAREHOLDERS
------------------------------------------------------------------------
Per Share.... $35.625 $.98 $34.645 $34.645
------------------------------------------------------------------------
Total (3).... $74,812,500 $2,058,000 $30,108,861 $42,645,639
========================================================================
(1) The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
See "Underwriting".
(2) Amounts shown are before deducting expenses, estimated at
$210,000. The Company will pay all expenses in connection
with the registration and offering of the Shares, other than
the following expenses of the Selling Shareholders, which
will be paid by the Selling Shareholders: (i) underwriting
discounts with respect to the Shares offered for sale by the
Selling Shareholders and (ii) the fees and expenses of the
Selling Shareholders' counsel.
(3) The Company has granted the Underwriters an option,
exercisable within 30 days after the date of this Prospectus
Supplement, to purchase up to 300,000 additional shares (the
"Option Shares") from the Company, on the same terms set
forth above, solely to cover over-allotments, if any. If
all such Option Shares are purchased, the total Price to
Public, Underwriting Discounts, Proceeds to Company and
Proceeds to Selling Shareholders will be $85,500,000,
$2,352,000, $40,502,361, and $42,645,639, respectively.
See "Underwriting".
-------------------
The Shares are offered by the several Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the
Underwriters, and subject to approval of certain legal matters by
their counsel and counsel for the Company. 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 Shares will be made in New York, New York on or about
April 27, 1998.
-------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
EDWARD D. JONES & CO., L.P.
LEHMAN BROTHERS
-------------------
The date of this Prospectus Supplement is April 21, 1998.
<PAGE>
[COMPANY LOGO OF REGISTRANT.]
[MAPS OF LOCATIONS OF REGISTRANT'S BUSINESS OPERATIONS.]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE
PRICE OF THE SHARES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING,
THE PURCHASE OF SHARES TO COVER SYNDICATE SHORT POSITIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
<PAGE>
SUMMARY INFORMATION
The following material, which is presented herein solely to furnish
limited introductory information regarding the Company, has been selected
from or is based upon the detailed information and financial statements
included in or incorporated by reference into this Prospectus Supplement
and the accompanying Prospectus, is qualified in its entirety by reference
thereto, and, therefore, should be read together therewith.
THE OFFERING
Company . . . . . . . . . . MDU Resources Group, Inc.
Selling Shareholders . . . Certain shareholders of the Company who
received Common Stock pursuant to the
Company's acquisitions of Morse Bros., Inc.
and S2 - F Corp. on March 5, 1998
Securities offered by
the Company . . . . . . . 869,068 shares of Common Stock and the
Rights appurtenant thereto (excluding up to
300,000 Option Shares)
Securities offered by
the Selling Shareholders. 1,230,932 shares of Common Stock and the
Rights appurtenant thereto
Shares of Common Stock
outstanding at March 31,
1998 . . . . . . . . . . 32,832,002 shares
Common Stock closing price
range, per share (April 1,
1997 through April 21, 1998) $21.50 - $37.25
New York Stock Exchange and
Pacific Exchange Symbol . MDU
Current indicated annual
dividend rate per share . $1.15
Book Value per share of
Common Stock
(at December 31, 1997) . $13.26
Use of Proceeds . . . . . . Proceeds from the offering may be used for
the refunding of outstanding debt
obligations, for corporate development
purposes (including the potential
acquisition of businesses and/or business
assets), and for other general corporate
purposes. The Company will not receive any
of the proceeds from the sale of Shares
offered for sale by the Selling
Shareholders.
THE COMPANY
The Company, headquartered in Bismarck, North Dakota, is a multi-
dimensional natural resource company incorporated under the laws of the
State of Delaware in 1924.
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., 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 Alaska, California, Hawaii and
Oregon. 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 power lines in the
western United States and Hawaii and provides related supplies and
equipment.
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<PAGE>
SELECTED FINANCIAL INFORMATION
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
---- ---- ----
(THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
INCOME STATEMENT DATA:
Operating revenues:
Electric $164,351 $138,761 $134,609
Natural gas 200,789 175,408 167,787
Construction materials and mining 174,147 132,222 113,066
Oil and natural gas production 68,387 68,310 48,784
-------- -------- --------
$607,674 $514,701 $464,246
-------- -------- --------
Operating income:
Electric $33,089 $29,476 $29,898
Natural gas distribution 10,410 11,504 6,917
Natural gas transmission 29,169 30,231 25,427
Construction materials and mining 14,602 16,062 14,463
Oil and natural gas production 24,291 24,252 13,871
-------- -------- --------
$111,561 $111,525 $90,576
-------- -------- --------
Earnings on common stock:
Electric $13,388 $11,436 $12,000
Natural gas distribution 4,514 4,892 1,604
Natural gas transmission 11,317 2,459 8,416
Construction materials and mining 10,111 11,521 10,819
Oil and natural gas production 14,505 14,375 8,002
-------- -------- --------
Earnings on common stock
before cumulative effect of
accounting change 53,835 44,683 40,841
Cumulative effect of
accounting change -- -- --
-------- -------- --------
$53,835 $44,683 $40,841
-------- -------- --------
Earnings per common share
before cumulative effect of
accounting change -- diluted $1.86 $1.57 $1.43
Cumulative effect of accounting change -- -- --
-------- -------- --------
Earnings per common share - diluted $1.86 $1.57 $1.43
-------- -------- --------
Dividends per common share $1.13 $1.10 $1.0782
-------- -------- --------
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
---- ---- ----
(THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
INCOME STATEMENT DATA:
Operating revenues:
Electric $133,953 $131,109 $123,908
Natural gas 160,970 178,981 159,438
Construction materials and mining 116,646 90,397 45,032
Oil and natural gas production 37,959 39,125 33,797
-------- -------- --------
$449,528 $439,612 $362,175
-------- -------- --------
Operating income:
Electric $27,596 $30,520 $30,188
Natural gas distribution 3,948 4,730 4,509
Natural gas transmission 21,281 20,108 21,331
Construction materials and mining 16,593 16,984 11,532
Oil and natural gas production 8,757 11,750 9,499
-------- -------- --------
$78,175 $84,092 $77,059
-------- -------- --------
Earnings on common stock:
Electric $11,719 $12,652* $13,302
Natural gas distribution 285 1,182* 1,370
Natural gas transmission 6,155 4,713 3,479
Construction materials and mining 11,622 12,359 10,662
Oil and natural gas production 9,267 7,109 5,751
-------- -------- --------
Earnings on common stock
before cumulative effect of
accounting change 39,048 38,015* 34,564
Cumulative effect of
accounting change -- 5,521 --
-------- -------- --------
$39,048 $43,536 $34,564
-------- -------- --------
Earnings per common share
before cumulative effect of
accounting change -- diluted $1.37 $1.34* $1.21
Cumulative effect of accounting change -- .19 --
-------- -------- --------
Earnings per common share - diluted $1.37 $1.53 $1.21
-------- -------- --------
Dividends per common share $1.0533 $1.0133 $.9733
-------- -------- --------
*Before cumulative effect of an accounting change reflecting the accrual of
estimated unbilled revenues.
S-4
<PAGE>
At December 31, 1997
-----------------------------------------------
Actual As Adjusted(1)
----------------------- -----------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Thousands, except percentages)
BALANCE SHEET DATA:
Total assets $1,113,892 $1,343,913
========== ==========
Short-term borrowings
and long-term debt and
preferred stock due
within one year $ 11,249 $ 19,791
========== ==========
Capitalization:
Long-term debt $ 298,561 43% $328,197 38%
Preferred stocks 16,700 2 16,700 2
Common stockholders'
equity 386,296 55 509,650 60
---------- ---- ---------- ----
Total
capitalization $ 701,557 100% $ 854,547 100%
========== ==== ========== ====
----------
(1) As adjusted to reflect (i) the net proceeds to the Company from the
sale of the Shares by the Company (excluding the Option Shares) after
deducting estimated expenses payable by the Company ($29,899)
which have been added to total assets and common stockholders'
equity and (ii) the acquisitions by the Company on March 5, 1998
of Morse Bros., Inc. and S2 - F Corp.
FORWARD-LOOKING STATEMENTS
This document and the documents incorporated by reference
herein contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are
all statements other than statements of historical fact,
including without limitation those statements that are identified
by the words anticipates, estimates, expects, intends, plans and
predicts. These statements are based on assumptions that the
Company believes are reasonable, but are subject to a wide range
of circumstances, including without limitation political and
economic risks, changes in and compliance with environmental and
safety laws and policies, weather conditions, population growth
rates and demographic policy, that may materially affect
anticipated revenues, costs and future performance. Therefore,
no assurance can be given by the Company that actual results will
not differ from those in the forward-looking statements contained
herein and in the incorporated documents. For a discussion of
other factors that may affect forward-looking statements
contained herein or in the incorporated documents, see the
Company's latest Annual Report on Form 10-K or its most recent
Quarterly Report on Form 10-Q.
S-5
<PAGE>
THE COMPANY
The Company is a multi-dimensional natural resource company
incorporated under the laws of the State of Delaware in 1924. It
has been listed on the New York Stock Exchange since 1948. The
Company's principal executive offices are located at the
following address: Schuchart Building, 918 East Divide Avenue,
P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701)
222-7900.
Throughout its history, the Company has had multi-dimensional
operations which, in addition to the natural gas and electric
utility businesses, focus on natural resources and their use.
The Company's development strategy has been to build on its
existing expertise by investing in the development of related
lines of business. In keeping with this long-held development
strategy, the Company has acquired several businesses in
extractive industries, all within higher than average growth
areas in the Pacific Northwest, along with acquisitions of
utility service operations.
Montana-Dakota Utilities Co. ("Montana-Dakota"), 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. Over 113,000
residential, commercial, industrial and municipal customers
receive electric service while approximately 200,000 residential,
commercial and industrial customers receive underground natural
gas and propane service. Montana-Dakota also offers a variety of
customer service programs including preventive maintenance on key
household appliances.
The Company, through its wholly owned subsidiary, Centennial
Energy Holdings, Inc., 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 owns and operates over 3,600 miles of
transmission, gathering and storage lines and 22 compressor
stations located in the states of Montana, North Dakota, South
Dakota and Wyoming. Through three underground storage fields
located in Montana and Wyoming, storage services are provided to
local distribution companies, producers, suppliers and others,
and serve to enhance system deliverability. Williston Basin's
system is strategically located near five natural gas producing
basins making natural gas supplies available to Williston Basin's
transportation and storage customers. Williston Basin has
interconnections with seven pipelines in Wyoming, Montana and
North Dakota which provide for supply and market access. In
addition, Williston Basin produces natural gas from owned
reserves which is sold to others or used by Williston Basin for
its operating needs. Since 1993, Williston Basin has engaged in
a long-term developmental drilling program to enhance the
performance of its investment in natural gas reserves. As a
result of this effort, 1997 production levels reached 6.9 million
decatherms, up 79 percent from 1993. The production increases
from these reserves are expected to provide additional natural
gas supplies for Prairielands Energy Marketing, Inc.
("Prairielands"), a subsidiary of Williston Basin, to enable it
to enhance its marketing efforts. Prairielands seeks new energy
markets while continuing to expand present markets for natural
gas. Its activities include buying and selling natural gas and
arranging transportation services to end users, pipelines and
local distribution companies. In addition, Prairielands operates
two retail propane operations in north central and southeastern
North Dakota.
Knife River, through its wholly owned subsidiary, KRC
Holdings, Inc. and its subsidiaries, surface mines and markets
aggregates and related construction materials in Alaska,
California, Hawaii and Oregon and holds over 500 million tons of
aggregate reserves. These operations mine, process and sell
construction aggregates (crushed rock, sand and gravel) and
supply ready-mixed concrete for use in most types of
construction, including homes, schools, shopping centers, office
buildings and industrial parks as well as roads, freeways and
bridges. In addition, the Alaskan, northern California and
Oregon operations produce and sell asphalt for various commercial
and roadway applications. Although not common to all locations,
other products include the manufacture and/or sale of cement,
S-6
<PAGE>
various finished concrete products and other building materials
and related construction services. Knife River's construction
materials business has continued to grow since its first
acquisition in 1992 and now comprises the majority of Knife
River's business. Knife River continues to investigate the
acquisition of other surface mining properties, particularly
those relating to sand and gravel aggregates and related products
such as ready-mixed concrete, asphalt and various finished
aggregate products. Knife River also surface mines and markets
low sulfur lignite coal at mines located in Montana and North
Dakota and held approximately 227 million tons of economically
recoverable lignite coal reserves as of December 31, 1997.
Fidelity Oil is comprised of Fidelity Oil Co. and Fidelity Oil
Holdings, Inc., which are involved in the acquisition,
exploration, development and production of oil and natural gas
properties. Fidelity Oil's operations vary from the acquisition
of producing properties with potential development opportunities
to exploratory drilling and are located throughout the United
States, the Gulf of Mexico and Canada. Fidelity Oil shares
revenues and expenses from the development of specified
properties in proportion to its interests. These operations held
approximately 24 million equivalent barrels of oil in reserves as
of December 31, 1997. Fidelity Oil's oil and natural gas
activities have continued to expand since the mid-1980s.
Fidelity Oil continues to seek additional reserve and production
opportunities through the direct acquisition of producing
properties and through exploratory drilling opportunities, as
well as routine development of its existing properties. Future
growth is dependent upon continuing success in these endeavors.
Utility Services is comprised of its wholly owned
subsidiaries, International Line Builders, Inc. and High Line
Equipment, Inc., both acquired in July 1997. International Line
Builders, Inc. installs and repairs electric transmission and
distribution power lines in the western United States and Hawaii.
High Line Equipment, Inc. sells and repairs tools and line
construction products and equipment for construction companies
and utilities in the northwestern United States.
RECENT DEVELOPMENTS
On March 5, 1998, the Company acquired Morse Bros., Inc.
("MBI"), and S2 - F Corp. ("S2 - F"), privately held construction
materials companies located in Oregon's Willamette Valley. The
purchase consideration for such companies consisted of
approximately $96 million of Common Stock and cash, the
assumption of certain liabilities and an adjustment based on
working capital. See "Selling Shareholders" in the accompanying
Prospectus. The acquisition will be accounted for under the
purchase method of accounting. Under this method, the
consideration for the stock of MBI and S2 - F will be allocated
to the underlying assets acquired and liabilities assumed, based
on their estimated fair market values. The Company anticipates
that the effect of such acquisitions will be accretive to 1998
earnings.
MBI, the largest construction materials supplier in Oregon,
sells aggregate, ready-mixed concrete, asphaltic concrete,
prestress concrete and construction services in the Willamette
Valley from Portland to Eugene. The products of MBI are used in
the construction of streets, roads, and highways and in both
building and bridge structures. Assets owned by MBI include
aggregate reserves and construction materials plant and
equipment. S2 - F sells aggregate and construction services and
its properties consist primarily of construction and aggregate
mining equipment and leased aggregate reserves. In 1997, MBI and
S2 - F had combined net sales of $107 million and have
approximately 370 million tons of aggregate reserves, of which
270 million tons are permitted. It is the intent of the Company
that MBI and S2 - F continue their operations and businesses.
As a result of the MBI and S2 - F acquisitions, shareholders
of MBI and S2 - F received an aggregate of 3,848,351 shares of
Common Stock, of which 3,542,953 shares were issued to the
Selling Shareholders, an aggregate of 145,717 shares were issued
to five senior executive officers of MBI (the "EMT Group") and
the remaining 159,681 shares were issued to MBI as consideration
for MBI's fifty percent (50%) ownership of the outstanding common
S-7
<PAGE>
stock of S2 - F. As a result of MBI receiving Common Stock for
the Company's acquisition of S2 - F, the 159,681 shares of Common
Stock are presently being held by MBI. Common Stock held by MBI
is neither entitled to vote nor be counted for quorum or
financial reporting purposes as outstanding shares.
The Company agreed to register for resale under the Securities
Act an aggregate of 1,230,932 shares of Common Stock held by the
Selling Shareholders, all of which are being offered hereby. The
Common Stock owned after the offering of the Shares by each
Selling Shareholder is subject to certain transfer and other
terms and restrictions (including restrictions with respect to
voting and other matters). See "Selling Shareholders" in the
accompanying Prospectus for a summary of such restrictions. The
Company has also agreed to issue up to a maximum of 305,000
additional shares of Common Stock to the Selling Shareholders
under certain circumstances. See "Selling Shareholders" in the
accompanying Prospectus.
A portion of the shares of Common Stock held by the EMT Group
(76,800 shares) are held subject to the same transfer and other
terms and restrictions as are applicable to the Common Stock
owned by the MBI Selling Shareholders following completion of the
offering. The remaining 68,917 shares owned by the members of
the EMT Group are not subject to such transfer restrictions (and,
consequently, are eligible to be sold pursuant to Rule 144 of the
Securities Act on or after March 5, 1999), but remain subject to
all other terms and restrictions as are applicable to the Common
Stock owned by the MBI Selling Shareholders. See "Selling
Shareholders" in the accompanying Prospectus.
Based upon the number of shares of Common Stock outstanding on
March 31, 1998 (32,832,002), and after giving effect to the sale
of the Shares by the Selling Shareholders and the Company
(excluding the Option Shares), the total number of shares of
Common Stock owned by the Selling Shareholders and the EMT Group
would be 2,457,738 shares, or approximately 7.29% of the
outstanding Common Stock.
On April 1, 1998, the Company acquired Angell Bros., Inc., a
construction materials company located in Portland, Oregon.
Angell Bros. sells crushed rock to customers in the greater
Portland metropolitan area. This strategic acquisition, which is
not material financially, includes approximately 80 million tons
of permitted reserves. On April 17, 1998, the Company acquired
Pouk & Steinle, Inc., an electrical construction company based in
Riverside, California. This acquisition is not material
financially.
The number of shares of Common Stock outstanding on March 31,
1998 (32,832,002) does not include the 545,545 shares of Common
Stock issued in connection with the acquisitions of Angell Bros.
and Pouk & Steinle.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Shares by
the Company will be added to the general funds of the Company and
may be used for the refunding of outstanding debt obligations,
for corporate development purposes (including the potential
acquisition of businesses and/or business assets), and for other
general corporate purposes. The Company will not receive any of
the proceeds from the sale of Shares offered for sale by the
Selling Shareholders.
S-8
<PAGE>
COMMON STOCK DIVIDENDS AND PRICE RANGE
The following table sets forth the high and low sales prices
per share of the Common Stock reported on the NYSE as published
in The Wall Street Journal and the dividends declared for the
indicated periods.
Price Range
------------------------ Dividends
High Low Per Share
----------- ------------ -----------
1996:
First Quarter $23.00 $19.88 $ .2725
Second Quarter 23.50 20.13 .2725
Third Quarter 22.38 20.75 .2775
Fourth Quarter 23.38 21.25 .2775
-------
$1.1000
=======
1997:
First Quarter $23.00 $21.00 $.2775
Second Quarter 25.25 21.38 .2775
Third Quarter 27.69 22.25 .2875
Fourth Quarter 33.50 26.63 .2875
-------
$1.1300
=======
1998:
First Quarter $37.88 $28.25 $.2875
Second Quarter (through
April 21, 1998) 37.69 35.38 --
The last reported sale price for the Common Stock on the NYSE
on April 21, 1998 was $35.625 per share. As of March 31, 1998,
the Company's Common Stock was held by approximately 13,500
stockholders of record.
The next quarterly dividend is expected to be paid on July 1,
1998 to stockholders of record on June 11, 1998.
S-9
<PAGE>
UNDERWRITING
The Underwriters named below, acting through their
Representatives, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Edward D. Jones & Co., L.P., and Lehman Brothers,
Inc. (the "Representatives"), have severally agreed, subject to
the terms and conditions of the Underwriting Agreement, dated
April 21, 1998 (the "Underwriting Agreement"), to purchase from
the Company and the Selling Shareholders the number of Shares set
forth below opposite their respective names.
NUMBER OF
UNDERWRITER SHARES
----------- ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . 352,500
Donaldson, Lufkin & Jenrette Securities
Corporation . . . . . . . . . . . . . . . . . 352,500
Edward D. Jones & Co., L.P. . . . . . . . . . . 352,500
Lehman Brothers Inc. . . . . . . . . . . . . . 352,500
BT Alex Brown Incorporated . . . . . . . . . . 60,000
CIBC Oppenheimer Corp. . . . . . . . . . . . . 60,000
Credit Suisse First Boston Corporation . . . . 60,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . 60,000
Goldman, Sachs & Co. . . . . . . . . . . . . . 60,000
Morgan Stanley & Co. Incorporated . . . . . . . 60,000
PaineWebber Incorporated . . . . . . . . . . . 60,000
Smith Barney Inc. . . . . . . . . . . . . . . . 60,000
Davenport & Company LLC . . . . . . . . . . . . 30,000
D.A. Davidson & Co. . . . . . . . . . . . . . . 30,000
Janney Montgomery Scott Inc. . . . . . . . . . 30,000
Petrie Parkman & Co., Inc. . . . . . . . . . . 30,000
Piper Jaffray Inc. . . . . . . . . . . . . . . 30,000
Ragen Mackenzie Incorporated . . . . . . . . . 30,000
Redwood Securities Group, Inc. . . . . . . . . 30,000
---------
Total . . . . . . . . . . . . . . . . . 2,100,000
=========
The Underwriters are committed to purchase all of the above
Shares if any are purchased. Under certain circumstances, the
commitments of non-defaulting Underwriters may be increased as
set forth in the Underwriting Agreement.
The Representatives have advised the Company that they propose
initially to offer the Shares to the public at the Price to
Public set forth on the cover page of this Prospectus Supplement,
and to certain dealers at such price less a concession not in
excess of $.56 per share. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $.10 per share
on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may
be changed.
The Company has granted the Underwriters an option,
exercisable within 30 days after the date of this Prospectus
Supplement, to purchase up to 300,000 Option Shares to cover
over-allotments, if any, at the Price to Public set forth on the
cover page of this Prospectus Supplement less the Underwriting
Discounts. If the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of the
Option Shares as the percentage of the Shares which it has agreed
to purchase.
The Company has agreed that, for a period of 90 days from the
date of this Prospectus Supplement, it will not, without the
prior written consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, sell any share of Common Stock, except for (i)
Common Stock to be sold in this offering, (ii) any shares granted
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<PAGE>
pursuant to existing employee benefit plans or director plans,
(iii) any shares issued pursuant to dividend reinvestment or
certain stock purchase plans, (iv) any shares issued upon the
exercise of any Right, (v) any shares issued upon the exercise of
an outstanding option or warrant or (vi) any shares issued in
connection with mergers or acquisitions completed in the ordinary
course of business by the Company or its subsidiaries provided
such shares may not be resold in a public offering until the
expiration of the foregoing period.
In the Underwriting Agreement, the Company and the Selling
Shareholders have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities
Act or to contribute to payments the Underwriters may be required
to make in respect thereof.
The Company has agreed to indemnify the Selling Shareholders
against certain liabilities, including liabilities under the
Securities Act or to contribute to payments the Selling
Shareholders may be required to make in respect thereof.
Until the distribution of the Shares is completed, rules of
the Securities and Exchange Commission may limit the ability of
the Underwriters and certain selling group members to bid for and
purchase the Common Stock. As an exception to these rules, the
Representatives are permitted to engage in certain transactions
that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common
Stock in connection with the offering, i.e., if they sell more
shares of Common Stock than are set forth on the cover page of
this Prospectus Supplement, the Representatives may reduce that
short position by purchasing Common Stock in the open market.
The Representatives may also elect to reduce any short position
by exercising all or part of the over-allotment option described
above.
The Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the
Representatives purchase shares of Common Stock in the open
market to reduce the Underwriters' short position or to stabilize
the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group
members who sold those shares as part of the offering.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have
an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.
Neither the Company nor any of the Underwriters nor Selling
Shareholders makes any representation or prediction as to the
direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters nor
Selling Shareholders makes any representation that the
Representatives will engage in such transactions or that such
transactions, once commenced, will not be discontinued without
notice.
S-11
<PAGE>
PROSPECTUS
----------
3,400,000 SHARES
MDU RESOURCES GROUP, INC.
COMMON STOCK
PAR VALUE, $3.33 PER SHARE
------------------
This Prospectus relates to the offering, from time to time, of
up to 3,400,000 shares of MDU Resources Group, Inc. (the
"Company") Common Stock, par value $3.33 per share (the "Common
Stock") and the appurtenant Preference Share Purchase Rights (the
"Rights", and together with the 3,400,000 shares of Common Stock,
the "Offered Shares") on terms to be determined at the time of
sale, of which 2,169,068 Offered Shares are being offered for
sale by the Company and 1,230,932 Offered Shares are being
offered for sale by certain shareholders of the Company (the
"Selling Shareholders"). This Prospectus will be supplemented by
one or more Prospectus Supplements ("Prospectus Supplement")
which will reflect any agreement entered into by the Company and,
to the extent applicable, the Selling Shareholders for the sale
of the Offered Shares and will set forth the number of Offered
Shares, proceeds to the Company and the Selling Shareholders,
initial offering price, and other specific terms of the
applicable offering of the Offered Shares in respect of which
this Prospectus is being delivered. The Company will not receive
any of the proceeds from the sale of Offered Shares by the
Selling Shareholders. See "Selling Shareholders." The Company
will pay all expenses in connection with the registration and
offering of the Offered Shares under the Securities Act of 1933,
as amended (the "Securities Act"), other than the following
expenses of the Selling Shareholders, which will be paid by the
Selling Shareholders: (i) underwriting discounts and commissions
with respect to the Offered Shares offered for sale by the
Selling Shareholders, (ii) placement agency fees or financial
advisor fees with respect to such Offered Shares and (iii) the
fees and expenses of their counsel.
The Company's outstanding shares of Common Stock and the
appurtenant Rights (including the Offered Shares offered for sale
by the Selling Shareholders) are, and the Offered Shares offered
for sale by the Company are expected to be, listed on the New
York Stock Exchange (the "NYSE") and the Pacific Exchange under
the symbol MDU.
------------------
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 Offered Shares may be sold directly by the Company or the
Selling Shareholders, through agents designated from time to time
or through underwriters. If an agent of the Company or the
Selling Shareholders or any underwriter is involved in the sale
of any Offered Shares in respect of which this Prospectus is
being delivered, the names of such agents or underwriters, any
applicable discounts, commissions or allowances and a description
of any indemnification arrangements will be set forth in a
Prospectus Supplement. See "Plan of Distribution."
------------------
The date of this Prospectus is April 2, 1998.
<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 outstanding Common
Stock and the appurtenant Rights are listed for trading on 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.
The Company has filed a Registration Statement on Form S-3
(herein, together with all exhibits and amendments thereto,
called the "Registration Statement") with the SEC under the
Securities Act with respect to the Offered Shares. This
Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For
further information, reference is made to the Registration
Statement. Statements contained herein concerning any document
filed as an exhibit to the Registration Statement are not
necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by
such reference.
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, 1997 (including portions of the Annual
Report to Stockholders); and
2. The Company's Registration Statement on Form 8-A dated
November 17, 1988.
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
2
<PAGE>
Group, Inc., Schuchart Building, 918 East Divide Avenue, P.O. Box
5650, Bismarck, North Dakota 58506-5650, 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 multi-dimensional natural resource company
incorporated under the laws of the State of Delaware in 1924.
The Company's principal executive offices are located at the
following address: Schuchart Building, 918 East Divide Avenue,
P.O. Box 5650, Bismarck, North Dakota 58506-5650, 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., 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 Alaska,
California, Hawaii and Oregon. 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 power lines in the western United States and
Hawaii and provides related supplies and equipment.
SELLING SHAREHOLDERS
The Company acquired all of the stock of Morse Bros., Inc.
("MBI") and S2 - F Corp. ("S2 - F") on March 5, 1998. As a
result of these transactions, shareholders of MBI and S2 - F
received an aggregate of 3,848,351 shares of Common Stock. The
terms of two separate, but substantially identical Stock
Disposition Agreements, each dated March 5, 1998, between the
Company and the MBI shareholders and the Company and the S2 - F
shareholders provide that the Company will register for resale
under the Securities Act certain of the shares of Common Stock
issued to certain MBI shareholders (the "MBI Selling
Shareholders") and the S2 - F shareholders listed in the table
below. Each Selling Shareholder is offering all shares of Common
Stock owned by such Selling Shareholder that it is permitted to
sell as of the date of this Prospectus under the Stock
Disposition Agreement to which it is a party.(1)
Pursuant to separate but substantially identical
Stockholders' Agreements dated as of March 5, 1998, the Common
Stock owned after the offering of the Offered Shares by each
Selling Shareholder is subject to certain restrictions, including
----------------
1. A group of five senior executive officers of MBI (the "EMT
Group") owning in the aggregate 145,717 shares of Common Stock
not subject to the MBI Stock Disposition Agreement are not
offering such shares of Common Stock for sale pursuant to this
offering.
3
<PAGE>
but not limited to (i) limitations on each Selling Shareholder's
ability to transfer its shares for a period of four years and
(ii) for a period of five years, requiring each Selling
Shareholder to (A) cause all of the shares to be present, in
person or proxy, for quorum purposes, at all meetings of
stockholders of the Company, (B) vote all shares entitled to be
voted by the Selling Shareholder in accordance with the
recommendation of the Board of Directors of the Company, other
than the election of directors, (C) not, alone or with any other
person, seek or accept a seat on the Board of Directors of the
Company, (D) not acquire any additional shares of Common Stock
except through (1) the reinvestment of dividends or (2)
compensation plans of the Company, (E) not solicit proxies to
vote any shares of Common Stock, (F) not form or participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to the shares, (G) not solicit or encourage any
person to acquire shares of Common Stock and (H) not make any
proposal with respect to a merger or business combination
involving the Company or any of its subsidiaries.
The aforementioned Stock Disposition Agreements provide that
the Company will issue to the MBI Selling Shareholders or the S2
- F shareholders, as the case may be, additional shares of Common
Stock pursuant to a price formula if the gross sale price for the
Offered Shares sold by the Selling Shareholders (or, in the event
no sales are made, if the market price of the Common Stock on
September 1, 1998) is lower than $29.3125 per share. Each such
Stock Disposition Agreement further provides that the number of
additional shares to be issued pursuant thereto will in no event
exceed a stated number which, in the case of the MBI Selling
Shareholders is 300,000 shares and, in the case of the S2 - F
shareholders is 5,000 shares. The share information set forth in
the Selling Shareholder Table below and in Note 1 thereto assumes
no such additional issuances occur.
The following table lists the Selling Shareholders, the number
of shares of Common Stock of the Company beneficially owned by
each Selling Shareholder as of the date of this Prospectus, the
number of Offered Shares to be offered for sale by each Selling
Shareholder and the number of outstanding shares of Common Stock
to be owned by each Selling Shareholder after completion of the
offering.
4
<PAGE>
COMMON COMMON
STOCK SHARES STOCK
OWNED TO BE OWNED
SELLING PRIOR TO OFFERED AFTER
SHAREHOLDER(1)(2) OFFERING HEREBY OFFERING
------------------------------------------------------------------
J. Franklin Morse(3) 380,841 100,238 280,603
The Joseph D. Morse 88,069 24,294 63,775
Revocable Trust, dated
January 25, 1993(4)
The Forrest W. Morse 104,187 28,739 75,448
Revocable Trust, dated
May 21, 1993(5)
The William F. Morse 96,127 26,516 69,611
Revocable Trust, dated
October 5, 1993(6)
Scot F. Morse 22,832 8,301 14,531
Kerry Lin Tong 22,832 8,301 14,531
Michael D. Morse(7) 393,491 143,117 250,374
Derek C. Morse(8) 8,293 3,018 5,275
Brock M. Morse(9) 8,293 3,018 5,275
Tari Morse as Custodian 8,293 3,018 5,275
for Tyler A. Morse
Under the Oregon
Uniform Transfer to
Minors Act
The Tyler A. Morse 16,126 5,865 10,261
Trust, dated April 24,
1997
The Joy L. Morse 19,867 7,224 12,643
Irrevocable Trust,
dated December 24,
1996
The Brock M. Morse 16,126 5,865 10,261
Trust, dated April 24,
1997
The Derek C. Morse 16,126 5,865 10,261
Trust, dated April 24,
1997(9)
Steven G. Morse(10) 464,729 169,021 295,708
Jennifer L. Smith 12,094 4,398 7,696
Gregory F. Morse(11) 461,757 162,684 299,073
The Sara L. Morse Trust, 8,292 3,018 5,274
dated October 31, 1995
The Bryan T. Morse 8,292 3,018 5,274
Trust, dated October
31, 1995
Jonathan B. Morse(12) 304,403 110,712 193,691
Travis L. Morse 3,741 1,359 2,382
Gabriel J. Morse 3,741 1,359 2,382
Susan L. Morse as 3,741 1,359 2,382
Custodian for Justin
W. Morse Under the
Oregon Uniform
Transfer to Minors Act
Susan L. Morse as 3,741 1,359 2,382
Custodian for Amanda
N. Morse Under the
Oregon Uniform
Transfers to Minors Act
5
<PAGE>
COMMON COMMON
STOCK SHARES STOCK
OWNED TO BE OWNED
SELLING PRIOR TO OFFERED AFTER
SHAREHOLDER(1)(2) OFFERING HEREBY OFFERING
------------------------------------------------------------------
The Travis Lee Morse 8,681 3,160 5,521
Gift Trust, dated May
15, 1997
The Justin Wade Morse 8,681 3,160 5,521
Gift Trust, dated May
15, 1997
The Amanda Nicole Morse 8,681 3,160 5,521
Gift Trust, dated May
15, 1997
The Gabriel Jerome Morse 8,681 3,160 5,521
Gift Trust, dated May
15, 1997
Raymond W. Morse(13) 123,104 44,770 78,334
Phyllis J. Helland 123,084 44,770 78,314
Diana M. Perdue(14) 123,104 44,770 78,334
John G. Perdue 123,084 44,770 78,314
The Anne M. Novakovich 158,587 57,678 100,909
Family Trust, dated
October 29, 1996(15)
The Anne M. Novakovich 56,447 20,532 35,915
Children's Trust,
dated April 8,
1997(15)
Angela Andersen 4,418 1,606 2,812
Clinton D. Andersen 4,418 1,606 2,812
The McBride Family 84,149 30,606 53,543
Limited
Partnership(16)
Debbie McCool 6,705 2,436 4,269
Richard Lyon(17) 6,705 2,436 4,269
Northwest Christian 60,150 60,150 0
College
Willamette Valley 8,270 8,270 0
Rehabilitation
Center, Inc.
R. Gary Ferguson(18) 95,981 14,225 81,756
Dennis L. Smallwood(19) 53,989 8,001 45,988
--------------------------------------------------------------------
Totals 3,542,953 1,230,932 2,312,021
====================================================================
(1) If the Common Stock holdings of the Selling Shareholders
were aggregated, then, based upon the number of shares of
Common Stock outstanding on December 31, 1997 and giving
effect both to the issuance on March 5, 1998 of 3,848,351
shares of Common Stock to former shareholders of MBI and S2
- F, including 3,542,953 shares issued to the Selling
Shareholders, and to the sale of 1,230,932 of such shares
pursuant to this Prospectus, the total number of shares of
Common Stock owned by the Selling Shareholders would be
2,312,021 shares, or approximately 7.04% of the outstanding
Common Stock excluding the 159,681 shares of Common Stock
being held by MBI, which are neither entitled to vote nor be
counted for quorum or financial reporting purposes as
outstanding shares.
(2) The MBI Selling Shareholders, which comprise all of the
Selling Shareholders other than R. Gary Ferguson and Dennis
L. Smallwood, filed a Schedule 13G with the SEC on March 13,
1998 to report their share ownership in the Company but
disclaimed the existence of a "group." If the Common Stock
6
<PAGE>
holdings of the MBI Selling Shareholders were aggregated,
then, based upon the number of shares of Common Stock
outstanding on December 31, 1997 and giving effect both to
the issuance on March 5, 1998 of 3,848,351 shares of Common
Stock to former shareholders of MBI and S2 - F, including
3,392,983 shares issued to the MBI Selling Shareholders, and
to the sale of 1,208,706 of such shares pursuant to this
Prospectus, the total number of shares of Common Stock owned
by the MBI Selling Shareholders would be 2,184,277 shares,
or approximately 6.65% of the outstanding Common Stock
excluding the 159,681 shares of Common Stock being held by
MBI, which are neither entitled to vote nor be counted for
quorum or financial reporting purposes as outstanding
shares.
(3) President of MBI, now a subsidiary of the Company.
(4) Joseph D. Morse is a former officer and director of MBI.
(5) Forrest W. Morse is a former officer and director of MBI.
(6) William F. Morse is a former officer and director of MBI.
(7) Former director and current manager of MBI.
(8) Former employee of MBI.
(9) Former employee of MBI.
(10) Former director and manager of and consultant to MBI.
(11) Former director and current manager of MBI.
(12) Former director of and consultant to MBI.
(13) Former director of MBI.
(14) Former director of MBI.
(15) Anne M. Novakovich is a former director of MBI.
(16) Judith M. McBride, a partner of the McBride Family Limited
Partnership, is a former director of MBI.
(17) Current employee of MBI.
(18) Former director and current officer of S2 - F.
(19) Former director and current officer of S2 - F.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Offered
Shares by the Company may be used for the refunding of
outstanding debt obligations, for corporate development purposes
(including the potential acquisition of businesses and/or
business assets), and for other general corporate purposes. The
7
<PAGE>
Company will not receive any of the proceeds from the sale of
Offered Shares offered for sale by the Selling Shareholders. See
"Selling Shareholders."
DESCRIPTION OF COMMON STOCK AND RIGHTS
The Company's authorized capital stock consists of 75,000,000
shares of Common Stock, $3.33 par value, 500,000 shares of
Preferred Stock, $100 par value, 1,000,000 shares of Preferred
Stock A, without par value, and 500,000 shares of Preference
Stock, without par value.
COMMON STOCK. The following statements are summaries of
certain provisions with respect to the Common Stock of the
Company contained in its Certificate of Incorporation, as
amended, as affected by certain rights of the holders, if any, of
the Company's Preferred Stock, Preferred Stock A and Preference
Stock and by certain provisions of its Indenture of Mortgage,
dated May 1, 1939, between the Company and The New York Trust
Company (The Bank of New York, successor Corporate Trustee) and
A.C. Downing (W.T. Cunningham, successor Co-Trustee), as restated
in the Forty-fifth Supplemental Indenture, dated as of April 21,
1992 and as further amended, (the "Indenture"). Such statements,
which do not purport to be complete, are subject in all respects
to the full provisions of the Certificate of Incorporation, as
amended, and the Indenture, to which reference is made.
Dividends may be paid on the Common Stock as determined by the
Board of Directors out of funds legally available therefor but
only if full dividends on all outstanding series of the Preferred
Stock, Preferred Stock A and Preference Stock for the then
current and all prior dividend periods and any required sinking
fund payments with respect to any outstanding series of such
Preferred Stock, Preferred Stock A or Preference Stock have been
paid or provided for. The Company's Indenture contains certain
restrictions upon, among other things, the payment or declaration
of cash dividends on shares of the Company's Common Stock.
The holders of the Common Stock have exclusive voting rights
on the basis of one vote per share, except as may be fixed and
determined by the Board of Directors in respect of series of the
Preferred Stock and Preferred Stock A, or as set forth in the
Certificate of Incorporation, as amended, with respect to the
Preference Stock or as otherwise provided by law.
Whenever the cumulative dividends on any outstanding series of
the Preferred Stock, Preferred Stock A or Preference Stock are
unpaid, in whole or in part, for a period of one year, the
holders of the Preferred Stock and Preferred Stock A, or
Preference Stock, as the case may be, shall be entitled to the
same voting rights as the holders of the Common Stock, namely one
vote for each share of Preferred Stock, Preferred Stock A or
Preference Stock held. Such voting rights remain in effect until
all arrears in the payment of the cumulative dividends shall have
been paid and the dividends thereon for the current dividend
period shall have been declared and the funds for the payment
thereof set aside. In addition, the consent of the holders, if
any, of specified percentages of certain series of the Preferred
Stock and Preferred Stock A is required in connection with
certain amendments to the Company's Certificate of Incorporation,
as amended, and certain increases in authorized amounts or
changes in stock senior to the Common Stock.
The holders of the Common Stock are entitled in liquidation to
share ratably in the assets of the Company after required
preferential payments to the holders of the Preferred Stock,
Preferred Stock A and Preference Stock.
The Common Stock has no preemptive or conversion rights and
there are no redemption or sinking fund provisions applicable
thereto. The outstanding Common Stock is fully paid and
nonassessable.
The Company's Certificate of Incorporation, as amended,
contains certain provisions which make it difficult to obtain
control of the Company through transactions not having the
approval of the Board of Directors, including:
8
<PAGE>
A provision providing for classification of the Board into
three classes comprised of as nearly equal a number of
directors as possible, establishing the method of filling any
vacancies, and providing that directors may be removed only
for cause;
A provision requiring the affirmative vote of 80% of the
outstanding shares of all classes of capital stock of the
Company entitled to vote for directors in order to authorize
certain "Business Combinations." Any such Business Combination
will also be required to meet certain "fair price" and
procedural requirements. Neither an 80% stockholder vote nor
"fair price" will be required for any Business Combination
which has been approved by two-thirds of the "Continuing
Directors;"
A provision permitting the Board of Directors to consider
certain specified factors in determining whether or not to
approve certain Business Combinations;
A provision requiring that action by stockholders be taken
only at a stockholders' meeting and limiting the ability of
stockholders to call a special meeting; and
A provision providing that certain Articles of the
Certificate of Incorporation, as amended, cannot be altered
except by 80% of the stockholders entitled to vote unless
approved by two-thirds of the Continuing Directors.
The Transfer Agent and Registrar for the Common Stock is
Norwest Bank Minnesota, N.A., South Saint Paul, Minnesota.
RIGHTS. On November 3, 1988, the Board of Directors of the
Company declared a dividend of one Right for each outstanding
share of Common Stock. The description and terms of the Rights
are set forth in a Rights Agreement, dated as of November 3, 1988
(the "Rights Agreement"), between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent. Each Right entitles the
registered holder, until the earlier of November 18, 1998 and the
redemption of the Rights, to purchase from the Company two-thirds
of one one-hundredth (one one-hundred-and-fiftieth) of a share of
Series A Preference Stock ("Preference Share") at an exercise
price of $50 per one one-hundredth ($33.33 per one one-hundred-
and-fiftieth) of a Preference Share (the "Purchase Price"),
subject to certain adjustments.
Capitalized terms used in the following description and not
otherwise defined herein have the meanings set forth in the
Rights Agreement.
The Rights initially are represented by the certificates for
Common Stock and will not be exercisable or transferable apart
from the Common Stock until the earlier to occur of (i) 10 days
following a public announcement that a person or group of
affiliated or associated persons ("Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership
of 20% or more of the outstanding Common Stock or (ii) 10 days
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of
30% or more of such outstanding Common Stock (the earlier of such
dates being called the "Distribution Date").
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then
current exercise price of the Right multiplied by the number of
one one-hundredths of a Preference Share for which a Right is
then exercisable, in accordance with the terms of the Rights
Agreement, such number of shares of common stock of the acquiring
company as shall be equal to the result obtained by (i)
multiplying the then current exercise price of a Right by the
number of one one-hundredths of a Preference Share for which a
Right is then exercisable, and (ii) dividing that product by 50%
9
<PAGE>
of the then current per share market price of the common stock of
the acquiring company on the date of consummation of such merger
or other business combination.
In the event that any Person becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right
to receive upon exercise thereof at a price equal to the then
current exercise price of the Right multiplied by the number of
one one-hundredths of a Preference Share for which a Right is
then exercisable, in accordance with the terms of the Rights
Agreement and in lieu of Preference Shares, such number of shares
of Common Stock of the Company as shall be equal to the result
obtained by (i) multiplying the then current exercise price of
the Right by the number of one one-hundredths of a Preference
Share for which a Right is then exercisable, and (ii) dividing
that product by 50% of the then current per share market price of
the Company's Common Stock on the date such person became an
Acquiring Person.
The Rights will first become exercisable on the Distribution
Date (unless sooner redeemed) and could then begin trading
separately from the Common Stock. The Rights will expire on
November 18, 1998 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier
redeemed by the Company, in each case as described below.
At any time prior to the time any person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01333 per Right
(the "Redemption Price"). No redemption will be permitted after
the time any person becomes an Acquiring Person. Immediately
upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, including an amendment to extend the Final Expiration
Date, and, provided there is no Acquiring Person, to extend the
period during which the Rights may be redeemed, except that from
and after such time as any person becomes an Acquiring Person no
such amendment may adversely affect the interests of the holders
of the Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
The Purchase Price payable, and the number of Preference
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preference
Shares, (ii) upon the grant to holders of the Preference Shares
of certain rights or warrants to subscribe for or purchase
Preference Shares at a price, or securities convertible into
Preference Shares with a conversion price, less than the then
current market price of the Preference Shares or (iii) upon the
distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in
Preference Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one one-
hundredths of a Preference Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock
payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Preference Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preference Share will be entitled to a
preferential quarterly dividend payment equal to the greater of
(a) $1 per share or (b) 150 times the aggregate dividend declared
per share of Common Stock. In the event of liquidation, the
holders of the Preference Shares will be entitled to a
preferential liquidation payment of $100 per share, provided that
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holders of the Preference Shares will be entitled to an aggregate
amount per share equal to 150 times the aggregate amount to be
distributed per share to the holders of shares of Common Stock.
Each Preference Share will have no vote, except as otherwise
provided for by law or as set forth in the Company's Certificate
of Incorporation, as amended. Finally, in the event of any
merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each Preference Share will be
entitled to receive 150 times the amount received per share of
Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preference Shares' dividend and
liquidation rights, the value of the number of one one-hundredths
of a Preference Share purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preference Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preference Share,
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preference Shares
on the last trading day prior to the date of exercise.
One Right was distributed to shareholders of the Company for
each share of Common Stock owned of record by them on November
18, 1988. Until the Distribution Date, the Company will issue
one Right with each share of Common Stock that shall become
outstanding so that all shares of Common Stock will have attached
Rights.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group that attempts to
acquire the Company on terms not approved by the Board of
Directors of the Company, except pursuant to an offer conditioned
on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time
that any person becomes an Acquiring Person, since until such
time the Rights may be redeemed by the Company at $.01333 per
Right.
PLAN OF DISTRIBUTION
The Company and the Selling Shareholders may sell the Offered
Shares in one of four ways: (i) through the solicitation of
proposals of underwriters or dealers to purchase the Offered
Shares, (ii) through underwriters or dealers on a negotiated
basis, (iii) directly to a limited number of purchasers or to a
single purchaser or (iv) through agents. The applicable
Prospectus Supplement with respect to the Offered Shares will set
forth the terms of the offering of such Offered Shares, including
the name or names of any underwriters, the purchase price of such
Offered Shares and the net proceeds to the Company and the
Selling Shareholders from such sale, any underwriting discounts
and other items constituting underwriters' compensation, any
initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
In addition, any Offered Shares offered for sale by the Selling
Shareholders that qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
If underwriters are used in the sale, such Offered Shares will
be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Offered
Shares may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or
directly by one or more underwriting firms. The underwriter or
underwriters with respect to a particular underwritten offering
of Offered Shares will be named in the Prospectus Supplement
relating to such offering and, if an underwriting syndicate is
used, the managing underwriter or underwriters will be set forth
on the cover page of such Prospectus Supplement. Unless
otherwise set forth in a Prospectus Supplement, the obligations
11
<PAGE>
of the underwriters to purchase the Offered Shares will be
subject to certain conditions precedent and the underwriters will
be obligated to purchase all such Offered Shares if any are
purchased.
The Offered Shares may be sold directly by the Company and the
Selling Shareholders or through agents designated by the Company
and the Selling Shareholders from time to time. The applicable
Prospectus Supplement will set forth the name of any agent
involved in the offer or sale of the Offered Shares and any
commissions payable by the Company or the Selling Shareholders to
such agent. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis
for the period of its appointment.
The Selling Shareholders and any broker-dealer or agents that
participate with the Selling Shareholders in the distribution of
the Offered Shares offered for sale by the Selling Shareholders
may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions received by them
and any profit on the resale of such Offered Shares purchased by
them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders
against certain liabilities, including liabilities under the
Securities Act. Agents and underwriters may be entitled under
agreements entered into with the Company and the Selling
Shareholders to indemnification or contribution by the Company
and the Selling Shareholders against certain liabilities,
including certain liabilities under the Securities Act.
The place and time of delivery for the Offered Shares in
respect of which this Prospectus is delivered will be set forth
in the accompanying Prospectus Supplement.
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, 1997,
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
in giving said report.
The information set forth in the reports, each dated January
12, 1998, 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, 1997, has been reviewed
and verified by Ralph E. Davis Associates, Inc. and has 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, 1997, 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 Offered Shares 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 will be passed upon for any
underwriter, dealer or agent by Berlack, Israels & Liberman LLP,
120 West 45th Street, New York, New York 10036.
12
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============================== ==============================
NO DEALER, SALESMAN OR OTHER
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IN CONNECTION WITH
THE OFFER CONTAINED IN THIS 2,100,000 SHARES
PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY MDU
SELLING SHAREHOLDER OR THE RESOURCES GROUP, INC.
UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE
THE DATE AS OF WHICH
INFORMATION IS GIVEN IN THIS COMMON STOCK
PROSPECTUS SUPPLEMENT AND THE PAR VALUE, $3.33 PER SHARE
PROSPECTUS. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE ANY 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 PROSPECTUS SUPPLEMENT
OFFER OR SOLICITATION. ---------------------
--------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Maps . . . . . . . . . . S-2
Summary Information . . S-3 MERRILL LYNCH & CO.
Selected Financial
Information . . . . . S-4
Forward-Looking Statements S-5
The Company . . . . . . S-6 DONALDSON LUFKIN & JENRETTE
Recent Developments . . S-7 SECURITIES CORPORATION
Use of Proceeds . . . . S-8
Common Stock Dividends
and Price Range . . . S-9
Underwriting . . . . . . S-10 EDWARD D. JONES & CO., L.P.
PROSPECTUS LEHMAN BROTHERS
Available Information . . 2
Incorporation of Certain
Documents by Reference. 2
The Company . . . . . . . 3
Selling Shareholders . . 3
Use of Proceeds . . . . . 7
Description of Common Stock
and Rights . . . . . . 8
Plan of Distribution . . 11 April 21, 1998
Experts . . . . . . . . . 12
Legal Opinions . . . . . 12
============================== ==============================
<PAGE>
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
The Company's logo will appear on page S-2 of the Prospectus.
The logo will contain the stylized words "MDU RESOURCES GROUP,
INC." and an illustration of a cube will appear immediately to
the left of the stylized words.
Maps of the locations of the registrant's business operations
will be set forth on page S-2 of the Prospectus. Such maps will
depict the states in the western and northwestern regions of the
United States and certain Canadian Provinces contiguous thereto,
as well as the States of Alaska and Hawaii. Such maps will
identify the states in which Montana-Dakota Utilities Co.,
Utility Services, Inc., Williston Basin Interstate Pipeline
Company, Fidelity Oil Group and Knife River Corporation operate .
