<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 26, 1993)
$150,000,000
AMERICAN PRESIDENT COMPANIES, LTD.
8% SENIOR DEBENTURES DUE 2024
The Senior Debentures will mature on January 15, 2024. Interest on the Senior
Debentures is payable semiannually on January 15 and July 15, beginning July 15,
1994. The Senior Debentures may not be redeemed prior to maturity and will not
be subject to any sinking fund.
The Senior Debentures will be represented by global securities registered in the
name of The Depository Trust Company (the "Depositary") or its nominee.
Interests in the Senior Debentures represented by such global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by the Depositary and its direct and indirect participants. Except as described
herein, Senior Debentures in definitive form will not be issued.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT COMPANY (1)(2)
Per Senior Debenture...................... 98.956% .875% 98.081%
Total..................................... $148,434,000 $1,312,500 $147,121,500
- -------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from January 12, 1994.
(2) Before deducting expenses payable by the Company estimated at $187,500.
</TABLE>
The Senior Debentures are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel or modify the offer without notice. It
is expected that delivery of global securities representing the Senior
Debentures will be made to the Depositary on or about January 12, 1994.
- ------------------------------------------
SALOMON BROTHERS INC
- ---------------------------------------------------------------------
The date of this Prospectus Supplement is January 5, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR
DEBENTURES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
S-2
<PAGE>
THE COMPANY
American President Companies, Ltd., through its subsidiaries, provides
integrated container transportation and related services through an intermodal
system combining ocean, rail and truck transportation and related terminal
operations. The Company operates principally in the trans-Pacific, intra-Asia
and North America markets. The Company believes that it is a leader in each of
these markets, with a number one or number two market share in the trans-Pacific
containership and North America double-stack train markets.
OPERATIONS
INTERNATIONAL CONTAINERIZED TRANSPORTATION. The Company provides
ocean-going containerized cargo transportation services in the trans-Pacific and
intra-Asia markets. It carried approximately 11% of all such cargo in the
trans-Pacific market in 1992, and believes that it has the largest share of this
market. The Company offers five scheduled trans-Pacific services per week
between key ports in Asia and the United States. Two of these services are made
possible under agreements with Orient Overseas Container Line, a Hong Kong
shipping company ("OOCL"), which enable the Company to exchange vessel space and
coordinate sailings with OOCL until 1996. These agreements are intended to
achieve increased service frequency, faster transit times, expanded service to
Southeast Asia and generally higher utilization of the Company's fleet and
marine terminals. The Company also provides intermodal transportation service
among major commercial centers in North America, Asia and the Middle East.
The Company operates 19 containerships in the trans-Pacific and intra-Asia
markets, five of which are chartered. In addition, it operates 24 chartered
feeder vessels in its intra-Asia and trans-Pacific services. The Company is
continuing to modernize its fleet of containerships. It has six C11-class
containerships under construction, each of which will be capable of carrying
approximately 4,800 twenty-foot equivalent containers. These ships are scheduled
for delivery in 1995 and will be among the largest, fastest and most
fuel-efficient vessels in the Company's fleet. The Company also plans to
construct three additional containerships to replace, in combination with its
new C11-class vessels, four L9-class vessels chartered until 1996 and used in
its West Asia/Middle East service.
In the United States, the Company operates marine terminal facilities in
Oakland and Los Angeles, California; Seattle, Washington; and Dutch Harbor,
Alaska. In Asia, it operates major marine terminal facilities in Kobe and
Yokohama, Japan and Kaohsiung, Taiwan, and its vessels call at numerous other
ports throughout Asia. The Company recently entered into a contract with the
Port of Los Angeles to lease a new 226-acre terminal facility for 30 years.
Occupancy of the new facility is scheduled for 1997. The Company is also
negotiating with the Port of Seattle to improve and expand its existing
terminal. Under the proposed construction plan, anticipated to be completed by
1997, the Seattle facility would approximately double in size to 160 acres. When
completed, both the new Los Angeles and the expanded Seattle terminals will
include on-dock rail facilities, which are expected to improve container
handling and throughput efficiency by allowing stacktrain loading and unloading
operations within the marine terminals. In addition, the Company recently
exercised an option to purchase no fewer than six gantry cranes and certain
intermodal equipment for use at the new Los Angeles terminal. The estimated
minimum cost of purchasing this equipment is $55 million. At certain locations,
the Company also performs stevedoring and other terminal services for its own
operations and for third parties.
The Company provides cargo distribution and warehousing services on the East
Coast of the United States and consolidation services in Asia, the Middle East,
Europe and North America. Freight consolidators combine various merchandise from
multiple vendors into a single containerload for delivery to a single
destination. The Company also serves shippers of less-than-container-load
cargoes by combining their shipments with others bound for the same or proximate
geographic locations.
The Company transports goods for import into the U.S. that include higher
value items such as clothing, electronics, automotive and manufacturing
components and other consumer products. Generally, higher value goods are
transported at higher rates due to their value, time sensitivity or need for
specialized services.
S-3
<PAGE>
U.S. export cargoes transported by the Company include refrigerated goods,
military shipments and lower value semi-processed and raw materials. In the
intra-Asia market, the Company transports food, raw materials and semi-processed
goods, as well as auto parts, electronics and other higher value finished
products.
The Company also bids competitively for contracts to transport military and
other cargo for the U.S. government. Such shipments represented approximately 2%
and 4% of the Company's consolidated revenues for 1992 and 1991, respectively,
excluding Operation Desert Storm shipments in 1991. Recently, a trade
publication reported that, in connection with the federal government's review of
U.S. maritime policy, the government is also reviewing the present practice of
reserving the carriage of certain U.S. government cargo, including military
cargo, for U.S.-flag carriers. The Company is unable to predict the outcome of
any such review.
The Company's international operations are seasonal and subject to
fluctuations in the relative value of various foreign currencies, the strength
of the local economies in the markets served and resulting changes in the demand
for transportation of import and export products. The Company's second and third
quarters are historically its strongest in terms of volume, primarily due to the
export of refrigerated goods from the U.S. in both of these quarters and
increased imports of consumer goods to the U.S. in the third quarter for the
Fall holiday buying season.
NORTH AMERICAN INTERMODAL TRANSPORTATION. The Company provides intermodal
transportation and freight brokerage services to domestic and international
shippers as well as time-critical cargo transportation and just-in-time delivery
(principally for the automotive manufacturing industry) through an integrated
system of rail and truck transportation. The Company operates one of the largest
double-stack container train networks in North America, based on the number of
containers carried. In this connection, the Company serves the long-haul
truckload, piggyback rail and international intermodal markets through more than
30 U.S., Canadian and Mexican inland terminal facilities. Major U.S. railroads
have entered into service contracts with the Company to provide locomotive
power, trackage, terminal services and labor to transport the Company's
containers on individual double-stack rail cars and on dedicated unit trains
consisting of up to 28 double-stack rail cars. In combination with its
double-stack rail service, the Company also provides local trucking services in
North America through a fleet of approximately 450 tractors, which it owns or
leases or which are provided by owner-operators.
LOGISTICS MANAGEMENT AND INFORMATION SERVICES. The Company operates its
vessels and manages its owned and leased fleet of nearly 120,000 containers and
approximately 50,000 owned and leased container chassis using its computer
systems and customized software, linked through a satellite communications
network with the Company's ships and offices. The Company's cargo and container
management system processes cargo bookings, generates bills of lading, expedites
U.S. Customs clearance and facilitates the management of rail cars, containers
and other equipment. The Company has also developed computer systems designed to
optimize the loading of containers onto ships and to facilitate the planning of
ship, rail and truck moves. The Company's communications system permits its
customers to access information regarding the location and status of their cargo
via touch-tone telephone, personal computer and computer-facsimile link.
COMPETITION AND REGULATION
The Company is a U.S.-flag carrier and faces vigorous competition
principally on the basis of price and service on all of its trade routes from 19
major operators, including foreign-flag operators who generally have cost and
operating advantages over U.S.-flag carriers. The Company's stacktrain
operations compete with 11 trans-Pacific containership companies and three West
Coast railroads offering double-stack rail service. The Company's stacktrain and
trucking operations also compete with numerous long-haul trucking companies. The
Company's freight brokerage business competes with numerous other domestic
freight brokerage companies.
The Company is party to an Operating-Differential Subsidy ("ODS") agreement
with the U.S. government, expiring on December 31, 1997, which provides for
payment by the U.S. government to partially compensate the Company for the
relatively greater expense of vessel operation under U.S. registry. ODS payments
to the
S-4
<PAGE>
Company, which were approximately $69 million in 1992, are expected to terminate
at the end of 1997. The Administration and Congress are actively reviewing U.S.
maritime policy. On November 4, 1993, the U.S. House of Representatives passed
the "Maritime Security and Competitiveness Act of 1993," H.R. 2151, which would,
among other things, extend the U.S. government's maritime support program for up
to ten years but would substantially reduce from current levels the amount of
support payments per participating vessel. Similar legislation has not yet been
addressed by the Senate. Accordingly, there can be no assurance that maritime
reform legislation will be enacted or that enacted legislation, if any, will
have terms similar to H.R. 2151.
While the Company continues to support efforts to enact new maritime support
legislation, prospects for passage of a program acceptable to the Company are
unclear. Accordingly, on July 16, 1993, the Company filed with the United States
Maritime Administration applications to operate under foreign flag its six new
C11-class containerships and to transfer to foreign flag seven of the 15
containerships in its trans-Pacific fleet. Enactment of maritime reform
legislation, if any, may influence the Company's decision whether to operate
these ships under foreign flag, should its applications be approved. Management
of the Company believes that, in the absence of ODS or an equivalent government
support program, it is generally no longer commercially viable to own or operate
containerships in foreign trade under the U.S. flag because of the higher labor
costs and the more restrictive design, maintenance and operating standards
applicable to U.S.-flag carriers. The Company continues to evaluate its
strategic alternatives in light of the expiration of its ODS agreement and the
uncertainties as to whether a new U.S. government maritime support program will
be enacted or the Company's application to flag its vessels under foreign
registry will be approved. While no assurances can be given, management of the
Company believes that it will be able to structure its operations to enable it
to continue to operate on a competitive basis without direct U.S. government
support.
MARKET OUTLOOK
TRANS-PACIFIC AND ASIA. Growth in demand for containerized cargo
transportation is correlated to economic growth in the markets served by the
Company. The Company believes that, in the near term, the economies of Southeast
Asia, China, India and the Middle East will maintain higher growth rates than
the economies of the United States and Japan. The Company has established
offices in the People's Republic of China, and it currently provides vessel
service to and from Shanghai, China's major gateway port, as well as service to
and from Dalian and Xingang.
NORTH AMERICA. In 1992, the Company introduced double-stack rail services
connecting the U.S., Canada and Mexico. The Company is continuing to expand its
intermodal transportation services into Mexico to serve the growing automotive
and other industries. The Company believes that the North America Free Trade
Agreement ("NAFTA") will increase volumes in this market. Growth in demand for
transportation services in this market depends on overall U.S., Canadian and
Mexican economic conditions.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Senior
Debentures offered hereby are estimated to be $146,934,000. The Company intends
to use such net proceeds for general corporate purposes, including, without
limitation, the financing of capital expenditures. Such capital expenditures may
include progress payments for the construction of new vessels.
S-5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information for each of the
five years in the period ended December 25, 1992 and for the 38-week periods
ended September 18, 1992 and September 17, 1993 should be read in conjunction
with the more detailed information and financial statements incorporated by
reference in the accompanying Prospectus. The information for the 38-week
periods ended September 18, 1992 and September 17, 1993 was derived from
unaudited financial statements which, in the opinion of management, include all
adjustments necessary for a fair presentation of such information. Results of
interim periods are not necessarily indicative of results for an entire year.
<TABLE>
<CAPTION>
YEARS ENDED 38 WEEKS ENDED
------------------------------------------------------------------ ------------------------
DEC. 30, DEC. 29, DEC. 28, DEC. 27, DEC. 25, SEPT. 18, SEPT. 17,
1988 1989 1990 1991 1992 1992 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Revenues...................... $ 2,131.2 $ 2,233.9 $ 2,269.9 $ 2,448.7 $ 2,504.8 $ 1,840.0 $ 1,832.4
Expenses
Operating, general and
administrative, net of
ODS........................ 1,881.7 2,066.4 2,106.5 2,199.4 2,257.5 1,641.5 1,651.4
Depreciation and
amortization............... 87.7 107.1 110.7 106.5 107.2 78.2 80.1
Restructuring charge........ -- -- 109.2 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total expenses............ 1,969.4 2,173.5 2,326.4 2,305.9 2,364.7 1,719.7 1,731.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)....... 161.8 60.4 (56.5) 142.8 140.1 120.3 100.9
Interest expense, net......... (17.7) (38.7) (36.7) (36.1) (26.5) (19.6) (10.4)
Other income (expense)........ (8.4) -- -- -- 8.1 8.1 8.9
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before taxes and
cumulative effect of
accounting changes........... 135.7 21.7 (93.2) 106.7 121.7 108.8 99.4
Tax expense (benefit)......... 54.4 8.7 (31.7) 40.5 43.6 41.3 40.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
cumulative effect of
accounting changes........... 81.3 13.0 (61.5) 66.2 78.1 67.5 58.9
Cumulative effect of
accounting changes........... -- (29.2) -- (10.5) (21.6) (21.6) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)............. $ 81.3 $ (16.2) $ (61.5) $ 55.7 $ 56.5 $ 45.9 $ 58.9
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less dividends on preferred
stock........................ 9.5 12.0 6.8 6.8 6.8 5.1 5.1
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) applicable
to common stock............ $ 71.8 $ (28.2) $ (68.3) $ 48.9 $ 49.7 $ 40.8 $ 53.8
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) per share,
fully diluted................ $ 3.26 $ (1.15 ) $ (3.55 ) $ 3.12 $ 3.39 $ 2.71 $ 3.72
RATIO OF EARNINGS TO FIXED
CHARGES...................... 2.87 x 1.26 x N/A 2.25 x 2.37 x 2.66 x 2.93 x
</TABLE>
<TABLE>
<CAPTION>
AS OF
--------------------------------------------------------------------------
DEC. 30, DEC. 29, DEC. 28, DEC. 27, DEC. 25, SEPT. 17,
1988 1989 1990 1991 1992 1993
--------- --------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............... $ 178.3 $ 127.7 $ 112.5 $ 158.7 $ (15.7) $ (23.1)
Total assets.................. 1,710.5 1,682.9 1,607.8 1,541.2 1,435.6 1,386.3
Long-term debt and capital
lease obligations............ 540.5 510.9 480.6 443.9 242.5 190.3
Redeemable preferred stock.... 75.0 75.0 75.0 75.0 75.0 75.0
Stockholders' equity.......... 616.7 566.7 459.5 426.3 397.2 452.8
</TABLE>
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 17, 1993 and as adjusted to give effect to the offering of Senior
Debentures made hereby, and to give effect to the offering in November 1993 of
the Company's 7 1/8% Senior Notes Due 2003 and the application of a portion of
the net proceeds of such notes to repay approximately $65 million of other
indebtedness. This table should be read in conjunction with the financial
statements of the Company incorporated by reference in the accompanying
Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 17, 1993
-----------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Current portion of long-term debt and capital
leases.............................................. $ 10.8 $ 10.8
Long-term debt and capital leases.................... 190.3 125.3
7 1/8% Senior Notes Due 2003......................... -- 150.0
Senior Debentures offered hereby..................... -- 150.0
------ -----------
Total debt......................................... 201.1 436.1
Redeemable preferred stock........................... 75.0 75.0
Stockholders' equity................................. 452.8 452.8
------ -----------
Total capitalization............................... $ 728.9 $ 963.9
------ -----------
------ -----------
</TABLE>
DESCRIPTION OF THE SENIOR DEBENTURES
The following description of the particular terms of the Senior Debentures
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Senior Debentures set
forth in the accompanying Prospectus, to which description reference is hereby
made.
The Senior Debentures offered hereby will be limited to $150,000,000
aggregate principal amount and will mature on January 15, 2024. Each Senior
Debenture will bear interest at the rate of 8% per annum, computed on the basis
of a 360-day year of twelve 30-day months, from January 12, 1994 or from the
most recent interest payment date to which interest has been paid or provided
for, payable semiannually on January 15 and July 15 of each year, beginning on
July 15, 1994. The Senior Debentures will be issued only in registered form in
denominations of $1,000 and any integral multiple thereof. Interest payable on
any Senior Debenture which is punctually paid or duly provided for on any
interest payment date shall be paid to the person in whose name such Senior
Debenture is registered at the close of business on the January 1 and July 1, as
the case may be, preceding such interest payment date.
The Senior Debentures will not be redeemable prior to maturity and will not
be entitled to any sinking fund. The Senior Debentures will be subject to
defeasance and covenant defeasance as provided in the accompanying Prospectus.
BOOK-ENTRY PROCEDURES
Upon issuance, the Senior Debentures will be represented by global
securities that will be deposited with, or on behalf of, the Depositary and will
be registered in the name of the Depositary or its nominee.
Upon issuance of the global securities, the Depositary for such global
securities or its nominee will credit the accounts of persons held with it with
the respective principal or face amounts of the book-entry Senior Debentures
represented by such global securities. Such accounts shall be designated by the
Underwriter. Ownership of beneficial interests in the global securities will be
limited to participants and to persons that have accounts with the Depositary
("participants") or persons that may hold interests through participants.
Ownership interests in the global securities will be shown on, and the transfer
of ownership interests will be effected only through, records maintained by the
Depositary or its nominee for such global securities (with respect to a
participant's interest) and records maintained by participants (with respect to
interests of persons other than participants).
S-7
<PAGE>
Payment of principal of and any premium and interest on the book-entry
Senior Debentures represented by global securities will be made to the
Depositary or its nominee, as the case may be, as the sole registered owner and
the sole holder of the Senior Debentures represented thereby for all purposes
under the Indenture. Neither the Company or the Trustee, nor any agent of the
Company or the Trustee, will have any responsibility or liability for any aspect
of the Depositary's records relating to beneficial ownership interests or
payments made on account of beneficial ownership interests in the global
securities representing any book-entry Senior Debentures, for any acts or
omissions of the Depositary or for any transactions between the Depositary and
participants or beneficial owners.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on the global securities, the
Depositary will immediately credit, on its book-entry registration and transfer
system, the accounts of participants with payments in amount proportionate to
their respective beneficial interests in the principal amount of such global
securities as shown on the records of the Depositary. Payments by participants
to owners of beneficial interests in the global securities held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for customer accounts registered in
"street name," and will be the sole responsibility of such participants.
The global securities may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by any such nominee to the
Depositary or another such nominee. The global securities are exchangeable only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such global securities or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), (ii) the Company in its sole
discretion determines that such global securities shall be exchangeable for
definitive Senior Debentures in registered form, or (iii) an Event of Default
with respect to the Senior Debentures represented by such global securities has
occurred and is continuing. Any global security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Senior Debentures issuable in
denominations of $1,000 and integral multiples thereof and registered in such
names as the Depositary holding such global security shall direct. Subject to
the foregoing, the global securities are not exchangeable, except for global
securities of like denominations to be registered in the name of the Depositary
or its nominee. If the Senior Debentures were subsequently issued in registered
form, they would thereafter be transferred or exchanged without any service
charge at the office of the Trustee, or at any other office or agency maintained
by the Company for such purpose.
So long as the Depositary for the global securities, or its nominee, is the
registered owner of such global securities, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Senior
Debentures represented by such global securities for the purposes of receiving
payment on the Senior Debentures, receiving notices and for all other purposes
under the Indenture and the Senior Debentures. Except as provided above, owners
of beneficial interests in the global securities representing the Senior
Debentures will not be entitled to receive physical delivery of Senior
Debentures in definitive form and will not be considered the Holders thereof for
any purpose under the Indenture. Accordingly, each person owning a beneficial
interest in the global securities representing the Senior Debentures must rely
on the procedures of the Depositary and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder of such securities under the Indenture. The
Depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a Holder is entitled to give or take under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any action of Holders or that an owner of a beneficial
interest in such a global security desires to give or take any action which a
Holder is entitled to give or take under the Indenture, the Depositary would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
S-8
<PAGE>
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
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 under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriter), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant either directly or indirectly.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof, Salomon Brothers Inc has agreed to purchase, and the
Company has agreed to sell to Salomon Brothers Inc, all of the Senior
Debentures.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Senior Debentures is subject to the
approval of certain legal matters by its counsel and to certain other
conditions. The Underwriter is obligated to purchase all of the Senior
Debentures if any are purchased.
The Underwriter initially proposes to offer part of the Senior Debentures
directly to the public at the public offering price set forth on the cover page
hereof and part to certain dealers at a price that represents a concession not
in excess of .50% of the principal amount of the Senior Debentures. The
Underwriter may allow, and dealers may reallow, a concession not in excess of
.25% of the principal amount of the Senior Debentures to certain other dealers.
After the initial offering of the Senior Debentures, the offering price and
other selling terms may from time to time be varied by the Underwriter.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the Senior Debentures on
a national securities exchange, but has been advised by the Underwriter that the
Underwriter presently intends to make a market in the Senior Debentures, as
permitted by applicable laws and regulations. The Underwriter is not obligated,
however, to make a market in the Senior Debentures and any such market-making
may be discontinued at any time at the sole discretion of the Underwriter.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Senior Debentures.
S-9
<PAGE>
PROSPECTUS
AMERICAN PRESIDENT COMPANIES, LTD.
DEBT SECURITIES
-----------------
American President Companies, Ltd., a Delaware corporation (the "Company"),
may offer from time to time up to $400,000,000 aggregate principal amount of its
senior unsecured debt securities ("Debt Securities"), in one or more series, in
amounts, at prices and upon terms to be determined at the time of sale. Debt
Securities may be issued in registered form without coupons or in bearer form
with or without coupons attached.
The accompanying Prospectus Supplement sets forth the specific terms of the
offering and sale of Debt Securities, including the specific designation, rights
and restrictions of the Debt Securities, the currencies or currency units in
which the Debt Securities are denominated, the aggregate principal amount, the
maturity, rate and time of payment of interest, any exchange, redemption or
sinking fund provisions of the Debt Securities, and the initial public offering
price, listing on any securities exchange or market, and the name of and
compensation to each underwriter, dealer or agent (if any) involved in the sale
of the Debt Securities.
-------------------
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.
-------------------
Debt Securities may be offered directly, through underwriters or dealers, or
through agents designated from time to time, as set forth in the Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for underwriters, dealers or agents.
November 26, 1993
<PAGE>
No dealer, sales representative, or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Prospectus or any Prospectus
Supplement and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or by any underwriter,
dealer or agent. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, any securities other than the securities
to which it relates or an offer to or a solicitation of any person in any
jurisdiction where such an offer or solicitation would be unlawful. Neither the
delivery of this Prospectus, any Prospectus Supplement nor any sale made
hereunder or thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date hereof or thereof.
-------------------
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 and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C., as well as at the regional offices of the Commission located
at Seven World Trade Center, New York, New York and 500 West Madison Street,
Chicago, Illinois. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain of the Company's securities are listed on,
and reports, proxy statements and other information filed by the Company should
also be available for inspection at the offices of, the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York, and The Pacific Stock Exchange, 301
Pine Street, San Francisco, California.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Debt Securities. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated into this Prospectus by reference: (a) Annual
Report on Form 10-K for the fiscal year ended December 25, 1992, as amended by
two Forms 8 dated April 19, 1993 and by Form 10-K/A dated October 18, 1993; (b)
Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 1993; (c)
Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 1993; and
(d) Quarterly Report on Form 10-Q for the fiscal quarter ended September 17,
1993, as amended by Form 10-Q/A dated November 1, 1993. All documents
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the termination of this offering shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of the
Prospectus has been delivered, and who makes a written or oral request, a copy
of any and all of the information that has been incorporated by reference in the
Registration Statement, excluding exhibits. Requests should be directed to:
Randall K. Gausman, Director, Corporate Finance and Investor Relations, American
President Companies, Ltd., 1111 Broadway, Oakland, California 94607 (telephone
number: (510) 272-8000).
2
<PAGE>
THE COMPANY
The Company, through its subsidiaries, provides integrated container
transportation and related services through an intermodal system combining
ocean, rail and truck transportation and related terminal operations. The
Company operates principally in the trans-Pacific, intra-Asia and North America
markets.
The Company's principal executive offices are located at 1111 Broadway,
Oakland, California 94607, and its telephone number is (510) 272-8000.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the net
proceeds from the sale of Debt Securities offered hereby will be used for
general corporate purposes, including the repayment of outstanding indebtedness
and the financing of capital expenditures.
LIQUIDITY AND CAPITAL RESOURCES
Effective January 5, 1993, the Company and its principal subsidiary,
American President Lines, Ltd. ("APL"), amended their four-year revolving credit
agreement with a group of banks (the "Credit Agreement") to provide for an
aggregate commitment of up to $300 million to the Company and APL, of which the
Company may borrow up to $150 million. Because the Indenture (as defined below)
will prohibit APL from borrowing under the Credit Agreement, the sale of the
Debt Securities will cause the aggregate credit available under the Credit
Agreement to be limited to the $150 million which the Company may itself borrow.
In addition, under the terms of the Credit Agreement, on the fifth business day
following the closing of an offering of the Debt Securities resulting in net
proceeds to the Company of at least $100 million, the aggregate credit available
under the Credit Agreement to the Company will be reduced to $100 million. See
"Description of the Debt Securities -- Covenants Contained in the Indenture --
Limitation on Restricted Subsidiary Debt."
The Company has obtained commitments from European banks to finance
approximately $400 million of the purchase price of six C11-class vessels
scheduled for delivery in 1995. This financing will become available for
draw-down by the Company upon the delivery of each vessel. Principal payments on
any such draw-downs will be due in increasing semi-annual installments over 12
years, commencing six months after the delivery of each vessel.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED 38 WEEKS ENDED
------------------------------------------------ --------------------
DEC. 30, DEC. 29, DEC. 28, DEC. 27, DEC. 25, SEPT. 18, SEPT. 17,
1988 1989 1990 1991 1992 1992 1993
-------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges...... 2.87x 1.26x N/A 2.25x 2.37x 2.66 x 2.93 x
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing the sum
of income before taxes, interest expense, excluding amounts capitalized, and a
portion of rental expense representative of the interest factor by the sum of
total interest and the portion of rental expense representative of the interest
factor.
DESCRIPTION OF THE DEBT SECURITIES
The Company may offer under this Prospectus Debt Securities, which will
represent senior unsecured general obligations of the Company and will rank
prior to all subordinated indebtedness of the Company and pari passu with all
other unsecured indebtedness of the Company outstanding on the date of the
Prospectus Supplement relating to such Debt Securities. The aggregate offering
price of Debt Securities offered by the
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<PAGE>
Company under this Prospectus will not exceed $400,000,000. The following
description of the terms of the Debt Securities sets forth certain general terms
and provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Debt Securities so offered will be described in the Prospectus Supplement
relating to such Debt Securities.
The Debt Securities will be issued under an Indenture, dated as of November
1, 1993 (the "Indenture"), among the Company and The First National Bank of
Boston, as trustee (the "Trustee"). The Indenture is filed as an exhibit to the
Registration Statement. The following summary of certain provisions that are
contained in the Indenture does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the Indenture.
Numerical references in parentheses below are to sections of the Indenture.
Wherever particular sections or defined terms of the Indenture are referred to,
it is intended that such sections or defined terms shall be incorporated herein
by reference. Unless otherwise indicated, capitalized terms shall have the
meanings ascribed to them in the Indenture.
GENERAL
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder, and the Indenture provides that Debt Securities may be issued
thereunder up to an aggregate principal amount authorized from time to time by
the Company and may be payable in any currency or currency unit designated by
the Company or in amounts determined by reference to an index. Reference is made
to the Prospectus Supplement for the following terms and other information to
the extent applicable with respect to the Debt Securities being offered thereby:
(1) the designation and any limit on the aggregate principal amount of such Debt
Securities; (2) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Debt Securities will be issued and whether the
Debt Securities are being issued in exchange for outstanding debt securities
with one or more persons for resale; (3) the date or dates on which such Debt
Securities will mature; (4) the currency, currencies or currency units in which,
or index with respect to which, such Debt Securities are being sold and are
denominated and the circumstances, if any, under which any Debt Securities may
be payable in a currency other than the currency in which such Debt Securities
are denominated, and if so, the exchange rate, the exchange rate agent and, if
the Holder of any such Debt Securities may elect the currency in which payments
thereon are to be made, the manner of such election; (5) the authorized
denominations in which such Debt Securities will be issuable; (6) the rate or
rates (which may be fixed or variable) at which such Debt Securities will bear
interest, which rate may be zero in the case of certain Debt Securities issued
at an issue price representing a discount from the principal amount payable at
maturity; (7) the date from which interest on such Debt Securities will accrue,
the dates on which such interest will be payable, the date on which payment of
such interest will commence and the circumstances, if any, in which the Company
may defer interest payments; (8) the dates on which, and the price or prices at
which, such Debt Securities will, pursuant to any mandatory sinking fund
provision, or may, pursuant to any optional redemption or required repayment
provisions, be redeemed or repaid and the other terms and provisions of any such
optional redemption or required repayment; (9) whether such Debt Securities are
to be issuable as Bearer Securities and/or Registered Securities and, if
issuable as Bearer Securities, the terms upon which any Bearer Securities may be
exchanged for Registered Securities; (10) whether such Debt Securities are to be
issued in the form of one or more temporary or permanent Global Securities and,
if so, the identity of the Depositary for such Global Security or Securities;
(11) if a temporary global Debt Security is to be issued with respect to such
series, the extent to which, and the manner in which, any interest thereon
payable on an interest payment date prior to the issuance of a permanent Global
Security or definitive Bearer Securities will be credited to the accounts of the
persons entitled thereto on such interest payment date; (12) if a temporary
Global Security is to be issued with respect to such series, the terms upon
which interests in such temporary Global Security may be exchanged for interests
in a permanent Global Security or for definitive Debt Securities of the series
and the terms upon which interests in a permanent Global Security, if any, may
be exchanged for definitive Debt Securities of the series; (13) any additional
restrictive covenants included for the benefit of Holders of such Debt
Securities; (14) any additional Events of Default provided with respect to such
Debt Securities; (15) information with
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<PAGE>
respect to book-entry procedures, if any; (16) whether the Debt Securities will
be repayable at the option of the Holder in the event of a change in control of
the Company; and (17) any other terms of the Debt Securities not inconsistent
with the provisions of the Indenture. Such Prospectus Supplement will also
describe any special provisions for the payment of additional amounts with
respect to the Debt Securities and certain United States federal income tax
consequences and other special considerations applicable to such series of Debt
Securities. If a Debt Security is denominated in a foreign currency, such Debt
Security may not trade on a national securities exchange unless and until the
Commission has approved appropriate rule changes pursuant to the Exchange Act to
accommodate the trading of such Debt Security. (SECTION 301)
If any of the Debt Securities are sold for foreign currencies or foreign
currency units, the restrictions, elections, tax consequences, specific terms
and other information with respect to such issue of Debt Securities and such
currencies or currency units will be set forth in the Prospectus Supplement
relating thereto.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
that at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable to any such series will be
described in the Prospectus Supplement relating thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in the Prospectus
Supplement, Bearer Securities other than Bearer Securities in temporary or
permanent global form will have interest coupons attached. (SECTION 201) The
Indenture also provides that Bearer Securities or Registered Securities of a
series may be issuable in permanent global form. (SECTION 203) See "Permanent
Global Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of authorized denominations and of a
like aggregate principal amount, tenor and terms. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the Indenture, Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default) of such
series will be exchangeable into Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount, tenor and
terms. Bearer Securities surrendered in exchange for Registered Securities
between the close of business on a Regular Record Date or a Special Record Date
and the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest, and interest will not be
payable in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the terms of the Indenture. Bearer Securities will not be issued
in exchange for Registered Securities. (SECTION 305) Each Bearer Security other
than a temporary global Bearer Security will bear a legend indicating that
certain Holders thereof will be subject to certain limitations under the United
States federal income tax laws.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a satisfactory written instrument of transfer), at
the office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to such series of Debt
Securities, without service charge and upon payment of any taxes and other
governmental charges. (SECTION 305) If the applicable Prospectus Supplement
refers to any transfer agent (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent (or
Security Registrar) acts, except that, if Debt Securities of a series are
issuable solely as Registered Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as Bearer Securities, the Company will be
required to maintain (in addition
5
<PAGE>
to the Security Registrar) a transfer agent in a Place of Payment for such
series located outside the United States. The Company may at any time designate
additional transfer agents with respect to any series of Debt Securities.
(SECTION 1002)
The Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed for a period of
15 days preceding the first publication of the relevant notice of redemption or,
if Registered Securities are outstanding and there is no publication, the
mailing of the relevant notice of redemption, (ii) to register the transfer of
or exchange any Registered Security so selected for redemption or exchange in
whole or in part, except the unredeemed or unexchanged portion of any Registered
Security being redeemed or exchanged in part, or (iii) to exchange any Bearer
Security so selected for redemption or exchange except that such a Bearer
Security may be exchanged for a Registered Security of like tenor and terms of
that series, PROVIDED that such Registered Security shall be surrendered for
redemption or exchange. (SECTION 305) Additional information regarding
restrictions on the issuance, exchange and transfer of, and special United
States federal income tax considerations relating to, Bearer Securities will be
set forth in the applicable Prospectus Supplement.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series which are issuable as Bearer Securities will
initially be represented by one or more temporary Global Securities, without
interest coupons, to be deposited with a common depositary in London for Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System, and CEDEL S.A. for credit to designated accounts. On and after
the date determined as provided in any such temporary Global Security and
described in the applicable Prospectus Supplement, but within a reasonable time,
each such temporary Global Security will be exchangeable for definitive Bearer
Securities, definitive Registered Securities or all or a portion of a permanent
global Bearer Security, or any combination thereof, as specified in such
Prospectus Supplement. No definitive Bearer Security or permanent global Bearer
Security delivered in exchange for a portion of a temporary Global Security
shall be mailed or otherwise delivered to any location in the United States in
connection with such exchange.
Additional information regarding restrictions on and special United States
federal income tax consequences relating to temporary Global Securities will be
set forth in the Prospectus Supplement relating thereto. The Debt Securities of
a series may be issued in whole or in part in the form of one or more Global
Securities that will be deposited with, or on behalf of, the Depositary
identified in the Prospectus Supplement relating to such series.
PERMANENT GLOBAL SECURITIES
If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such Global Security may
exchange such interests for Debt Securities of such series and of like tenor and
principal amount of any authorized form and denomination. Principal of and any
premium and interest on a Global Security will be payable in the manner
described in the Prospectus Supplement relating thereto.
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payments
of principal of and premium, if any, and interest, if any, on Bearer Securities
will be payable in the currency designated in the Prospectus Supplement, subject
to any applicable laws and regulations, at such paying agencies outside the
United States as the Company may appoint from time to time. Unless otherwise
provided in the Prospectus Supplement, such payments may be made, at the option
of the Holder, by a check in the designated currency or by transfer to an
account in the designated currency maintained by the payee with a bank located
outside the United States. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of interest on Bearer Securities on any Interest
Payment Date will be made only against surrender of the coupon relating to such
Interest Payment Date to a paying agent outside the United States. (SECTIONS 307
AND 1002) Unless otherwise indicated in the applicable Prospectus Supplement, no
payment with respect to any Bearer Security will be made at any office or paying
agency maintained by the Company in the United States nor will any such payment
be made by transfer to an account, or by mail to an address, in the United
States.
6
<PAGE>
Notwithstanding the foregoing, payments of principal of and premium, if any, and
interest, if any, on Bearer Securities denominated and payable in U.S. dollars
will be made in U.S. dollars at an office or agency of, and designated by, the
Company located in the United States, if payment of the full amount thereof in
U.S. dollars at all paying agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions, and
the Trustee receives an opinion of counsel that such payment within the United
States is legal. (SECTION 1002)
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and premium, if any, and interest, if any, on a Registered
Security will be payable in the currency designated in the Prospectus
Supplement, and interest will be payable at the office of such paying agent or
paying agents as the Company may appoint from time to time, except that at the
option of the Company payment of any interest may be made by a check in such
currency mailed to the Holder at such Holder's registered address or by wire
transfer to an account in such currency designated by such Holder in writing not
less than 10 days prior to the date of such payment. Unless otherwise indicated
in the applicable Prospectus Supplement, payment of any installment of interest
on a Registered Security will be made to the Person in whose name such
Registered Security is registered at the close of business on the Regular Record
Date for such payments. (SECTION 307) Unless otherwise indicated in the
applicable Prospectus Supplement, principal payable at maturity will be paid to
the registered holder upon surrender of the Registered Security at the office of
a duly appointed paying agent.
The paying agents outside the United States initially appointed by the
Company for a series of Debt Securities will be named in the applicable
Prospectus Supplement. The Company may terminate the appointment of any of the
paying agents from time to time, except that the Company will maintain at least
one paying agent outside the United States so long as any Bearer Securities are
outstanding where Bearer Securities may be presented for payment and may be
surrendered for exchange. (SECTION 1002)
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest, if any, on any Debt Security that
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will, at request of the Company, be
repaid to the Company, and the Holder of such Debt Security or any coupon
appertaining thereto will thereafter look only to the Company for payment
thereof. (SECTION 1003)
COVENANTS CONTAINED IN THE INDENTURE
Except as set forth below or as otherwise provided in the applicable
Prospectus Supplement with respect to any series of Debt Securities, the Company
is not restricted by the Indenture from incurring, assuming or becoming liable
for any type of debt or other obligations, from paying dividends or making
distributions on its capital stock or purchasing or redeeming its capital stock.
The Indenture does not require the maintenance of any financial ratios or
specified levels of net worth or liquidity. In addition, the Indenture does not
contain any provision that would require the Company to repurchase or redeem or
otherwise modify the terms of any of its Debt Securities upon a change in
control or other events involving the Company which may adversely affect the
creditworthiness of the Debt Securities.
The following covenants apply to all series of Debt Securities unless made
inapplicable to any particular series of Debt Securities at the time of issuance
thereof. Reference should be made to the Prospectus Supplement for the
particular series as to whether any of these covenants has been made
inapplicable to such series.
LIMITATION ON LIENS. The Company will not, and will not permit any
Restricted Subsidiary to, create, assume, suffer to exist or incur any Lien on
any property or assets of the Company or any Restricted Subsidiary, whether
owned on the date of the Indenture or thereafter acquired, to secure any Debt of
the Company or any Restricted Subsidiary or any other person (other than the
Debt Securities), without in any such case making effective provision whereby
all of the Debt Securities outstanding (together with, if the Company shall so
determine, any other Debt of the Company or such Restricted Subsidiary then
existing or thereafter created ranking equally with the Debt Securities,
including guarantees of indebtedness of others) shall be directly secured
equally and ratably with (or prior to) such Debt, so long as such Debt shall be
7
<PAGE>
secured, PROVIDED, HOWEVER, that the foregoing shall not prohibit (1) Liens
existing at the date of the original issuance of Debt Securities of the series
to which the applicable Prospectus Supplement relates or provided for under the
terms of agreements or bank commitment letters existing on such date, provided
that such Liens are limited to the property or assets subject thereto or
required to be subject thereto at such date (including after-acquired property
or additions or improvements) and that the amount of Debt secured thereby
(including the amount that may contractually be secured thereby) is not
increased from that existing on such date, (2) Liens on real property or
improvements thereto, (3) Liens on property or assets existing at the time of
acquisition of such property or assets by the Company or a Restricted Subsidiary
or securing Debt incurred prior to, at the time of or within 18 months after the
acquisition or construction of such property or assets or improvements thereto
for the purpose of financing all or any part of the cost of acquiring or
constructing such property or assets (including capitalized leases of such
property or assets) and/or improvements thereto, (4) Liens on any property or
assets owned by any entity existing on the date on which such entity becomes a
Restricted Subsidiary, (5) Liens on any property or assets of any Person
existing at the time such Person is merged into or consolidated with the Company
or any Restricted Subsidiary, or at the time of a sale, lease or other
disposition of the properties of any entity as an entirety or substantially as
an entirety to the Company or any Restricted Subsidiary, (6) Liens incurred in
the ordinary course of business not in connection with the borrowing of money,
including, but not limited to, liens imposed by operation of maritime law,
mechanics' and similar liens or deposits to obtain the release of such liens,
pledges or deposits to secure performance in connection with bids, tenders or
contracts, and deposits to secure or in lieu of surety, appeal, customs or
similar bonds, (7) Liens that secure Debt owing by a Restricted Subsidiary to
the Company and/or one or more Subsidiaries, (8) Liens in favor of a
governmental unit to secure payments under any contract or statute, or to secure
debts incurred in financing the acquisition or construction of or improvements
to property subject thereto, (9) any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or in part of any Lien
referred to in the foregoing clauses (1) through (8), inclusive, or of any Debt
secured thereby, provided that the principal amount of Debt secured thereby at
the time of such extension, renewal or replacement shall not be increased
(except that in the case of a Lien referred to in clause (1) the principal
amount of Debt may be increased up to the principal amount existing on the date
of original issuance of Debt Securities of the series to which the applicable
Prospectus Supplement relates) and that such extension, renewal or replacement
shall be limited to all or part of the property or assets subject to the Lien so
extended, renewed or replaced (plus improvements on such property or assets),
(10) Liens for taxes or assessments or governmental charges or levies not then
due and delinquent or the validity of which shall be contested in good faith,
(11) Liens arising out of any final judgment for the payment of money
aggregating not in excess of the greater of 5% of Stockholders' Equity or
$20,000,000, or Liens arising out of any final judgment for the payment of money
provided such judgment is being contested in good faith, and (12) easements or
similar encumbrances, the existence of which do not materially impair the use of
the property or assets subject thereto for the purposes for which it is held or
was acquired. Notwithstanding the foregoing, the Company or any Restricted
Subsidiary may create or assume Liens in addition to those permitted above, and
renew, extend or replace such Liens provided that at the time of such creation,
assumption, renewal, extension or replacement, and after giving effect thereto,
Exempted Debt does not exceed the greater of 10% of Stockholders' Equity or
$40,000,000. (SECTION 1004)
LIMITATION ON RESTRICTED SUBSIDIARY DEBT. The Indenture provides that the
Company will not permit any Restricted Subsidiary to create, incur, assume or
become liable for any Debt, except Debt secured by a Lien permitted above.
(SECTION 1005)
LIMITATION ON MERGER, CONSOLIDATION OR SALE OF ASSETS BY THE COMPANY. The
Company may not consolidate with or merge into any other Person or convey,
transfer or lease its assets substantially as an entirety to any Person, unless
(i) the successor Person, if other than the Company, assumes the Company's
obligations on the Debt Securities and under the Indenture, (ii) after giving
effect to the transaction no Event of Default, and no event which, after notice
or lapse of time, would become an Event of Default, shall have occurred and be
continuing, and (iii) certain other conditions are met. (SECTION 801)
CONSENT TO SERVICE OF PROCESS. In the event the Company or a successor
Person thereof is not a corporation, partnership or trust organized under the
laws of the United States of America, any State
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<PAGE>
thereof or the District of Columbia, the Company or such successor person will
appoint an Authorized Agent in the Borough of Manhattan, the City of New York
upon whom process may be served in any legal action or proceeding against it
with respect to its obligations under the Indenture or the Debt Securities of
any series instituted by the Holder of any Debt Security or the Trustee, and
each of the Company and such successor Person will thereby irrevocably submit to
the non-exclusive jurisdiction of any federal or state court in the Borough of
Manhattan, the City of New York in respect of any such legal action or
proceeding until all amounts due and to become due on the Debt Securities have
been paid. (SECTION 114)
CERTAIN DEFINITIONS. Set forth below are certain definitions relating to
the above covenants: (SECTION 101)
"Exempted Debt" means Debt of the Company and its Restricted Subsidiaries
incurred after the date of the Indenture and secured by Liens created or assumed
or permitted to exist pursuant to the limitation of the greater of 10% of
Stockholders' Equity or $40 million set forth in the last sentence of
"Limitation on Liens" above.
"Debt" means indebtedness for money borrowed or evidenced by a note, bond,
debenture or similar security and required by generally accepted accounting
principles to be shown as a liability on the Company's consolidated balance
sheet, and shall not include (i) indebtedness owed by a Subsidiary to the
Company and/ or another Subsidiary, (ii) trade accounts payable arising in the
ordinary course of business, or (iii) indebtedness of a Restricted Subsidiary
owing to a holder of 20% or more of the equity interests in such Restricted
Subsidiary.
"Lien" means any mortgage, pledge, lien, charge, security interest,
conditional sale or other title retention agreement or similar encumbrance.
"Restricted Subsidiary" means American President Lines, Ltd. and any
corporation: (i) of which more than 50% of the voting stock is owned or
controlled by the Company or by one or more of the other Restricted
Subsidiaries, and (ii) the total assets of which represent 5% or more of the
consolidated total assets of the Company as of the end of the Company's most
recent fiscal quarter; PROVIDED, HOWEVER, that neither Natomas Real Estate
Company nor any Subsidiary of Natomas Real Estate Company shall be deemed to be
a Restricted Subsidiary of the Company.
"Stockholders' Equity" means the stockholders' equity in the Company and its
consolidated Subsidiaries as shown on the audited consolidated balance sheet
contained in the latest annual report to stockholders of the Company.
MODIFICATION AND WAIVER
Except as to certain modifications and amendments not adverse to Holders of
Debt Securities, modifications and amendments of and waivers of compliance with
certain restrictive provisions under the Indenture may be made only with the
consent of the Holders of a majority in principal amount of the Outstanding Debt
Securities of each series thereunder affected by such modification, amendment or
waiver; PROVIDED that no such modification or amendment may, without the consent
of the Holder of each Outstanding Debt Security or coupon affected thereby: (i)
change the Stated Maturity of the principal or any installment of principal or
any installment of interest, if any; (ii) reduce the amount of principal or
interest thereon, or any premium payable upon redemption or repayment thereof or
in the case of an Original Issue Discount Security the amount of principal
payable upon acceleration of the Maturity thereof; (iii) change the place of
payment or the currency in which principal or interest is payable, if any; (iv)
impair the right to institute suit for the enforcement of any payment of the
principal, premium, if any, and interest, if any, or adversely affect the right
of repayment, if any, at the option of the Holder; (v) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults; (vi) reduce the requirements contained in the Indenture for
quorum or voting; or (vii) modify any of the above provisions. (SECTION 902)
9
<PAGE>
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series issued thereunder if Debt Securities of that series
are issuable in whole or in part as Bearer Securities. (SECTION 1401) A meeting
may be called at any time by the Trustee for such Debt Securities, or upon the
request of the Company or the Holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice given
in accordance with the Indenture. (SECTION 1402) Except as limited by the
proviso in the preceding paragraph, any resolution presented at a meeting or
adjourned meeting at which a quorum is present may be adopted by the affirmative
vote of the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the Indenture with respect
thereto will be binding on all Holders of Debt Securities of that series and the
related coupons issued under the Indenture. The quorum at any meeting of Holders
of a series of Debt Securities called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing Outstanding Debt
Securities of such series having an aggregate principal amount sufficient to
transact the business for which such meeting was called. (SECTION 1404)
EVENTS OF DEFAULT
Unless otherwise provided in the applicable Prospectus Supplement, any
series of Debt Securities issued under the Indenture will provide that the
following shall constitute Events of Default with respect to such series: (i)
default in payment of principal of or premium, if any, on any Debt Security of
such series when due; (ii) default for 30 days in payment of interest on any
Debt Security of such series or related coupon, if any, when due; (iii) default
in the deposit of any sinking fund payment on any Debt Security of such series
when due; (iv) default by the Company in the performance of any other covenant
in the Indenture, continued for 60 days after written notice thereof by the
Trustee thereunder or the Holders of at least 25% in principal amount of the
Outstanding Securities of such series issued under the Indenture; (v) default
under any bond, debenture, note or other evidence of Debt of the Company in an
amount in excess of $10 million, which default shall constitute a failure to pay
the entire principal amount of such Debt when due and payable upon maturity
after the expiration of any applicable grace period with respect thereto or
shall have resulted in such Debt being accelerated prior to the date on which it
would otherwise become due and payable, unless such acceleration is rescinded or
annulled within 15 days after written notice as provided in the Indenture; and
(vi) certain events of bankruptcy, insolvency or reorganization of the Company.
(SECTION 501)
The Company is required to file with the Trustee annually an Officers'
Certificate as to the absence of certain defaults under the terms of the
Indenture. (SECTION 1007) The Indenture provides that if an Event of Default
specified therein shall occur and be continuing, either the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series issued under the Indenture may declare the principal
of all such Debt Securities (or in the case of Original Issue Discount Series,
such portion of the principal amount thereof as may be specified in the terms
thereof) to be due and payable. (SECTION 502) In certain cases, the Holders of a
majority in principal amount of the Outstanding Debt Securities of any series
may, on behalf of the Holders of all Debt Securities of any such series and any
related coupons, waive any past default or Event of Default except a default (i)
in payment of the principal of or premium, if any, or interest on any of the
Debt Securities of such series and (ii) in respect of a covenant or provision of
the Indenture which cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security of such series or coupons affected.
(SECTION 513)
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care, to
be indemnified by the Holders of the Debt Securities of any series thereunder or
any related coupons before proceeding to exercise any right or power under such
Indenture with respect to such series at the request of such Holders. (SECTION
603) The Indenture provides that no Holder of any Debt Securities of any series
thereunder or any related coupons may institute any proceeding, judicial or
otherwise, to enforce the Indenture except in the case of failure of the Trustee
thereunder, for 60 days, to act after it is given notice of default, a request
to enforce the Indenture by the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debt Securities of such series and an offer
of reasonable indemnity of the Trustee. (SECTION 507) This provision will not
prevent any Holder
10
<PAGE>
of Debt Securities or any related coupons from enforcing payment of the
principal thereof and premium, if any, and interest, if any, thereon at the
respective due dates thereof. (SECTION 508) The Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of any series
issued under the Indenture may direct the time, method and place of conducting
any proceedings for any remedy available to the Trustee for such Debt Securities
or exercising any trust or power conferred on it with respect to the Debt
Securities of such series. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture under which it serves.
(SECTION 512)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that if, pursuant to Section 301 thereof, the
provisions of Article Fifteen are made applicable to the Debt Securities of any
series denominated in U.S. dollars, the Company may elect either (A) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, lost or stolen Debt
Securities, to maintain an office or agency in respect of the Debt Securities
and to hold moneys for payment in trust) ("defeasance") or (B) to (1) be
released from its obligations with respect to such Debt Securities under certain
restrictive covenants, including those described above under "Covenants
Contained in the Indenture" and (2) have the occurrence of certain events
described above under clauses (iii), (iv) (with respect to such restrictive
covenants) and (v) under "Events of Default" be deemed not to be or result in an
Event of Default, in each case with respect to Debt Securities of such series
("covenant defeasance"), upon the irrevocable deposit with the Trustee (or other
qualifying trustee) in trust for such purpose, of money and/or Eligible
Instruments which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the day on which
such payments are due and payable, or on the redemption dates thereof, as the
case may be, in accordance with the terms of the Indenture and such Debt
Securities. In the case of a defeasance, such a trust may only be established
if, among other things, the Company has delivered to the Trustee an opinion of
counsel to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred. Such opinion must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable federal income
tax law occurring after the date of the Indenture. (ARTICLE FIFTEEN)
In the event the Company effects covenant defeasance with respect to Debt
Securities of any series and the Debt Securities of such series are declared due
and payable because of the occurrence of any Event of Default other than the
Events of Default described in clause (B)(2) above, the amount of money and
Eligible Instruments on deposit with the Trustee will be sufficient to pay
amounts due on the Debt Securities of such series at the time of their Stated
Maturity or Redemption Date, as the case may be, but may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company will
remain liable for such payments.
Debt Securities of any series denominated in a currency other than U.S.
dollars may be made subject to such provisions regarding defeasance or covenant
defeasance as are specified pursuant to Section 301 of the Indenture. The
Prospectus Supplement may further describe the provisions, if any, permitting
such defeasance or covenant defeasance with respect to the Debt Securities of a
particular series.
INFORMATION CONCERNING THE TRUSTEE
The First National Bank of Boston, the Trustee under the Indenture, has been
appointed by the Company as the paying agent, registrar and custodian with
respect to the Debt Securities. The Trustee is the transfer agent of the
Company's Common Stock, and it or its affiliates provide, and may in the future
provide, banking services to the Company in the ordinary course of their
business.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. A Prospectus
Supplement will set forth the terms of the offering of the
11
<PAGE>
Debt Securities offered thereby, including the name or names of any
underwriters, the purchase price of the Debt Securities, and the proceeds to the
Company from the sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, and any securities exchange
or market on which the Debt Securities may be listed. Only underwriters so named
in the Prospectus Supplement are deemed to be underwriters in connection with
the Debt Securities offered thereby.
If underwriters are used in the sale, the Debt Securities 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
obligations of the underwriters to purchase the Debt Securities will be subject
to certain conditions precedent, and the underwriters will be obligated to
purchase all the Debt Securities of the series offered by the Prospectus
Supplement if any of the Debt Securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Debt Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best-efforts basis for
the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Debt Securities providing for payment and delivery on a
future date specified in the Prospectus Supplement. There may be limitations on
the minimum amount which may be purchased by any such institutional investor or
on the portion of the aggregate principal amount of the particular Debt
Securities which may be sold pursuant to such arrangements. Institutional
investors to which such offers may be made, when authorized, include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions, and such other institutions as may be
approved by the Company. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any conditions
except (1) the purchase by an institution of the particular Debt Securities
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (2)
if the particular Debt Securities are being sold to underwriters, the Company
shall have sold to such underwriters the total principal amount of such Debt
Securities less the principal amount thereof covered by such arrangements.
Underwriters will not have any responsibility in respect of the validity of such
arrangements or the performance of the Company or such institutional investors
thereunder.
All Debt Securities offered will be a new issue of securities with no
established trading market. Any underwriters to whom such Debt Securities are
sold by the Company for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading markets for any such Debt
Securities.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may engage in
transactions with, or perform services for, the Company in the ordinary course
of business.
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for the Company by
Maryellen B. Cattani, Senior Vice President, General Counsel and Secretary of
the Company, and Pillsbury Madison & Sutro, San Francisco, California, and for
any agents or underwriters by Davis Polk & Wardwell, New York, New York. Toni
Rembe, a member of Pillsbury Madison & Sutro, is a director of the Company.
12
<PAGE>
EXPERTS
The consolidated financial statements and schedules of the Company included
in its Annual Report on Form 10-K, as amended by Form 10-K/A dated October 18,
1993, for the fiscal year ended December 25, 1992, incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, have been audited
by Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
13
<PAGE>
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
The Company.................................... S-3
Use of Proceeds................................ S-5
Selected Consolidated Financial Information.... S-6
Capitalization................................. S-7
Description of the Senior Debentures........... S-7
Underwriting................................... S-9
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
Use of Proceeds................................ 3
Liquidity and Capital Resources................ 3
Ratio of Earnings to Fixed Charges............. 3
Description of the Debt Securities............. 3
Plan of Distribution........................... 11
Legal Matters.................................. 12
Experts........................................ 13
</TABLE>
$150,000,000
AMERICAN PRESIDENT
COMPANIES, LTD.
8% SENIOR DEBENTURES
DUE 2024
[LOGO]
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SALOMON BROTHERS INC
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PROSPECTUS SUPPLEMENT
DATED JANUARY 5, 1994
