<PAGE> 1
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(4)
(To Prospectus dated May 15, 1996) Registration No. 033-64001
10,000,000 Shares
[NORAM ENERGY CORP. LOGO]
Common Stock
---------------------
All of the shares (the "Shares") of common stock, par value $.625 per share
(the "Common Stock"), of NorAm Energy Corp. ("NorAm" or the "Company") offered
hereby (the "Offering") are being sold by the Company. The Common Stock is
traded on the New York Stock Exchange under the symbol "NAE." On June 11, 1996,
the last sale price of the Common Stock as reported on the New York Stock
Exchange Composite Tape was $10 per share. See "Price Range of Common Stock and
Dividends."
Concurrently with the Offering, an affiliate of the Company is offering, by
means of a separate prospectus, $150 million liquidation amount of 6 1/4%
Convertible Trust Originated Preferred Securities(SM) (the "Convertible
Preferred Securities"), guaranteed to the extent set forth in such separate
prospectus by the Company. The Convertible Preferred Securities will be
convertible into Common Stock at an initial conversion price of $12.125 per
share. The sale of the Common Stock offered hereby and the sale of the
Convertible Preferred Securities are not conditioned on each other. See
"Convertible Trust Originated Preferred Securities Offering."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $9.875 $.40 $9.475
- ---------------------------------------------------------------------------------------------
Total(3)..................................... $98,750,000 $4,000,000 $94,750,000
=============================================================================================
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting" in this Prospectus Supplement.
(2) Before deducting expenses of the Offering payable by the Company estimated
at $100,000.
(3) The Company has granted the several Underwriters an option, exercisable
within 30 days after the date of this Prospectus Supplement, to purchase up
to an additional 1,500,000 shares of Common Stock at the Price to Public,
less Underwriting Discount, solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $113,562,500, $4,600,000 and
$108,962,500, respectively. See "Underwriting."
---------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Shares
will be made in New York, New York on or about June 17, 1996.
---------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
---------------------
The date of this Prospectus Supplement is June 12, 1996.
- ---------------
(SM) "Convertible Trust Originated Preferred Securities" is a service mark of
Merrill Lynch & Co., Inc.
<PAGE> 2
THE COMPANY'S PRINCIPAL FACILITIES
NATURAL GAS DISTRIBUTION
[MAP]
INTERSTATE PIPELINES
[MAP]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and the financial statements (including notes thereto)
appearing elsewhere in this Prospectus Supplement or incorporated by reference
in the accompanying Prospectus. Except where otherwise indicated, the
information in this Prospectus Supplement assumes the over-allotment option is
not exercised. See "Underwriting."
THE COMPANY
NorAm Energy Corp. ("NorAm" or the "Company") is principally engaged in the
distribution and transmission of natural gas, including gathering, storage and
marketing of natural gas. The Company is currently organized into five operating
units: (i) natural gas distribution; (ii) interstate pipelines; (iii) wholesale
energy marketing; (iv) retail energy marketing; and (v) natural gas gathering.
During 1995, such operating units generated approximately 53%, 35%, 2%, 7% and
3%, respectively, of the Company's business unit operating income.
Natural Gas Distribution. The Company's natural gas distribution business
("Natural Gas Distribution") is conducted through three divisions, Arkla, Entex
and Minnegasco, which collectively form the nation's third largest gas
distribution operation with over 400 billion cubic feet ("Bcf") of annual
throughput to over 2.7 million customers. Through these divisions, the Company
engages in both the sale and transportation of natural gas. The facilities and
terms of service related to these three divisions are largely regulated by state
public service commissions and municipalities. Natural Gas Distribution will
continue to serve as a core business providing a base of regulated revenues to
the Company. In addition to controlling costs, NorAm's distribution divisions,
by coordinating activities, are sharing marketing successes and adding new
products and services. Further, the Company's distribution divisions are
developing new and innovative rate structures to provide incentives if costs are
controlled and to mitigate the potential impact of retail unbundling.
Interstate Pipelines. The Company's interstate natural gas pipeline
business ("Interstate Pipelines") is conducted principally through NorAm Gas
Transmission Company ("NGT") and Mississippi River Transmission Corporation
("MRT"), two wholly-owned subsidiaries of the Company, together with certain
subsidiaries and affiliates. Through these subsidiaries and affiliates, the
Company engages in the transmission, sale and storage of natural gas. These
operations are subject to regulation principally by the Federal Energy
Regulatory Commission ("FERC"). A major focus of Interstate Pipelines is to seek
to profit from the growing demand to transport gas from west-to-east through the
Company's pipelines to serve Midwest and East Coast markets. In addition,
Interstate Pipelines are focusing on combining their activities and reducing
their capital expenditures and operating expenses. To this end, a significant
cost reduction initiative was implemented in early 1996.
Wholesale Energy Marketing. The Company's wholesale energy marketing
business is engaged in marketing natural gas and providing risk management
services to natural gas resellers and certain large volume customers. This
business is principally conducted by NorAm Energy Services, Inc., together with
certain affiliates (collectively, "Wholesale Energy Marketing" or "NES"). NES is
one of the largest natural gas marketers in the country, having increased its
average daily volumes from 0.9 Bcf per day in 1994 to 1.4 Bcf per day in 1995
and 2.2 Bcf per day during the first quarter of 1996. This growth can be
attributed largely to NES becoming a marketer on a national scale. In addition,
NES has begun to market electricity in wholesale markets in recent periods.
NES's activities are not generally subject to rate regulation.
Retail Energy Marketing. The Company's retail energy marketing business is
principally conducted by NorAm Energy Management, Inc. and certain affiliates
(collectively, "Retail Energy Marketing" or "NEM"). NEM was created in 1995 to
consolidate the existing unregulated retail marketing activities of NorAm's
distribution companies into one business segment. NEM is focusing on industrial
and large commercial customers behind the "city gate." Services offered to these
customers include natural gas supply, electric power services, management of
commodity pricing risks, total energy management, and supply and financing of
gas burning equipment, including inside-the-fence cogeneration. NorAm is also
organizing a
S-3
<PAGE> 4
company which will provide unbundled services to smaller customers in the
residential and small commercial categories behind the "city gate." Further,
NorAm is seeking to position itself as a "provider of choice" of new,
unregulated services such as appliance repair and preventive maintenance
contracts and home security systems to retail customers. NEM's activities are
not generally subject to traditional cost-of-service regulation.
Natural Gas Gathering. The Company's natural gas gathering activities are
principally carried out by NorAm Field Services Corp. and certain affiliates
(collectively, "Natural Gas Gathering" or "NFS"). NFS operates approximately
3,500 miles of gathering pipelines which collect gas from more than 200 separate
systems located in major producing fields in Oklahoma, Louisiana, Arkansas and
Texas. NFS is implementing plans to provide additional services including
compression, line looping and administrative services to its customers. NFS has
opened a regional office in Tulsa, Oklahoma and is exploring opportunities for
growth through acquisitions and partnerships which meet the Company's strategic
objectives.
In addition to the growth provided by the Company's five core businesses,
NorAm believes that it can expand its business opportunities in other areas.
International. NorAm intends to begin operations internationally with an
initial emphasis on natural gas distribution in Latin America. The Company
believes that significant opportunities exist to participate in energy
infrastructure development in areas which currently do not have natural gas
service. To exploit such opportunities, NorAm's strategy is to form partnerships
with reputable local companies as well as other international energy companies.
NorAm has entered into joint ventures and partnerships which are exploring
opportunities in several geographic areas including Argentina, Bolivia, Colombia
and Mexico.
Finance. From 1991 to 1995, annual interest expense has been reduced by
approximately $50 million. NorAm intends to continue to optimize its capital
structure by reducing its outstanding debt and increasing the strength of its
balance sheet. At March 31, 1996, the Company had $746 million of debt with an
average interest rate of 9.40% which matures or becomes callable prior to
December 31, 1999.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered............... 10,000,000 shares(1)
Number of Shares Outstanding:
Before the Offering.............. 125,249,110 shares(2)
After the Offering............... 135,249,110 shares(1)
Use of Proceeds.................... The net proceeds of the Offering, together with the net
proceeds of the offering of the Convertible Preferred
Securities and short-term borrowings of the Company,
will be used to redeem all $109.1 million outstanding
principal amount of the Company's 9.875% Debentures due
2018 (the "9.875% Debentures") and for general corporate
purposes. Pending use for general corporate purposes,
such proceeds will be used to repay in full the
Company's outstanding Bank Term Loan. See "Use of
Proceeds" and "Convertible Trust Originated Preferred
Securities Offering."
New York Stock Exchange Symbol..... NAE
</TABLE>
- ---------------
(1) Does not include up to 1,500,000 shares of Common Stock subject to an
over-allotment option granted to the Underwriters. See "Underwriting."
(2) As of March 31, 1996. Does not include shares of Common Stock issuable upon
exercise of certain rights to convert securities into additional shares of
Common Stock or upon conversion of the Convertible Preferred Securities
being separately offered concurrently herewith. See "Convertible Trust
Originated Preferred Securities Offering" in this Prospectus Supplement and
"Description of Capital Stock" in the accompanying Prospectus.
S-4
<PAGE> 5
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The summary consolidated financial information of the Company shown below
for the three-year period ended December 31, 1995 has been derived from the
Company's audited consolidated financial statements and for the three-month
periods ended March 31, 1996 and 1995 has been derived from the Company's
unaudited consolidated financial statements that include, in the opinion of
management of the Company, all adjustments (consisting solely of normal
recurring accruals, except as noted) necessary to present fairly the data for
such periods. This information should be read in conjunction with the financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996, incorporated by reference in the
accompanying Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues.................. $1,417.7 $ 888.1 $2,964.7 $2,857.9 $2,988.3
Gross profit........................ 390.1 346.9 1,107.5 1,078.4 1,087.4
Operating income
Natural Gas Distribution......... 122.4 92.7 158.0 145.5 160.1
Interstate Pipelines............. 30.8 31.0 103.8 105.4 100.6
Wholesale Energy Marketing....... 9.2 3.8 4.2 (3.0) (22.4)
Retail Energy Marketing.......... 9.1 6.1 22.2 18.4 15.1
Natural Gas Gathering(1)......... 2.7 1.8 8.7 5.6 --
Corporate and other.............. (5.3) (0.7) (9.6) (7.0) (16.9)
-------- -------- -------- -------- --------
168.9 134.7 287.3 264.9 236.5
Other items, net(2).............. (22.3) -- -- -- (28.6)
-------- -------- -------- -------- --------
Operating income................. 146.6 134.7 287.3 264.9 207.9
-------- -------- -------- -------- --------
Income from continuing operations... 61.2 52.1 65.5 51.3 39.9(3)
Per share data:
Continuing operations............ $ 0.47 $ 0.41 $ 0.47 $ 0.36 $ 0.26(3)
Discontinued operations, less
taxes.......................... -- -- -- (0.02) --
Extraordinary item, less taxes... 0.00 0.00 0.00 (0.01) (0.03)
-------- -------- -------- -------- --------
Net income....................... $ 0.47 $ 0.41 $ 0.47 $ 0.33 $ 0.23(3)
BALANCE SHEET DATA (END OF PERIOD):
Property, plant and equipment,
net.............................. $2,403.2 $2,372.5 $2,407.8 $2,377.1 $2,357.1
Total assets........................ 3,687.8 3,435.1 3,666.0 3,561.5 3,727.8
Long-term debt, less current
maturities....................... 1,467.5 1,323.7 1,474.9 1,414.4 1,629.4
Stockholders' equity................ 831.6 768.2 767.3 717.4 708.0
THROUGHPUT (BCF, EXCEPT AS NOTED):
Natural Gas Distribution............ 177.8 155.3 408.4 397.4 422.2
Interstate Pipelines(4)............. 304.5 269.0 976.3 835.1 871.0
Wholesale Energy Marketing.......... 201.9 105.7 512.8 317.9 244.7
Retail Energy Marketing............. 55.1 50.9 195.0 144.3 109.1
Natural Gas Gathering(1)............ 55.8 58.7 232.3 229.7 --
</TABLE>
- ---------------
(1) Included with Interstate Pipelines in 1993.
(2) For the three months ended March 31, 1996, includes charges for early
retirement and severance of $16.5 million and $5.8 million associated with
Interstate Pipelines and Natural Gas Distribution, respectively. For 1993,
includes (i) a $34.2 million charge associated with a comprehensive
settlement with a pipeline supplier and (ii) $5.6 million of operating
income associated with Louisiana Intrastate Gas Corporation.
(3) Income from continuing operations for 1993 includes pre-tax gains of
approximately $42.8 million (approximately $20.8 million or $0.17 per share
after tax) principally related to the Company's sale of Louisiana Intrastate
Gas Corporation and the Company's former Nebraska distribution properties.
(4) Interstate Pipelines throughput data is expressed in millions of MMBtu.
S-5
<PAGE> 6
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Shares are estimated
to be approximately $94.7 million (approximately $108.9 million if the
Underwriters' over-allotment option is exercised in full). Such net proceeds,
together with the proceeds from the offering of the Convertible Preferred
Securities by a Company affiliate (if completed) described under "Convertible
Trust Originated Preferred Securities Offering" (estimated at $145.7 million or
$167.6 million if the Underwriters' over-allotment option granted to the
underwriters of the Convertible Preferred Securities is exercised in full) and
short-term borrowings of the Company, will be used (i) to redeem all $109.1
million outstanding principal amount of the 9.875% Debentures at a redemption
price of 105.93% of the principal amount thereof and (ii) for general corporate
purposes. Pending such use for general corporate purposes, the remainder of such
net proceeds will be used to repay in full the Company's outstanding Bank Term
Loan. At March 31, 1996, the outstanding borrowings under the Bank Term Loan
were $150 million, which borrowings bore interest at 6.44% per annum through
June 19, 1996 (LIBOR plus 87 1/2 basis points). See "Capitalization" and
"Convertible Trust Originated Preferred Securities Offering."
The offerings of the Common Stock and the Convertible Preferred Securities
are not conditioned on each other. If the offering of the Convertible Preferred
Securities is not completed, the net proceeds from the sale of the Shares will
be used, together with short-term borrowings of the Company, to redeem the
9.875% Debentures in full.
COMPANY EXCHANGE OF $3.00 CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK, SERIES A
In accordance with the terms of the Company's $3.00 Convertible
Exchangeable Preferred Stock, Series A (the "Series A Preferred Stock"), on May
16, 1996 the Company gave notice to all holders of the Series A Preferred Stock
that, effective as of June 17, 1996, the Company will exercise its right to
exchange all outstanding shares of Series A Preferred Stock for the Company's 6%
Convertible Subordinated Debentures due 2012 (the "Exchange Debentures") at the
rate of $50 principal amount of Exchange Debentures per share of Series A
Preferred Stock, or $130 million principal amount of Exchange Debentures in the
aggregate. Each $50 principal amount of the Exchange Debentures will be
convertible, at the option of the holder at any time, unless previously
redeemed, into approximately 1.75 shares of Common Stock, subject to adjustment
in certain circumstances. See "Description of Capital Stock -- Convertible
Exchangeable Preferred Stock, Series A" in the accompanying Prospectus.
CONVERTIBLE TRUST ORIGINATED PREFERRED SECURITIES OFFERING
Concurrently with the Offering, NorAm Financing I, a Delaware statutory
business trust and affiliate of the Company (the "Trust"), is engaged in an
offering by means of a separate prospectus of $150 million aggregate liquidation
amount ($172.5 million aggregate liquidation amount if the underwriters'
over-allotment option is exercised in full) of Convertible Preferred Securities
evidencing undivided beneficial interests in the assets of the Trust. The
payment of periodic cash distributions with respect to the Convertible Preferred
Securities, out of moneys held by the Trust, and payments on liquidation,
redemption or otherwise with respect to such Convertible Preferred Securities
will be guaranteed to the extent set forth in such separate prospectus by the
Company. The Trust, in accordance with its declaration of trust, will use the
proceeds of the Convertible Preferred Securities offering to purchase $150
million of 6 1/4% convertible subordinated debt securities issued by the Company
("Convertible Subordinated Debt"). The Convertible Preferred Securities and the
Convertible Subordinated Debt will each be convertible into Common Stock at an
initial conversion price of $12.125 per share. The Company will use the net
proceeds of the Convertible Subordinated Debt issued to the Trust as described
above under "Use of Proceeds."
The sale of the Shares offered hereby is not conditioned on the sale of the
Convertible Preferred Securities by the Trust.
S-6
<PAGE> 7
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange (the "NYSE"). The
range of closing prices of the Common Stock as reported on the NYSE Composite
Tape and dividends paid or declared are shown in the following table for the
periods indicated.
<TABLE>
<CAPTION>
CLOSING
PRICES QUARTERLY
------------ DIVIDENDS
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1994
First Quarter............................................ $ 9 $6 3/4 $.07
Second Quarter........................................... 6 1/2 5 5/8 .07
Third Quarter............................................ 7 3/4 5 3/4 .07
Fourth Quarter........................................... 6 1/2 5 1/4 .07
1995
First Quarter............................................ $ 6 $5 1/8 $.07
Second Quarter........................................... 6 3/4 5 1/4 .07
Third Quarter............................................ 8 1/8 6 1/4 .07
Fourth Quarter........................................... 9 7 1/8 .07
1996
First Quarter............................................ $ 9 3/8 $8 1/4 $.07
Second Quarter (through June 11)......................... 11 8 5/8 .07
</TABLE>
Cash dividends on the Common Stock have been paid every year since 1954.
The most recent quarterly dividend of $0.07 per share was declared by the Board
of Directors on May 14, 1996, and will be paid on June 14, 1996, to stockholders
of record on May 24, 1996; therefore, investors in the Offering will not be
entitled to receive this dividend. Future dividends are dependent on the
Company's earnings, cash flow, financial condition, capital requirements and
other factors.
The Company has a Direct Stock Purchase and Dividend Reinvestment Plan
pursuant to which registered holders of Common Stock may reinvest all or a
portion of their Common Stock cash dividends in shares of the Common Stock at
the applicable market price. Stockholders and others may also make optional cash
purchases of shares of Common Stock in amounts up to $120,000 per calendar year
at the applicable market price.
Under the provisions of the Company's revolving credit facility, the
Company's total debt capacity is limited and it is required to maintain a
minimum level of stockholders' equity, which requirements may limit the
Company's ability to pay dividends. See Note 3 of the Notes to Consolidated
Financial Statements incorporated by reference into Item 8 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form
10-K") incorporated by reference in the accompanying Prospectus. On May 13,
1996, the Company had 44,504 common stockholders of record.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at March 31, 1996, as adjusted to give effect to the sale of the Common
Stock offered hereby and the application of the net proceeds as described in
"Use of Proceeds" in this Prospectus Supplement (including the exchange of the
Series A Preferred Stock for the Exchange Debentures), and as further adjusted
to give effect to the sale of the Convertible Preferred Securities by the Trust
and the application of the net proceeds from the sale thereof as described in
"Convertible Trust Originated Preferred Securities Offering" in this Prospectus
Supplement. The table should be read in conjunction with the historical
financial statements of the Company and related notes included in the 1995 Form
10-K and the Company's Quarterly Report on Form 10-Q for the period ended March
31, 1996. See "Incorporation of Certain Documents By Reference" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
AS FURTHER
ADJUSTED FOR
MARCH AS ADJUSTED CONVERTIBLE
31, FOR COMMON PREFERRED
1996 STOCK SECURITIES
ACTUAL OFFERING(1)(2) OFFERING(3)
-------- -------------- ------------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Short-Term Debt:
Notes Payable............................................. $ -- $ 18.3 $ 22.6
Long-Term Debt Due Within One Year........................ 48.8 48.8 48.8
-------- -------- --------
Total Short-Term Debt............................. 48.8 67.1 71.4
-------- -------- --------
Long-Term Debt:
Senior Long-Term Debt..................................... 1,467.5 1,358.4 1,208.4
Convertible Subordinated Debentures....................... -- 130.0 130.0
-------- -------- --------
Total Long-Term Debt.............................. 1,467.5 1,488.4 1,338.4
-------- -------- --------
Company-Obligated Mandatorily Redeemable Convertible
Preferred Securities of Subsidiary Trust(4)............... -- -- 145.7
Stockholders' Equity:
$3.00 Convertible Exchangeable Preferred Stock, Series A;
10,000,000 Shares Authorized; 2,600,000 Shares
Outstanding; 0 Shares Outstanding As Adjusted.......... 130.0 -- --
Common Stock; 250,000,000 Shares Authorized; 125,249,110
Shares Outstanding; 135,249,110 Shares Outstanding As
Adjusted............................................... 78.3 84.6 84.6
Paid-in Capital........................................... 884.2 972.6 972.6
Accumulated Deficit....................................... (286.7) (290.6) (290.6)
Unrealized Gain on Investment, net(5)..................... 25.8 25.8 25.8
-------- -------- --------
Total Stockholders' Equity........................ 831.6 792.4 792.4
-------- -------- --------
Total Capitalization......................... $2,347.9 $2,347.9 $2,347.9
======== ======== ========
</TABLE>
- ---------------
(1) Includes adjustment for the exchange of the Series A Preferred Stock for
the Exchange Debentures. See "Company Exchange of $3.00 Convertible
Exchangeable Preferred Stock, Series A" in this Prospectus Supplement and
"Description of Capital Stock -- Convertible Exchangeable Preferred Stock,
Series A" in the accompanying Prospectus.
(2) Assumes the redemption of all $109.1 million of the 9.875% Debentures at a
redemption price of 105.93% of the principal amount using the proceeds of
this offering of Common Stock and short-term borrowings. See "Use of
Proceeds" and "Convertible Trust Originated Preferred Securities Offering."
(3) Assumes repayment of the Bank Term Loan with the proceeds of the offering
of the Convertible Preferred Securities, if completed, and short-term
borrowings. See "Convertible Trust Originated Preferred Securities
Offering."
(4) The sole asset of the Trust will be the Convertible Subordinated Debt
with a principal amount of approximately $154,640,000. Upon redemption of
the Convertible Subordinated Debt, the Convertible Preferred Securities
will be mandatorily redeemable. See "Convertible Trust Originated Preferred
Securities Offering."
(5) Based on a market price of $44 3/4 per share for the Itron, Inc. common
stock at March 31, 1996 on the Nasdaq National Market. As of June 11, 1996,
the market price of the Itron common stock had declined to $34 1/2 per
share and the net unrealized gain to approximately $15.1 million.
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<PAGE> 9
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial information of the Company shown below
for the five-year period ended December 31, 1995 has been derived from the
Company's audited consolidated financial statements and for the three-month
periods ended March 31, 1996 and 1995 has been derived from the Company's
unaudited consolidated financial statements that include, in the opinion of
management of the Company, all adjustments (consisting solely of normal
recurring accruals, except as noted) necessary to present fairly the data for
such periods. This information should be read in conjunction with the financial
statements and related notes included in the 1995 Form 10-K and the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, incorporated
by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------------
1996 1995 1995 1994(1) 1993(1)(2) 1992(2) 1991(2)
-------- -------- -------- -------- ---------- -------- --------
(MILLIONS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues.......... $1,417.7 $ 888.1 $2,964.7 $2,857.9 $2,988.3 $2,782.2 $2,759.2
Operating Expenses:
Cost of Natural Gas
Purchased, Net.......... 1,027.6 541.2 1,857.2 1,779.5 1,900.9 1,758.4 1,730.4
Operation, Maintenance,
Cost of Sales and
Other................... 150.9 144.3 570.5 559.6 588.7 579.1 557.7
Depreciation and
Amortization(3)......... 35.7 38.6 147.1 153.0 151.9 151.4 146.2
Taxes Other Than Income
Taxes................... 34.6 29.3 102.6 100.9 104.7 100.9 98.9
Early Retirement and
Severance............... 22.3(4) -- -- -- -- -- --
Contract Termination
Charge.................. -- -- -- -- 34.2(5) -- --
Regulatory Settlement..... -- -- -- -- -- -- 15.0(6)
-------- ------ -------- -------- -------- -------- --------
Operating Income........ 146.6 134.7 287.3 264.9 207.9 192.4 211.0
Interest Expense, Net....... 36.2 39.8 158.0 169.3 172.4 185.2 169.8
Other Expense (Income),
Net....................... 3.4 2.7 8.4 9.9 (50.9)(7) (11.5) 6.3
Provision for Income
Taxes..................... 45.8 40.1 55.4 34.4 46.5 12.5 18.4
-------- ------ -------- -------- -------- -------- --------
Income from Continuing
Operations............ 61.2 52.1 65.5 51.3 39.9 6.2 16.5
Discontinued Operations,
Less Taxes................ -- -- -- (2.1)(8) -- (34.8)(9) (6.9)(10)
Cumulative Effect of Changes
in Accounting
Principles................ -- -- -- -- -- (4.9)(11) (64.4)(12)
Extraordinary Items, Less
Taxes..................... (0.3)(13) (0.1)(13) 0.0(13) (1.1)(13) (3.8)(13) (195.0)(14) --
-------- ------ -------- -------- -------- -------- --------
Net Income (Loss)....... 60.9 52.0 65.5 48.1 36.1 (228.5) (54.8)
Preferred Stock Dividend
Requirement............... 2.0 2.0 7.8 7.8 7.8 7.8 7.8
-------- ------ -------- -------- -------- -------- --------
Earnings (Loss) Available
to Common Stock......... $ 58.9 $ 50.0 $ 57.7 $ 40.3 $ 28.3 $ (236.3) $ (62.6)
======== ====== ======== ======== ======== ======== ========
Earnings (Loss) per Common
Share:
Continuing Operations..... $ 0.47 $ 0.41 $ 0.47 $ 0.36 $ 0.26 $ (0.01) $ 0.08
Discontinued Operations,
Less Taxes.............. -- -- -- (0.02) -- (0.29) (0.06)
Cumulative Effect of
Changes in Accounting
Principles.............. -- -- -- -- -- (0.04) (0.56)
Extraordinary Items, Less
Taxes................... 0.00 0.00 0.00 (0.01) (0.03) (1.60) --
-------- ------ -------- -------- -------- -------- --------
Net Income (Loss)....... $ 0.47 $ 0.41 $ 0.47 $ 0.33 $ 0.23 $ (1.94) $ (0.54)
======== ====== ======== ======== ======== ======== ========
Dividends per Common
Share................. $ 0.07 $ 0.07 $ 0.28 $ 0.28 $ 0.28 $ 0.48 $ 1.08
======== ====== ======== ======== ======== ======== ========
Weighted Average Shares
Outstanding (in
thousands)............ 124,991 122,960 123,868 122,424 122,305 121,820 115,981
======== ====== ======== ======== ======== ======== ========
BALANCE SHEET DATA (END OF
PERIOD):
Property, Plant and
Equipment, Net.......... $2,403.2 $2,372.5 $2,407.8 $2,377.1 $2,357.1 $2,523.9 $2,668.1
Total Assets.............. 3,687.8 3,435.1 3,666.0 3,561.5 3,727.8 4,059.0 4,806.9
Long-Term Debt............ 1,467.5 1,323.7 1,474.9 1,414.4 1,629.4 1,783.1 1,551.5
Stockholders' Equity...... 831.6 768.2 767.3 717.4 708.0 712.9 948.0
</TABLE>
S-9
<PAGE> 10
- ---------------
(1) The Company engaged in the acquisition and disposition of significant
distribution properties during 1994 and 1993.
(2) The assets, liabilities and results of operations for Louisiana Intrastate
Gas Corporation are included until its sale at June 30, 1993.
(3) Pursuant to a revised study of the useful lives of certain assets, in July
1995, the Company changed the depreciation rates associated with certain of
its pipeline and gathering assets. The effect of this change was to reduce
first-quarter 1996 depreciation expense by approximately $2.7 million from
the amount which would have been recorded if the first-quarter 1995
depreciation rates had been applied to these assets during 1996. The
estimated annual effect of this change is to decrease depreciation expense
by approximately $10.8 million.
(4) Represents costs associated with: (i) a reorganization at Interstate
Pipelines resulting in the elimination of approximately 275 positions, (ii)
an early retirement program at Entex accepted by approximately 100
employees, and (iii) the reorganization of certain functions at Minnegasco
resulting in the elimination of approximately 25 positions. The Company
expects that a substantial portion of these costs will be offset by
associated cost savings during 1996.
(5) Represents the costs associated with a comprehensive settlement entered
into with a gas supplier, terminating or modifying a number of contractual
arrangements.
(6) Represents the costs associated with a settlement entered into with the
Arkansas Public Service Commission in June 1991, including the issuance of
$8.3 million of credits to certain customers and the payment of certain
related expenses.
(7) Includes approximately $42.8 million of gains from the sale of certain
assets, including Louisiana Intrastate Gas Corporation and the Company's
former Nebraska distribution properties.
(8) Principally legal costs associated with the Company's discontinued savings
and loan business.
(9) Includes losses associated with the discontinued operations and disposal of
the Company's former operations in the exploration and production, radio
communications, savings and loan and gas grill manufacturing businesses.
(10) Includes losses associated with the discontinued operations of the
Company's former exploration and production, gas grill manufacturing and
radio communications businesses.
(11) Represents the cumulative effect of the Company's adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits."
(12) Represents the cumulative effect of the Company's adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
(13) Losses incurred upon early extinguishment of debt, net of related tax
benefit.
(14) Represents the charge associated with the Company's discontinuance of the
application of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" to the
Company's NorAm Gas Transmission Company subsidiary effective December 31,
1992.
S-10
<PAGE> 11
THE COMPANY
GENERAL
The Company is principally engaged in the distribution and transmission of
natural gas including gathering, marketing and storage of natural gas. In
recognition of changes within the natural gas industry and the manner in which
the Company manages its portfolio of businesses, the Company has organized its
operations into the following five operating units: (i) Natural Gas
Distribution; (ii) Interstate Pipelines; (iii) Wholesale Energy Marketing; (iv)
Retail Energy Marketing; and (v) Natural Gas Gathering. The Company is also
evaluating certain international investment opportunities including those
emerging from privatization initiatives in Latin America.
The following table summarizes the operating income (loss) of each of the
Company's five operating units for each of the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ --------------------------------
1996(1) 1995 1995 1994 1993
------ ----- ------ ------ ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Natural Gas Distribution.......... $122.4 $92.7 $158.0 $145.5 $160.1
Interstate Pipelines.............. 30.8 31.0 103.8 105.4 100.6
Wholesale Energy Marketing........ 9.2 3.8 4.2 (3.0) (22.4)
Retail Energy Marketing........... 9.1 6.1 22.2 18.4 15.1
Natural Gas Gathering(2).......... 2.7 1.8 8.7 5.6 --
</TABLE>
- ---------------
(1) Excludes the impact of early retirement and severance costs of $5.8 million
and $16.5 million for Natural Gas Distribution and Interstate Pipelines,
respectively. See "Selected Consolidated Financial Data."
(2) Included with Interstate Pipelines in 1993.
The Company's principal executive offices are located at 1600 Smith Street,
32nd Floor, Houston, Texas 77002. Its mailing address is P.O. Box 2628, Houston,
Texas 77252-2628, and its telephone number is (713) 654-5699.
STRATEGY
NorAm's strategy is to emphasize growth through offering an expanded
selection of natural gas, electric power and related value-added services. NorAm
intends to (i) extend products and services that are proven in current core
markets to new geographic markets, (ii) broaden the Company's product line based
on experience gained in all markets and (iii) leverage the Company's strengths,
including its operating expertise, physical facilities, contract rights, large
diverse customer base, purchasing power and systems and processes.
NorAm has identified six core areas of growth.
Natural Gas Distribution. NorAm's three distribution divisions serve as a
core business providing a base of regulated revenues for the Company. In
addition to controlling costs, NorAm's distribution divisions, by coordinating
activities, are sharing marketing successes and adding new products and
services. Further, the Company's distribution divisions are developing new and
innovative rate structures to provide incentives if costs are controlled, and
mitigate the potential impact of retail unbundling.
Interstate Pipelines. A major focus of Interstate Pipelines will be to seek
to profit from the growing demand to move gas from west-to-east through the
Company's pipelines to serve Midwest and East Coast markets. In 1995, NGT and
MRT, Natural Gas Gathering and Wholesale Energy Marketing, were placed under the
direction of a new management team. Since that time, the Interstate Pipelines
unit has focused on combining the activities at NorAm's pipelines and reducing
capital expenditures and operating expenses. As a result, a significant cost
reduction initiative was implemented in early 1996.
Wholesale Energy Marketing and Natural Gas Gathering. NES has seen its
volume and profits increase substantially in the past two years. NES is one of
the largest natural gas marketers in the country, having increased its average
daily volumes from an average of 0.9 Bcf per day in 1994 to 1.4 Bcf per day in
1995 and
S-11
<PAGE> 12
2.2 Bcf per day during the first quarter of 1996. This growth can be attributed
largely to NES becoming a marketer on a national scale. In addition, in recent
periods, NES has begun to market electricity in wholesale markets.
NFS, NorAm's natural gas gathering company, is implementing plans to bring
additional services including compression, line looping and administrative
services to its customers. NFS has opened a regional office in Tulsa, Oklahoma,
and is exploring opportunities for growth through acquisitions and partnerships
which meet the Company's strategic objectives.
Retail Energy Marketing. Retail Energy Marketing is an area of increasing
emphasis in the Company's strategic plan. NEM was created in 1995 to consolidate
the existing unregulated retail marketing activities of NorAm's distribution
companies into one business segment. NEM will focus on industrial and large
commercial customers behind the "city gate." Services offered to its customers
include natural gas supply, electric power services, management of commodity
pricing risks, total energy management, and supply and financing of gas burning
equipment, including inside-the-fence cogeneration. Further, NorAm is organizing
a company which will provide unbundled services to smaller customers in the
residential and small commercial categories behind the "city gate." NorAm is
also seeking to position itself as a "provider of choice" of new, unregulated
services such as appliance repair and preventive maintenance contracts and home
security systems to retail customers.
International. NorAm intends to begin operations internationally with an
initial emphasis on natural gas distribution in Latin America. The Company
believes that significant opportunities exist to participate in energy
infrastructure development in areas which currently do not have natural gas
service. To exploit such opportunities, NorAm's strategy is to form partnerships
with reputable local companies as well as other international energy companies.
NorAm has entered into joint ventures and partnerships which are exploring
opportunities in several geographic areas including Argentina, Bolivia, Colombia
and Mexico.
Finance. From 1991 to 1995, annual interest expense has been reduced by
approximately $50 million. NorAm intends to continue to optimize its capital
structure by reducing its outstanding debt and increasing the strength of its
balance sheet. At March 31, 1996, the Company had $746 million of debt with an
average interest rate of 9.40% which matures or becomes callable prior to
December 31, 1999.
THE BUSINESS
Natural Gas Distribution. The Company's natural gas distribution business
is conducted through three divisions, Arkla, Entex and Minnegasco, which
collectively form the nation's third largest gas distribution operation. These
three divisions serve over 2.7 million customers in six states, including the
metropolitan areas of Minneapolis, Minnesota; Houston, Texas; and Little Rock,
Arkansas. Historically, the Company's natural gas distribution business included
substantially all the activities conducted by these three divisions. In
recognition of the fact that certain of these activities are not subject to
traditional cost-of-service rate regulation and, as such, have different risk
profiles and return potentials, and in order to concentrate its
similarly-targeted marketing efforts in a single business unit, certain
large-volume marketing activities, including the provision of services to a
number of customers previously reported as part of Natural Gas Distribution,
have been aggregated and are now reported as part of Retail Energy Marketing.
Thus, Natural Gas Distribution, as presently constituted consists principally of
natural gas sales to and natural gas transportation for residential, commercial
and a limited number of industrial customers, substantially all of which are
located behind the "city gate" and are subject to traditional cost-of-service
rate regulation.
S-12
<PAGE> 13
The following table summarizes by state the number of communities and the
estimated number of customers served by the Company as of December 31, 1995:
<TABLE>
<CAPTION>
SERVICE AREA COMMUNITIES NUMBER OF
LOCATIONS SERVED CUSTOMERS
----------------------------------------------------------------- ----------- ---------
<S> <C> <C>
Texas............................................................ 365 1,203,712
Minnesota........................................................ 243 626,556
Arkansas......................................................... 383 425,423
Louisiana........................................................ 179 262,480
Mississippi...................................................... 91 118,520
Oklahoma......................................................... 97 114,794
----- ---------
Total.................................................. 1,358 2,751,485
===== =========
</TABLE>
The following table summarizes the estimated number of customers served by
each of the divisions as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
CUSTOMERS BY DIVISION 1995 1994
------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Entex............................................................. 1,394,292 1,375,393
Arkla............................................................. 730,637 721,185
Minnegasco........................................................ 626,556 612,254
--------- ---------
Total................................................... 2,751,485 2,708,832
========= =========
</TABLE>
The Company's approximately 54,982 miles of gas distribution mains vary in
size from one-half inch to 24 inches. Generally, in each of the cities, towns
and rural areas it serves, the Company owns the underground gas mains and
service lines, metering and regulating equipment located on customers' premises,
and the district regulating equipment necessary for pressure maintenance. With a
few exceptions, the measuring stations at which the Company receives gas from
its suppliers are owned, operated and maintained by others, and the distribution
facilities of the Company begin at the outlet of the measuring equipment. These
facilities include odorizing equipment usually located on the land owned by
suppliers and district regulator installations, in most cases located on small
parcels of land which are leased or owned by the Company.
Throughput and customer data of the distribution divisions are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- -------------------------
THROUGHPUT 1996 1995 1995 1994 1993
----------------------------------------------- ----- ----- ----- ----- -----
(BILLIONS OF CUBIC FEET)
<S> <C> <C> <C> <C> <C>
Sales
Residential.................................. 95.7 80.5 183.3 180.0 193.6
Commercial................................... 54.2 47.1 123.3 119.1 126.7
Industrial................................... 14.5 13.2 52.4 53.4 49.7
Transportation................................. 13.4 14.5 49.4 44.9 52.2
----- ----- ----- ----- -----
Total................................ 177.8 155.3 408.4 397.4 422.2
===== ===== ===== ===== =====
</TABLE>
Interstate Pipelines. The Company's interstate natural gas pipeline
business is conducted principally through NGT and MRT, together with certain
subsidiaries and affiliates. A major focus of NorAm's Interstate Pipelines will
be to seek to profit from the growing demand to move gas from west-to-east on
the Company's pipelines to serve Midwest and East Coast markets.
NGT owns and operates a natural gas pipeline system located in portions of
Arkansas, Louisiana, Mississippi, Missouri, Kansas, Oklahoma, Tennessee and
Texas. The NGT system consists of approximately 6,400 miles of transmission
lines. The NGT pipeline system extends generally in an easterly direction from
the Anadarko Basin area of the Texas Panhandle and western Oklahoma through the
Arkoma Basin area of eastern Oklahoma and Arkansas to the Mississippi River,
from eastern Texas to northern Louisiana and central Arkansas, from the mainline
system in Oklahoma and Arkansas to south central Kansas and
S-13
<PAGE> 14
southwestern Missouri. In its system, NGT operates various product extraction
plants and compressor facilities related to its transmission business. NGT's
peak day gas handled during the 1995/96 heating season was approximately 2.4
Bcf. NGT, on behalf of various shippers, transports and delivers gas to
distributors for resale for ultimate public consumption, to industrial customers
for their own use and consumption, and to third party pipeline interconnects
located in the states of Arkansas, Kansas, Louisiana, Mississippi, Missouri,
Oklahoma, Tennessee and Texas. In 1995, NGT's throughput totaled 630.1 million
MMBtu.
The MRT system consists of approximately 2,200 miles of pipeline serving
principally the greater St. Louis area in Missouri and Illinois. This pipeline
system includes the "Main Line System," the "East Line" and the "West Line." The
Main Line System includes three transmission lines extending approximately 435
miles from Perryville, Louisiana, to the greater St. Louis area. The East Line,
also a main transmission line, extends approximately 94 miles from southwestern
Illinois to St. Louis. The West Line extends approximately 140 miles from
eastern Texas to Perryville, Louisiana. The system also includes various other
branch, lateral, transmission and gathering lines and compressor stations. In
1995, MRT's throughput totaled 395.1 million MMBtu. Approximately one-half of
MRT's total 1995 volumes were delivered to its traditional markets along its
system in Missouri, Illinois and Arkansas, with the remaining volumes delivered
to off-system customers. MRT's peak day deliveries during the 1995/96 heating
season to its traditional market area customers were approximately 1.0 million
MMBtu.
The Company owns and operates seven gas storage fields. Four storage fields
are associated with NGT's pipeline and have a combined maximum deliverability of
approximately 665 million cubic feet ("MMcf") per day and a working gas capacity
of approximately 22.8 Bcf. Three storage fields are associated with MRT's
pipeline and have a maximum aggregate deliverability of approximately 580 MMcf
per day and a working gas capacity of approximately 31 Bcf. During 1995, all of
MRT's storage capacity was subscribed on a firm basis by its customers.
In early 1996, Interstate Pipelines implemented a reorganization plan which
resulted in the elimination of a total of approximately 275 positions at NGT and
MRT. The reorganization plan is intended to allow Interstate Pipelines to
operate more efficiently, improving its ability to compete in its market areas.
The Company recorded a first-quarter 1996 pre-tax charge of $16.5 million
associated with the reorganization plan, which amount is expected to be
substantially offset by the associated cost savings during 1996.
Consolidated throughput data for Interstate Pipelines are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------- --------------------------
THROUGHPUT 1996 1995 1995 1994 1993
------------------------------------------ ------ ------ ------ ------ ------
(MILLIONS OF MMBTU)
<S> <C> <C> <C> <C> <C>
Sales..................................... 12.5 12.9 79.5 63.2 115.1
Transportation............................ 303.8 268.4 974.3 831.8 780.1
FERC Order 636 Elimination(1)............. (11.8) (12.3) (77.5) (59.9) (24.2)
------ ------ ------ ------ ------
Total........................... 304.5 269.0 976.3 835.1 871.0
====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) When sold volumes are also transported by Interstate Pipelines, the
throughput statistics will include the same physical volumes in both the
sales and transportation categories, requiring an elimination to prevent
the over-statement of actual total throughput. No elimination is made for
volumes of 60.7 million MMBtu, 51.6 million MMBtu, 196.6 million MMBtu,
145.8 million MMBtu and 158.2 million MMBtu in the three months ended March
31, 1996 and 1995, and for 1995, 1994 and 1993, respectively, which were
transported on both the NGT and MRT systems.
The Company is committed under certain agreements to purchase certain
quantities of gas in the future. In order to reduce the risk from market
fluctuations in the price of natural gas and transportation during the terms of
these commitments, the Company enters into futures contracts, swaps and options.
In no case are these derivatives held for trading purposes. To the extent that
the Company expects that these commitments will result in losses over the
contract term, the Company has established reserves equal to such expected
losses.
S-14
<PAGE> 15
Wholesale Energy Marketing. The Company's wholesale energy marketing
activities, the marketing of natural gas and risk management services to natural
gas resellers and certain large volume industrial consumers, is principally
conducted by NES, together with certain affiliates. NES, previously reported as
a part of Interstate Pipelines, historically has operated primarily in those
states served by the NGT and MRT systems but recently has had significant sales
in various other states as it seeks to extend its activities throughout North
America. NES has increased its average daily volumes from 0.9 Bcf per day in
1994 to 1.4 Bcf per day in 1995 and 2.2 Bcf per day during the first quarter of
1996. This growth can be attributed largely to NES becoming a marketer on a
national scale. NES markets gas under daily, baseload and term agreements which
include either market sensitive or fixed pricing provisions. NES gas supplies
are purchased from others on both a daily and term basis. Most gas supplies are
purchased based on market sensitive pricing. Gas sales for 1995 were
approximately 513 million MMBtu of which approximately 85.2% was to unaffiliated
parties. Customers are located on both the NGT system and other pipelines. Gas
is transported to customers using both firm and interruptible transportation.
Fixed priced sales or purchase contracts are hedged using gas futures contracts
or other derivative financial instruments. In addition, in recent periods, NES
has begun to market electricity in wholesale markets. Sales and services
provided by NES are generally not subject to any form of rate regulation.
Retail Energy Marketing. The Company's retail energy marketing business is
conducted primarily by NEM. NEM will focus on commercial and large industrial
customers behind the "city gate" of local gas distribution companies. This
recently-formed business unit includes a number of activities previously
included within Natural Gas Distribution and will execute the Company's plan for
serving these markets more coherently and effectively. Certain of NEM's
activities, while not subject to traditional cost-of-service rate determination,
are subject to the jurisdiction of various regulatory bodies as to the
allocation of joint costs between such activities and certain of the Company's
regulated activities.
Natural Gas Gathering. On February 1, 1995, pursuant to a "spindown" order
from the FERC, the Company transferred the natural gas gathering assets of NGT
into NFS. These assets consist principally of approximately 3,500 miles of
gathering pipelines which collect gas from more than 200 separate systems
located in major producing fields in Oklahoma, Louisiana, Arkansas and Texas.
NFS is not generally subject to cost-of-service regulation, although the
spindown order required that it offer to continue any pre-existing gathering
services generally under the terms of NGT's tariff, including the applicable
stated maximum gathering rate of $0.1417 per MMBtu for a two-year period until
February 1, 1997, except to the extent that separate terms and conditions have
been negotiated. Natural Gas Gathering also includes Arkla Chemical Company
which performs gas processing, liquids extraction and marketing activities,
generally in conjunction with certain of NFS's gathering activities. In the
future, the majority of NFS's gas processing activities will be conducted by
Waskom Gas Processing Company, a joint venture of NFS and NGC Corp.
S-15
<PAGE> 16
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Dean Witter Reynolds Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation are acting as representatives (the
"Representatives"), has severally agreed to purchase from the Company, the
respective number of Shares set forth opposite its name below at the initial
public offering price less the underwriting discount set forth on the cover page
of this Prospectus Supplement. In the Purchase Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all of the Shares if any of the Shares are purchased. In the event
of default by an Underwriter, the Purchase Agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting Underwriters may
be increased or the Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
------------------------------------------------------------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ 1,900,000
Dean Witter Reynolds Inc. ............................................... 1,900,000
Donaldson, Lufkin & Jenrette Securities Corporation...................... 1,900,000
Bear, Stearns & Co. Inc. ................................................ 200,000
CS First Boston Corporation.............................................. 200,000
Dillon, Read & Co. Inc. ................................................. 200,000
A.G. Edwards & Sons, Inc. ............................................... 200,000
Goldman, Sachs & Co. .................................................... 200,000
Howard, Weil, Labouisse, Friedrichs Incorporated......................... 200,000
Lehman Brothers Inc. .................................................... 200,000
J.P. Morgan Securities Inc. ............................................. 200,000
Nesbitt Burns Securities Inc. ........................................... 200,000
Oppenheimer & Co., Inc. ................................................. 200,000
PaineWebber Incorporated................................................. 200,000
Prudential Securities Incorporated....................................... 200,000
Salomon Brothers Inc .................................................... 200,000
Smith Barney Inc. ....................................................... 200,000
UBS Securities LLC....................................................... 200,000
CIBC Wood Gundy Securities Corp. ........................................ 200,000
The Chicago Corporation.................................................. 100,000
D. A. Davidson & Co. Incorporated........................................ 100,000
Gerard Klauer Mattison & Co. LLC......................................... 100,000
Jefferies & Company, Inc. ............................................... 100,000
McDonald & Company Securities, Inc. ..................................... 100,000
Petrie Parkman & Co., Inc. .............................................. 100,000
Piper Jaffray Inc. ...................................................... 100,000
Principal Financial Securities, Inc. .................................... 100,000
Rauscher Pierce Refsnes, Inc. ........................................... 100,000
Rodman & Renshaw, Inc. .................................................. 100,000
Sterne, Agee & Leach, Inc. .............................................. 100,000
---------
Total....................................................... 10,000,000
=========
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the Shares to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of $.23 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 and other selling terms may be changed.
S-16
<PAGE> 17
The Company has granted to the Underwriters an option, exercisable within
30 days after the date of this Prospectus Supplement, to purchase up to an
additional 1,500,000 shares of Common Stock at the initial public offering price
set forth on the cover page hereof, less the underwriting discount. The
Underwriters may exercise such option only to cover over-allotments, if any,
made in connection with the sale of the Shares. To the extent that the
Underwriters exercise this option, each Underwriter will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage
thereof which the number of Shares to be purchased by it shown in the above
table is of the Shares initially offered hereby. If purchased, the Underwriters
will offer such additional shares on the same terms as those on which the Shares
are being offered.
The Company has agreed that, for a period of 120 days from the date of this
Prospectus Supplement, it will not offer, sell, grant any option for the sale
of, or otherwise dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for, or any rights to purchase
or acquire, any shares of Common Stock, without the prior written consent of the
Underwriters, except for issuances pursuant to the Company's Direct Stock
Purchase and Dividend Reinvestment Plan, employee benefit plans or pursuant to
executive compensation arrangements or convertible securities outstanding on the
date of this Prospectus Supplement and upon conversion of the Exchange
Debentures.
Certain of the Underwriters, including Merrill Lynch, Pierce, Fenner &
Smith Incorporated, are also acting as underwriters in connection with the
concurrent offering by an affiliate of the Company of the Convertible Preferred
Securities. The Offering and the sale of the Convertible Preferred Securities
are not conditioned on each other. See "Convertible Trust Originated Preferred
Securities Offering."
The Company has agreed to indemnify the Underwriters against, or contribute
to payments that the Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales of the Shares to any accounts over which they exercise
discretionary authority.
LEGAL OPINIONS
The validity of the Shares will be passed upon for the Company by Hubert
Gentry, Jr., Senior Vice President and General Counsel of the Company, and for
the Underwriters by Coudert Brothers. Coudert Brothers will rely on the opinion
of Mr. Gentry as to all matters regarding regulatory consents and approvals. As
of April 30, 1996, Mr. Gentry beneficially owned or had options to purchase
45,808 shares of Common Stock.
S-17
<PAGE> 18
PROSPECTUS
NORAM ENERGY CORP.
PREFERRED STOCK AND/OR COMMON STOCK
---------------------
This Prospectus may be used in connection with the offering of shares of
NorAm Energy Corp.'s (the "Company") preferred stock, par value $.10 per share
(the "Preferred Stock") and shares of its common stock, par value $.625 per
share (the "Common Stock"). The Preferred Stock and Common Stock (collectively,
the "Securities") may be offered separately or together, in separate series, in
amounts, at prices and on terms determined at the time of sale and set forth in
one or more supplements to this Prospectus (together, the "Prospectus
Supplement"). Pursuant to the terms of the Registration Statement of which this
Prospectus forms a part, the Company's debt securities may also be offered under
the Registration Statement.
The specific terms of each offering of Securities made pursuant to this
Prospectus will be set forth in the applicable Prospectus Supplement, which in
each case will identify any underwriters or agents for the Securities being
offered thereby and their compensation, and the public offering or purchase
price.
The Prospectus Supplement will also include the following: (a) in the case
of any series of Preferred Stock, the specific designation, the aggregate number
of shares offered, the dividend rate or method of calculation, the dividend
period and dividend payment dates, whether such dividends will be cumulative or
noncumulative, the liquidation preference, the currency or composite currency,
if not the U.S. dollar, in which dividends and liquidation preference will be
denominated, voting rights, any terms for redemption at the option of the holder
or the Company and any applicable conversion provisions, in the event that such
series of Preferred Stock is convertible at the option of the holder thereof or
of the Company, into shares of Common Stock or into other securities of the
Company, and (b) in the case of Common Stock, the aggregate number of shares
offered.
The Prospectus Supplement will also contain information, where applicable,
concerning certain United States federal income tax considerations relating to,
and as to any listing on a securities exchange of, the Securities covered by
such Prospectus Supplement.
The Securities may be offered by the Company directly to purchasers,
through agents designated from time to time, through underwriting syndicates led
by one or more managing underwriters or through one or more underwriters acting
alone. If the Company, directly or through agents, solicits offers to purchase
the Securities, the Company reserves the sole right to accept and, together with
its agents, to reject in whole or in part any proposed purchase of Securities.
Affiliates of the Company may from time to time act as agents or underwriters in
connection with the sale of the Securities to the extent permitted by applicable
law.
If any agent or underwriter is involved in the sale of the Securities
offered hereby, any applicable commissions or discounts will be set forth in, or
will be calculable from, the applicable Prospectus Supplement, and the net
proceeds to the Company or the selling securityholders from such sale will be
the purchase price of the Securities less such commissions or discounts and
other attributable issuance and distribution expenses. See "Plan of
Distribution" for possible indemnification arrangements for agents, underwriters
and their controlling persons.
This Prospectus may not be used to consummate sales of Securities unless a
Prospectus Supplement is also delivered. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Securities shall
not constitute an offer in any jurisdiction of any of the other Securities
covered by this Prospectus.
---------------------
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 date of this Prospectus is May 15, 1996.
<PAGE> 19
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT 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 ANY UNDERWRITER OR
AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY AND THEREBY IN JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
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 statements and other information with the
Securities and Exchange Commission (the "Commission"). Such 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., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain securities of the Company are listed on, and
reports, proxy statements and other information concerning the Company can be
inspected at the offices of, The New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
This Prospectus does not contain all of the information set forth in the
Registration Statement, of which this Prospectus is a part, and exhibits
relating thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Act"). Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference herein its Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 (the "Form 10-K") and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, and its
Current Report on Form 8-K dated February 7, 1996, which have been filed
previously with the Commission under File No. 1-3751.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein or
in a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein 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
THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY AND ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). REQUESTS
SHOULD BE DIRECTED TO THE OFFICE OF THE SECRETARY, NORAM ENERGY CORP., P.O. BOX
2628, HOUSTON, TEXAS 77252, TELEPHONE NUMBER (713) 654-5699.
2
<PAGE> 20
THE COMPANY
NorAm Energy Corp., a Delaware corporation (the "Company"), was
incorporated in 1928 and is principally engaged in the distribution and
transmission of natural gas including gathering, storage and marketing of
natural gas. A current summary description of the Company's activities will be
set forth in the applicable Prospectus Supplement.
The Company's principal executive offices are located at 1600 Smith Street,
32nd Floor, Houston, Texas 77002. Its mailing address is P. O. Box 2628,
Houston, Texas 77252-2628, and its telephone number is (713) 654-5699.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net proceeds
from the sale of the Securities will be used to reduce the Company's
indebtedness and for general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- ------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges Including
Preferred Stock Dividends(1)................ 3.44(2) 2.93 1.64 1.44 1.43 1.09 1.17
</TABLE>
- ---------------
(1) The ratios of earnings to fixed charges, including preferred stock
dividends, have been computed using earnings which are the sum of income
from continuing operations, income taxes and fixed charges including
preferred stock dividends. Fixed charges are interest, amortization of debt
discount and expense, the estimated interest portion of rental charges and
preferred stock dividends.
(2) Because of the seasonal nature of the Company's business and other factors,
the ratio for the three month period ended March 31, 1996, may not
necessarily be indicative of the ratio which will result for the full year
1996.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 250,000,000
shares of Common Stock, and (ii) 10,000,000 shares of Preferred Stock, of which
124,881,936 shares of Common Stock and 2,600,000 shares of $3.00 Convertible
Exchangeable Preferred Stock, Series A ("Series A Preferred"), were issued and
outstanding at January 31, 1996. The following summary description of these
securities is qualified in its entirety by reference to the Restated Certificate
of Incorporation of the Company ("Certificate") which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
COMMON STOCK
Holders of the Common Stock are entitled to one vote for each share held of
record. The Company provides for cumulative voting in the election of directors.
Subject to the preferential rights of the holders of Preferred Stock, the
holders of Common Stock are entitled to receive any dividends which may be
declared by the Company's Board of Directors out of funds legally available
therefor and to share pro rata in the net assets of the Company upon
liquidation. Holders of Common Stock have no preemptive rights and have no
rights to convert their Common Stock into any other securities and there are no
redemption provisions with respect to such shares. All outstanding shares of
Common Stock are fully paid and not subject to further calls or assessments. The
Company's Common Stock is listed on the New York Stock Exchange and prices are
reported by the New York Stock Exchange Composite Tape under the symbol "NAE."
The Transfer Agent
3
<PAGE> 21
and Registrar of the Company's Common Stock is Boatmen's Trust Company of
Arkansas and the Co-Transfer Agent is First Chicago Trust Company.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of Preferred Stock. The description set forth
below is subject to and qualified in its entirety by reference to the
Certificate and the form of Certificate of Designations (the "Designation")
establishing a particular series of Preferred Stock.
GENERAL. Under the Certificate, the Board of Directors of the Company (the
"Board of Directors") is authorized, without further shareholder action, to
provide for the issuance of up to 10,000,000 shares of Preferred Stock, in one
or more series, and to fix the designations, terms, and relative rights and
preferences, including the dividend rate, voting rights, conversion rights,
redemption and sinking fund provisions and liquidation values of each such
series. The Company may amend the Certificate from time to time to increase the
number of authorized shares of Preferred Stock. Any such amendment would require
the approval of the holders of a majority of the outstanding shares of all
series of Preferred Stock voting together as a single class without regard to
series.
The Preferred Stock will have the dividend, liquidation, redemption,
conversion, and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including, (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence to
accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion or exchange provisions of such Preferred Stock; (vi)
the voting rights, if any, of such Preferred Stock; and (vii) any additional
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations, and restrictions of such Preferred Stock. The Preferred
Stock will, when issued, be fully paid and nonassessable.
DIVIDEND RIGHTS. The Preferred Stock will be preferred over the Common
Stock as to payment of dividends. Before any dividends or distributions on the
Common Stock shall be declared and set apart for payment or paid, the holders or
shares of each series of Preferred Stock shall be entitled to receive dividends
(either in cash, shares of Common Stock or Preferred Stock, or otherwise) when,
as, and if declared by the Board of Directors, at the rate and on the date or
dates as set forth in the Prospectus Supplement. With respect to each series of
Preferred Stock, the dividends on each share of such series with respect to
which dividends are cumulative shall be cumulative from the date of issue of
such share unless some other date is set forth in the Prospectus Supplement
relating to any such series. Accruals of dividends shall not bear interest.
RIGHTS UPON LIQUIDATION. The Preferred Stock shall be preferred over the
Common Stock as to assets so that the holders of each series of Preferred Stock
shall be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Company, and before any distribution is made
to the holders of Common Stock, the amount set forth in the Prospectus
Supplement relating to any such series, but in such case the holders of such
series of Preferred Stock shall not be entitled to any other or further payment.
If upon any such liquidation, dissolution, or winding-up of the Company its net
assets shall be insufficient to permit the payment in full of the respective
amounts to which the holders of all outstanding Preferred Stock are entitled,
the entire remaining net assets of the Company shall be distributed among the
holders of each series of Preferred Stock in amounts proportionate to the full
amounts to which the holders of each such series are respectively so entitled.
REDEMPTION AND CONVERSION. All shares of any series of Preferred Stock
shall be redeemable to the extent set forth in the Prospectus Supplement
relating to any such series. All shares of any series of Preferred Stock
4
<PAGE> 22
shall be convertible into shares of Common Stock or into shares of any other
series of Preferred Stock to the extent set forth in the Prospectus Supplement
relating to any such series.
VOTING RIGHTS. All shares of any series of Preferred Stock shall have the
voting rights set forth in the Prospectus Supplement relating to any such
series.
CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES A
On March 24, 1987, the Company issued 2,600,000 shares of Series A
Preferred Stock. Each share of Series A Preferred Stock has a liquidation
preference of $50 per share and is convertible at the option of the holder at
any time, unless previously redeemed, into shares of Common Stock at a
conversion price of $28.625 per share of Common Stock, subject to adjustment in
certain events. The Series A Preferred Stock is redeemable for cash at any time
in whole or in part, at the option of the Company, at redemption prices
declining to $50 on March 15, 1997, plus accrued dividends to the redemption
date. Dividends on the Series A Preferred Stock are cumulative and are payable
quarterly at a rate of $3.00 annually. The Series A Preferred Stock is
exchangeable, in whole but not in part, at the option of the Company, on any
dividend payment date for the Company's 6% Convertible Subordinated Debentures
due 2012 (the "Debentures") at the rate of $50 principal amount of Debentures
per share of Series A Preferred Stock. The Debentures, if issued, will be
convertible at the option of the holder at any time, unless previously redeemed,
into shares of Common Stock at a price equivalent to the conversion price
applicable to the Series A Preferred Stock for which the Debentures were
exchanged, subject to adjustment in certain events. The holders of the Series A
Preferred Stock do not have voting rights. However, in the event that dividends
payable on the Series A Preferred Stock are in arrears and unpaid in an amount
equal to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, the holders thereof have the right to elect two directors to
the Company's Board. Holders of Series A Preferred Stock have no preemptive
rights.
CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS
Under the Certificate, holders of Common Stock are entitled to cumulative
voting rights for the election of Company directors. Holders of Common Stock are
not otherwise entitled to cumulative voting rights. Under cumulative voting, a
stockholder may multiply the number of shares owned by the number of directors
to be elected, and cast that total number of votes in any proportion among as
many nominees as the stockholder desires.
The By-laws of the Company contain certain requirements concerning advance
notice of (i) nominations by stockholders of persons for election to the Board,
and (ii) other matters introduced by stockholders at annual meetings.
PLAN OF DISTRIBUTION
The Company may sell the Securities to which this Prospectus relates to or
for resale to the public through one or more underwriters, acting alone or in
underwriting syndicates led by one or more managing underwriters, and also may
sell such Securities directly to other purchasers or dealers or through agents.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed from time to
time, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. Each Prospectus Supplement
will describe the method of distribution of the Securities.
In connection with the sale of Securities, such underwriters, dealers, and
agents may receive compensation from the Company, or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters, dealers, and agents that participate
in the distribution of Securities and, in certain cases, direct purchasers from
the Company, may be deemed to be "underwriters" and any discounts or commissions
received by them and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any such underwriters,
5
<PAGE> 23
dealers, or agents will be identified and any such compensation will be
described in the applicable Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. The place and time of delivery
for the Securities in respect of which this Prospectus is delivered will be set
forth in the applicable Prospectus Supplement.
VALIDITY OF OFFERED SECURITIES
The validity of the Securities will be passed upon for the Company by
Hubert Gentry, Jr., Senior Vice President and General Counsel of the Company,
P.O. Box 2628, Houston, Texas 77252. Mr. Gentry beneficially owns 45,808 shares
of common stock of the Company acquired pursuant to various employee benefit
plans of the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1994 and the consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995
incorporated by reference in the Form 10-K, which is incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
6
<PAGE> 24
===============================================================================
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN OR INCORPORATED BY
REFERENCE 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 INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement
Summary.............................. S-3
Use of Proceeds........................ S-6
Company Exchange of $3.00 Convertible
Exchangeable Preferred Stock, Series
A.................................... S-6
Convertible Trust Originated Preferred
Securities Offering.................. S-6
Price Range of Common Stock and
Dividends............................ S-7
Capitalization......................... S-8
Selected Consolidated Financial Data... S-9
The Company............................ S-11
Underwriting........................... S-16
Legal Opinions......................... S-17
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 3
Ratios of Earnings to Fixed Charges
Including Preferred Stock
Dividends............................ 3
Description of Capital Stock........... 3
Plan of Distribution................... 5
Validity of Offered Securities......... 6
Experts................................ 6
</TABLE>
===============================================================================
===============================================================================
10,000,000 SHARES
[NORAM ENERGY CORP. LOGO]
COMMON STOCK
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
JUNE 12, 1996
===============================================================================
