<PAGE> 1
File Pursuant to Rule 424(b)(3)
Registration No. 333-48157
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 25, 1998)
2,000,000 DEPOSITARY SHARES
ANADARKO LOGO
EACH REPRESENTING 1/10TH OF A SHARE OF
5.46% CUMULATIVE PREFERRED STOCK, SERIES B
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Each Depositary Share (a "Depositary Share") represents ownership of 1/10th
of a share of 5.46% Cumulative Preferred Stock, Series B, $1.00 par value per
share (the "Series B Preferred Stock"), of Anadarko Petroleum Corporation, a
Delaware corporation (the "Company"), to be deposited with ChaseMellon
Shareholder Services, L.L.C. as Depositary (the "Depositary") and, through the
Depositary, entitles the holder, proportionately, to all rights, preferences and
privileges of the Series B Preferred Stock represented thereby, including
dividend, voting, redemption and liquidation rights and preferences. The
proportionate stated value of each Depositary Share is $100. See "Description of
Depositary Shares."
The Series B Preferred Stock will not be redeemable prior to May 15, 2008.
On or after such date, the Series B Preferred Stock will be redeemable at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at a redemption price equal to $1,000 per share of Series B
Preferred Stock (equivalent to $100 per Depositary Share) plus dividends accrued
and unpaid to the redemption date. In addition, the Series B Preferred Stock is
redeemable in the event of certain amendments to the Internal Revenue Code of
1986, as amended (the "Code"), in respect of the dividends received deduction.
See "Description of Series B Preferred Stock -- Redemption."
Dividends on the Series B Preferred Stock will be cumulative from the date
of issuance and are payable quarterly, commencing June 30, 1998. The amount of
dividends payable in respect of the Series B Preferred Stock will be adjusted in
the event of certain amendments to the Code in respect of the dividends received
deduction. See "Description of Series B Preferred Stock -- Dividends."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Depositary Share $100.00 $2.00 $98.00
- -------------------------------------------------------------------------------------------------------------
Total $200,000,000 $4,000,000 $196,000,000
=============================================================================================================
</TABLE>
(1) Plus accrued dividends, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $100,000.
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The Depositary Shares are offered by the several Underwriters named herein,
subject to prior sale, when, as and if accepted by them and subject to certain
conditions. It is expected that delivery of Depositary Receipts (as defined)
will be only in book entry form through the facilities of The Depository Trust
Company, on or about May 7, 1998 against payment therefor in immediately
available funds.
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SALOMON SMITH BARNEY MORGAN STANLEY DEAN WITTER
May 4, 1998
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DEPOSITARY SHARES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH THEY RELATE OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
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<PAGE> 3
RECENT DEVELOPMENTS
On April 30, 1998, the Company announced financial results for the quarter
ended March 31, 1998 ("First Quarter 1998"). For First Quarter 1998, the
Company's net income was $7.0 million (12 cents per share) on revenues of $146.4
million as compared to net income for the quarter ended March 31, 1997 ("First
Quarter 1997") of $34.4 million (58 cents per share) on revenues of $170.5
million. The decrease in income is primarily due to significantly lower
commodity prices in 1998, partially offset by higher production volumes. Net
income for 1998 also reflects higher costs and expenses as well as increased
interest expense. During First Quarter 1998, the Company participated in the
completion of 66 oil wells, 32 gas wells and drilled 11 dry holes.
The Company's average U.S. wellhead gas price in First Quarter 1998 was
$2.02 per thousand cubic feet (Mcf), down 24% from $2.66 per Mcf in First
Quarter 1997. Lower U.S. natural gas prices were partially offset by a 4%
increase in gas production volumes. Anadarko produced 44.0 billion cubic feet
(Bcf) of gas or 489 million cubic feet per day (MMcf/d) of gas in First Quarter
1998 compared to 42.3 Bcf of gas or 470 MMcf/d of gas in First Quarter 1997.
During First Quarter 1998, the Company's average U.S. price for crude oil
dropped 37% to $13.02 per barrel from $20.58 per barrel in First Quarter 1997.
The Company's crude oil and condensate volumes during First Quarter 1998
increased 12% to 2.3 million barrels or 25,000 barrels per day. This compares to
First Quarter 1997 volumes of 2.0 million barrels or 22,000 barrels per day. The
increase in oil and condensate volumes is primarily due to Mahogany production
from the Gulf of Mexico and increased production from the Permian Basin in west
Texas.
Natural gas liquids (NGLs) sales volumes in First Quarter 1998 increased
nearly 40% to 1.7 million barrels of 19,000 barrels per day compared to 1.2
million barrels or 14,000 barrels per day in First Quarter 1997. Prices for NGLs
in First Quarter 1998 decreased approximately 25% to an average of $11.68 per
barrel. NGLs prices in First Quarter 1997 averaged $15.65 per barrel.
Costs and expenses in First Quarter 1998 increased 14% compared to First
Quarter 1997. The increase was primarily due to higher operating and
depreciation, depletion and amortization expenses related to increased volumes
and higher administrative and general expenses due to costs associated with the
growth in the Company's workforce.
On May 4, 1998, the Company announced first crude oil production from the
Hassi Berkine South Field, located on Block 404 of Algeria's Berkine Basin
through Stage I production.
USE OF PROCEEDS
It is anticipated that the net proceeds from the sale of the Depositary
Shares, estimated to be approximately $195,900,000 after underwriting discount
and offering expenses, will be used to fund a portion of Anadarko's 1998 capital
investment program. Pending such use, the net proceeds will be used to reduce a
portion of outstanding borrowings under non-committed lines of credit and
commercial paper. As of May 4, 1998, the average interest rate on such
outstanding indebtedness, which had original maturities ranging from overnight
to 50 days, was 5.71% per annum.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated ratio of earnings
to combined fixed charges and preferred stock dividends for the periods shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
- --------------------------------
1993 1994 1995 1996 1997
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
2.68 2.11 1.24 3.34 3.04
</TABLE>
The ratios of earnings to combined fixed charges and preferred stock
dividends were computed by dividing earnings by fixed charges and preferred
stock dividends. For this purpose, earnings include income before income taxes,
fixed charges and preferred stock dividends. Fixed charges include interest and
amortization of debt expenses, and the estimated interest component of rentals.
There were no shares of preferred stock outstanding for any of the periods shown
above.
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<PAGE> 4
DESCRIPTION OF SERIES B PREFERRED STOCK
The following description of the particular terms of the 200,000 shares of
Series B Preferred Stock supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of Preferred Stock
set forth in the accompanying Prospectus, to which description reference is
hereby made. The description of certain provisions of the Series B Preferred
Stock set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the Certificate of
Designation relating to the Series B Preferred Stock, a form of which will be
filed with the Securities and Exchange Commission at or prior to the time of
sale of the Depositary Shares. Capitalized terms used but not defined herein
have the meanings assigned to such terms in the Prospectus.
The shares of the Series B Preferred Stock will be deposited with the
Depositary under a deposit agreement, dated as of May 7, 1998 (the "Deposit
Agreement"), among the Company, the Depositary and the holders from time to time
of the depositary receipts (the "Depositary Receipts") issued by the Depositary
thereunder. The Depositary Receipts will evidence the Depositary Shares. Subject
to the terms of the Deposit Agreement, each holder of a Depositary Receipt will
be entitled, proportionately, to all the rights, preferences and privileges of,
and subject to all of the limitations of, the interest in the Series B Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights and preferences). See "Description of Depositary Shares."
GENERAL
The Series B Preferred Stock is a single series consisting of 200,000
shares. The holders of Series B Preferred Stock will have no preemptive rights.
The Series B Preferred Stock will not be convertible into shares of Common Stock
of the Company. The Series B Preferred Stock will be fully paid and
nonassessable.
The Series B Preferred Stock will, on the date of original issuance, rank
on a parity as to payment of dividends and distribution of assets upon
dissolution, liquidation or winding up of the Company with any other outstanding
series of preferred stock. The Series B Preferred Stock, together with any other
series of preferred stock, will rank prior to the Common Stock of the Company as
to the payment of dividends and distribution of assets upon dissolution,
liquidation or winding up of the Company.
DIVIDENDS
General. Cumulative cash dividends will be payable on each share of Series
B Preferred Stock when, as and if declared by the Board of Directors of the
Company or a duly authorized committee thereof out of the assets of the Company
legally available therefor.
The initial dividend for the dividend period commencing on May 7, 1998, to
but excluding June 30, 1998, will be $8.19 per share (equivalent to 81.9 cents
per Depositary Share) and will be payable on June 30, 1998. Thereafter,
dividends on the Series B Preferred Stock will be payable quarterly, as, if and
when declared by the Board of Directors of the Company or a duly authorized
committee thereof on March 31, June 30, September 30 and December 31 of each
year (each a "Dividend Payment Date") at the annual rate of 5.46% or $54.60 per
share (equivalent to $5.46 per Depositary Share). The amount of dividends
payable for any other period that is shorter or longer than a full quarterly
dividend period will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
If a Dividend Payment Date is not a business day, dividends (if declared)
on the Series B Preferred Stock will be paid on the next business day, without
interest. A dividend period with respect to a Dividend Payment Date is the
period commencing on the preceding Dividend Payment Date and ending on the day
immediately prior to the next Dividend Payment Date. Dividends will be payable
to holders of record as they appear on the stock books of the Company on the
record date, which shall be the 15th day of the calendar month in which the
applicable Dividend Payment Date falls or on such other date designated by the
Board of Directors of the Company for the payment of dividends that is not more
than 30 nor less than 10 days prior to such Dividend Payment Date (each, a
"Dividend Record Date").
Dividends on the Series B Preferred Stock will be cumulative and rights
will accrue to the holders of the Series B Preferred Stock if the Company fails
to declare one or more dividends on the Series B Preferred Stock in any amount,
whether or not the earnings or financial condition of the Company were
sufficient to pay such dividends in whole or in part.
Changes in the Dividends Received Percentage. If, prior to 18 months after
the date of the original issuance of the Series B Preferred Stock, one or more
amendments to the Code are enacted which change the
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<PAGE> 5
percentage of the dividends received deduction (currently 70%) as specified in
Section 243(a)(1) of the Code or any successor provision (the "Dividends
Received Percentage"), the amount of each dividend on each share of the Series B
Preferred Stock for dividend payments made on or after the date of enactment of
such change will be adjusted by multiplying the amount of the dividend payable
determined as described above under "-- General" (before adjustment) by a
factor, which will be the number determined in accordance with the following
formula (the "DRD Formula"), and rounding the result to the nearest cent (with
one-half cent and above rounded up):
1 - [.35(1 - .70)]
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1- [.35(1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question; provided however, that if the
Dividends Received Percentage applicable to the dividend in question shall be
less than 50%, then the DRP shall equal .50. No amendment to the Code, other
than a change in the percentage of the dividends received deduction set forth in
Section 243(a)(1) of the Code or any successor provision, will give rise to such
an adjustment. Notwithstanding the foregoing provisions, in the event that, with
respect to any such amendment, the Company receives either an unqualified
opinion of nationally recognized independent tax counsel selected by the Company
or a private letter ruling or similar form of authorization from the Internal
Revenue Service to the effect that such an amendment does not apply to dividends
payable on the Series B Preferred Stock, then any such amendment will not result
in the adjustment provided for pursuant to the DRD Formula. The opinion
referenced in the previous sentence will be based upon a specific exception in
the legislation amending the DRP or upon a published pronouncement of the
Internal Revenue Service addressing such legislation. Unless the context
otherwise requires, references to dividends in this Prospectus Supplement will
mean dividends as adjusted by the DRD Formula. The Company's calculation of the
dividends payable as so adjusted and as certified accurate as to calculation and
reasonable as to method by the independent certified public accountants then
regularly engaged by the Company, will be final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a record date and before the next Dividend Payment
Date, the amount of dividend payable on such Dividend Payment Date will not be
increased; but instead, an amount, equal to the excess of (x) the product of the
dividends paid by the Company on such Dividend Payment Date and the DRD Formula
(where the DRP used in the DRD Formula would be equal to the greater of the
Dividends Received Percentage applicable to the dividend in question and .50)
over (y) the dividends paid by the Company on such Dividend Payment Date, will
be payable (if declared) to holders of record on the next succeeding Dividend
Payment Date in addition to any other amounts payable on such date.
In addition, if any such amendment to the Code is enacted that reduces the
Dividends Received Percentage and such reduction retroactively applies to a
Dividend Payment Date as to which the Company previously paid dividends on the
Series B Preferred Stock (each an "Affected Dividend Payment Date"), the Company
will pay (if declared) additional dividends (the "Additional Dividends") on the
next succeeding Dividend Payment Date (or if such amendment is enacted after the
dividend payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to holders of
record on such succeeding Dividend Payment Date in an amount equal to the excess
of (x) the product of the dividends paid by the Company on each Affected
Dividend Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the greater of the Dividends Received Percentage and .50
applied to each Affected Dividend Payment Date) over (y) the dividends paid by
the Company on each Affected Dividend Payment Date.
Notwithstanding the foregoing, Additional Dividends will not be paid as a
result of the enactment of any amendment to the Code 18 months or more after the
date of original issuance of the Series B Preferred Stock which retroactively
reduces the Dividends Received Percentage, or if such amendment would not result
in an adjustment due to the Company having received either an opinion of counsel
or tax ruling referred to in the third preceding paragraph. The Company will
make only one payment of Additional Dividends.
In the event that the amount of dividend payable per share of the Series B
Preferred Stock will be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Company will cause notice of each such adjustment
and, if applicable, any Additional Dividends, to be sent to the holders of the
Series B Preferred Stock with the payment of dividends on the next Dividend
Payment Date after the date of such adjustment.
S-5
<PAGE> 6
In the event that the Dividends Received Percentage is reduced to 50% or
less, the Company may, at its option, redeem the Series B Preferred Stock in
whole but not in part as described below. See "-- Redemption."
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of Series B Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made on the
Company's Common Stock or any other class or series of stock of the Company
ranking junior to the Series B Preferred Stock upon liquidation, liquidating
distributions in the amount of $1,000 per share (equivalent to $100 per
Depositary Share), plus an amount equal to the sum of all accrued and unpaid
dividends including any increase in dividends payable due to changes in the
Dividends Received Percentage and Additional Dividends (whether or not earned or
declared) for the then-current dividend period and all dividend periods prior
thereto. See "Description of Capital Stock, Rights Agreement and Restated
Certificate of Incorporation--Preferred Stock".
VOTING RIGHTS
The holders of shares of Series B Preferred Stock will not be entitled to
vote, except as set forth below or as expressly required by applicable law.
If the equivalent of six quarterly dividends payable on the Preferred Stock
or any other class or series of preferred stock are in default, the number of
directors of the Company will be increased by two (without duplication of any
increase made pursuant to the terms of any other series of preferred stock of
the Company), and the holders of the Series B Preferred Stock, voting as a
single class with the holders of shares of any other class of the Company's
preferred stock ranking on a parity with the Series B Preferred Stock either as
to dividends or distribution of assets and upon which like voting rights have
been conferred and are exercisable will be entitled to elect such two directors
to fill such newly created directorships. Such right shall continue until full
cumulative dividends for all past dividend periods on all such preferred stock
of the Company, including any shares of the Series B Preferred Stock, have been
paid or declared and set apart for payment. Any such elected directors shall
serve until the Company's next annual meeting of stockholders (notwithstanding
that prior to the end of such term the dividend default shall cease to exist) or
until their respective successors shall be elected and qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series B Preferred Stock will be required for any
amendment of the Restated Certificate of Incorporation of the Company (or any
certificate supplemental thereto) which will adversely affect the powers,
preferences, privileges or rights of the Series B Preferred Stock. The
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series B Preferred Stock and any other series of the
Company's preferred stock ranking on a parity with the Series B Preferred Stock
either as to dividends or upon liquidation, voting as a single class without
regard to series, will be required to issue, authorize or increase the
authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Series B Preferred Stock as to dividends or
upon liquidation, or to reclassify any authorized stock of the Company into such
prior shares, but such vote will not be required for the Company to take any
such actions with respect to any stock ranking on a parity with or junior to the
Series B Preferred Stock.
REDEMPTION
Prior to May 15, 2008, the Series B Preferred Stock is not redeemable. On
or after such date, each share of Series B Preferred Stock will be redeemable,
in whole or in part, at the option of the Company, at any time and from time to
time upon not less than 30 nor more than 60 days' notice, at $1,000 (equivalent
to $100 per Depositary Share) per share, plus accrued and unpaid dividends
(whether or not declared) to the date fixed for redemption, including any
increase in dividends payable due to changes in the Dividends Received
Percentage and Additional Dividends. If fewer than all the outstanding shares of
Series B Preferred Stock are to be redeemed, the Company will select those to be
redeemed by lot or pro rata or by any other method as may be determined by the
Board of Directors to be equitable.
If, at any time while the Series B Preferred Stock is outstanding, an
enactment of an amendment to the Code results in a reduction of the Dividend
Received Percentage to 50% or less, the Company, at its option, may redeem all,
but not less than all, of the outstanding shares of the Series B Preferred Stock
provided that,
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<PAGE> 7
within 60 days of the date on which an amendment to the Code is enacted which
changes the Dividend Received Percentage to 50% or less, the Company sends
notice to holders of the Series B Preferred Stock of such redemption. Any
redemption of the Series B Preferred Stock pursuant to this paragraph will take
place on the date specified in the notice, which date shall not be less than 30
nor more then 60 days from the date such notice is sent to holders of the Series
B Preferred Stock. Any redemption of the Series B Preferred Stock in accordance
with this paragraph shall be at $1,000 per share (equivalent to $100 per
Depositary Share) plus accrued and unpaid dividends (whether or not declared)
thereon to the date fixed for redemption, including any changes in dividends
payable due to changes in the Dividends Received Percentage, if any. Holders of
the Series B Preferred Stock will have no right to require redemption of the
Series B Preferred Stock.
In addition, if the holders of the shares of the Series B Preferred Stock
are entitled to vote upon or consent to a merger or consolidation of the
Company, and if the Company offers to purchase all of the outstanding shares of
the Series B Preferred Stock (the "Offer"), then each holder of Series B
Preferred Stock who does not sell their shares of Series B Preferred Stock
pursuant to the Offer shall be deemed irrevocably to have voted or consented all
shares of Series B Preferred Stock owned by such holder in favor of the merger
or consolidation of the Company without any further action by the holder. The
Offer shall be at a price of $1,000 per share (equivalent to $100 per Depositary
Share), together with accrued and unpaid dividends (whether or not declared) to
the date fixed for redemption, including any increase in dividends payable due
to changes in the Dividend Received Percentage and Additional Dividends. The
Offer will remain open for acceptance for a period of at least 30 days.
The Series B Preferred Stock is not subject to any mandatory redemption,
sinking fund or other similar provisions.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. will be the transfer agent and
registrar. In the ordinary course of its business, the Company has engaged and
may in the future engage in commercial banking transactions with The Chase
Manhattan Bank and its affiliates.
DESCRIPTION OF DEPOSITARY SHARES
Each Depositary Share represents 1/10th of a share of Series B Preferred
Stock deposited under the Deposit Agreement. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share is entitled, proportionately, to all
the rights, preferences and privileges of the Series B Preferred Stock
represented thereby (including dividend, voting, redemption, and liquidation
rights and preferences), and subject to all of the limitations of the Series B
Preferred Stock represented thereby, contained in the Company's Restated
Certificate of Incorporation and the Certificate of Designation for the Series B
Preferred Stock and summarized under "Description of Series B Preferred Stock."
The Depositary Shares are evidenced by the Depositary Receipts. The
following summary of the terms and provisions of the Depositary Shares does not
purport to be complete and is subject to, and qualified in its entirety by, the
Deposit Agreement (which contains the form of the Depositary Receipt), which
will be filed with the Securities and Exchange Commission at or prior to the
time of sale of the Depositary Shares. Copies of the Deposit Agreement are
available for inspection at the corporate office of the Depositary, located as
of the date of this Prospectus Supplement at 450 W. 33rd Street, New York, New
York 10001.
ISSUANCE OF DEPOSITARY RECEIPTS
Immediately following the issuance of the Series B Preferred Stock by the
Company, the Company will deposit the Series B Preferred Stock with the
Depositary, which will then issue and deliver the Depositary Receipts to the
Company. The Company will, in turn, deliver the Depositary Receipts to the
Underwriters. Depositary Receipts will be issued evidencing only whole
Depositary Shares. A holder of Depositary Shares is not entitled to receive the
shares of Series B Preferred Stock underlying the Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
As described under "Description of Series B Preferred Stock," the Series B
Preferred Stock is not redeemable prior to May 15, 2008. The Depositary Shares
are subject to redemption upon the same terms and conditions (including as to
notice to the owners of Depositary Shares) and subject to the same limitations
as the Series B Preferred Stock held by the Depositary, except that the
consideration received upon redemption of each Depositary Share will be equal to
one-tenth of the consideration received upon redemption of each
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<PAGE> 8
share of Series B Preferred Stock. The amount distributed will be reduced by any
amounts required to be withheld by the Company or the Depositary with respect to
tax liability.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price payable upon such redemption. Any funds deposited by the
Company with the Depositary for any Depositary Shares which the holders thereof
fail to redeem shall be returned to the Company after a period of two years from
the date such funds are so deposited.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions in respect of the Series B Preferred Stock to the record holders
of Depositary Receipts in proportion to the number of such Depositary Shares
owned by such holders.
In the event of a distribution other than cash in respect of the Series B
Preferred Stock, the Depositary will distribute property received by it to the
record holders of Depositary Receipts entitled thereto, unless the Depositary
determines that it is not feasible to make such distributions, in which case the
Depositary may, with the approval of the Company, sell such property and
distribute the net proceeds from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary with respect to
tax liability.
RECORD DATE
Whenever (i) any cash dividends or other cash distributions become payable,
any distributions other than cash are to be made, or any rights, preferences or
privileges are to be offered with respect to the Series B Preferred Stock, or
(ii) the Depositary receives notice of any meeting at which holders of Series B
Preferred Stock are entitled to vote or of which holders of Series B Preferred
Stock are entitled to notice, the Depositary upon instruction by the Company
will in each instance fix a record date (which shall be the same date as the
record date for the Series B Preferred Stock) for the determination of the
holders of Depositary Receipts (x) who are entitled to receive such dividends,
distributions, rights, preferences or privileges or the net proceeds of the sale
thereof or (y) who are entitled to give instructions for the exercise of voting
rights at any such meeting or to receive notice of such meeting, subject to the
provisions of the Deposit Agreement.
VOTING OF SERIES B PREFERRED STOCK
Upon receipt of notice of any meeting at which holders of Series B
Preferred Stock are entitled to vote the Depositary will mail the information
contained in such notice of meeting to the record holders of Depositary
Receipts. Each record holder of Depositary Receipts on the record date will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the number of shares of Series B Preferred Stock represented by
such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the number of shares of Series B Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company has agreed to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. To the
extent the Depositary does not receive specific instructions from the holders of
Depositary Shares relating to such Series B Preferred Stock, it will not vote
shares of Series B Preferred Stock.
AMENDMENT OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment which materially and adversely alters the rights of
holders of Depositary Shares will not take effect unless such amendment has been
approved by the record holders of at least a majority of the Depositary Shares
then outstanding.
S-8
<PAGE> 9
BOOK-ENTRY PROCEDURES AND SETTLEMENT
The Depositary Shares will be issued in the form of a single global
Depositary Receipt registered in the name of the nominee of The Depository Trust
Company ("DTC," which term, as used herein, includes any successor or alternate
depository selected by the Company).
DTC is a limited-purpose trust company created to hold securities for its
participating organizations (the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in the accounts of the Participants. Participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Access to DTC's 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 ("Indirect Participants"). Persons who are not
Participants or Indirect Participants may beneficially own securities held by
DTC only through Participants or Indirect Participants.
DTC's nominee for all purposes will be considered the sole owner or holder
of the Depositary Shares held in book-entry form. Owners of beneficial interests
in the global Depositary Receipt will not be entitled to have Depositary Shares
registered in their names, will not receive or be entitled to receive physical
delivery of Depositary Shares in definitive form and will not be considered the
holders thereof under the Restated Certificate of Incorporation or the Deposit
Agreement.
Neither the Company nor the Depositary will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global Depositary Receipt, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
A holder's ownership of Depositary Shares issued in book-entry form will be
recorded on or through the records of the brokerage firm or other entity that
maintains that holder's account. In turn, the total number of Depositary Shares
held by an individual brokerage firm or other entity for its clients will be
maintained on the records of DTC in the name of that brokerage firm or other
entity (or in the name of a Participant that acts as agent for the holder's
brokerage firm or other entity if it is not a Participant). Therefore, a holder
must rely upon the records of the holder's brokerage firm or other entity to
evidence the holder's ownership of Depositary Shares and transfer of ownership
of such Depositary Shares may be effected only through the brokerage firm or
other entity that maintains the holder's account.
Dividends or other distributions payable in respect of Depositary Shares
will be paid by the Depositary to DTC, DTC will be responsible for crediting the
amount of payments that it receives to the accounts of the Participants in
accordance with their respective standard procedures. Each Participant will be
responsible for disbursing the payments for which it is so credited to the
holders that it represents and to each brokerage firm or other entity for which
it acts as agent. Each such brokerage firm or other entity will be responsible
for disbursing funds to the holders that it represents. It is suggested that any
purchaser of Depositary Shares with accounts at more than one brokerage firm or
other entity effect transactions in the Depositary Shares only through the
brokerage firm or firms or other entity or entities that hold such purchaser's
Depositary Shares.
If DTC is at any time unwilling or unable to continue as depository in
respect of a global Depositary Receipt and a successor depository is not
appointed by the Company or the Depositary, as the case may be, within 90 days,
the Company will issue Depositary Receipts in definitive form in exchange for
the global Depositary Receipt. In addition, the Company may determine at any
time not to have Depositary Shares represented by a global Depositary Receipt,
and, in such event, will issue Depositary Receipts in definitive form in
exchange for such global Depositary Receipt. In either instance, an owner of a
beneficial interest in the global Depositary Receipt will be entitled to have
Depositary Receipts equal in aggregate amount to that beneficial interest
registered in its name and will be entitled to physical delivery of a definitive
Depositary Receipt evidencing such Depositary Shares. The registered holder of
Depositary Shares will be entitled to receive the dividends or other
distributions or, if applicable, the redemption price payable in respect of such
Depositary Shares, upon surrender of the Depositary Receipt evidencing such
Depositary Shares to the Company or the Depositary in accordance with the
procedures set forth in the Deposit Agreement.
S-9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, each of the Underwriters named below has severally agreed to
purchase, and the Company has agreed to sell to each Underwriter, the number of
Depositary Shares set forth opposite its name:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Smith Barney Inc. .......................................... 1,000,000
Morgan Stanley & Co. Incorporated........................... 1,000,000
---------
Total............................................. 2,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Depositary Shares are subject
to the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the
Depositary Shares if any are taken.
The Underwriters propose to offer the Depositary Shares directly to the
public at the public offering price set forth on the cover page hereof and to
certain dealers at such price less a concession not in excess of $1.20 per
Depositary Share. The Underwriters may allow, and such dealers may reallow, a
concession, not in excess of $1.00 per Depositary Share, on sales to certain
other dealers. After the initial public offering, the public offering price and
the concessions may be changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriters may be required to make in respect
thereof.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged and may in the future engage in commercial banking
and investment banking transactions with the Company.
In connection with the offering of the Depositary Shares and in accordance
with applicable law and industry practice, the Underwriters may over-allot or
effect transactions which stabilize, maintain or otherwise affect the market
price of the Depositary Shares at levels above those which might otherwise
prevail in the open market, including by entering stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids. A stabilizing bid
means the placing of any bid, or the effecting of any purchase, for the purpose
of pegging, fixing or maintaining the price of a security. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting syndicate
or the effecting of any purchase to reduce a short position created in
connection with the offering. A penalty bid means an arrangement that permits
the managing underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when Depositary Shares originally sold by the
syndicate member are purchased in syndicate covering transactions. Such
transactions may be effected in the over-the-counter market or otherwise. The
Underwriters are not required to engage in any of these activities. Any such
activities, if commenced, may be discontinued at any time.
The Depositary Shares are a new issue of securities with no established
trading market. The Company does not intend to list the Depositary Shares on any
securities exchange. The Company has been advised by the Underwriters that the
Underwriters intend to make a market in the Depositary Shares; however, the
Underwriters are not obligated to do so and may discontinue market making at any
time without notice. No assurance can be given as to the liquidity of, or the
trading markets for, the Depositary Shares.
S-10
<PAGE> 11
[ANADARKO LOGO]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
------------------------
Anadarko Petroleum Corporation (the "Company") from time to time may offer
its senior debt securities (the "Senior Debt Securities") or subordinated debt
securities (the "Subordinated Debt Securities") consisting of debentures, notes
and/or other unsecured evidences of indebtedness (the Senior Debt Securities and
the Subordinated Debt Securities, collectively referred to as the "Debt
Securities"). The Company may also from time to time offer shares of its
Preferred Stock, $1.00 par value (the "Preferred Stock") or Common Stock, $0.10
par value (the "Common Stock"). The aggregate offering price of the Debt
Securities, the Preferred Stock and the Common Stock offered hereby (the
"Securities") will not exceed $500,000,000. The Securities may be offered as
separate series in amounts, at prices and on terms to be determined at the time
of sale and to be set forth in supplements to this Prospectus (each a
"Prospectus Supplement").
The Company may sell Securities to or through underwriters or dealers
designated from time to time, and also may sell Securities directly to other
purchasers or through agents designated from time to time. See "Plan of
Distribution."
As used herein, Debt Securities shall include securities denominated in
U.S. dollars or, at the option of the Company if so specified in the applicable
Prospectus Supplement, in any other currency, including composite currencies
such as the European Currency Unit. Debt Securities of a series may be issuable
in registered definitive form ("Registered Notes") or in the form of one or more
global securities (each a "Global Note"). The Subordinated Debt Securities will
be subordinated in right of payment to all present and future Senior
Indebtedness (as defined) of the Company. See "Description of Debt Securities --
Subordination."
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, currencies, denominations, maturity,
rate (which may be fixed or variable) and time of payment of interest, if any,
terms for redemption at the option of the Company or the holder, terms for
sinking or purchase fund payments, the initial public offering price, the
conversion price (in the case of Subordinated Debt Securities that may be
convertible into shares of Common Stock of the Company), and the other terms in
connection with the offering and sale of the Debt Securities in respect of which
this Prospectus is being delivered will be set forth in the applicable
Prospectus Supplement.
The applicable Prospectus Supplement will set forth the specific
designation, rights, preferences, privileges and restrictions, including
dividend rate (or manner of calculation thereof), time of payment of dividend,
liquidation value, terms for conversion (if any) into Common Stock, listing (if
any) on a securities exchange, terms for mandatory or optional redemption and
any other specific terms of the series of Preferred Stock in respect of which
this Prospectus is being delivered. If so specified in the applicable Prospectus
Supplement, the Preferred Stock may be represented by Depositary Shares
entitling the holder proportionally to all rights and preferences of the
Preferred Stock.
The names of any underwriters or agents, the principal amounts, if any, to
be purchased by underwriters, the compensation of such underwriters or agents
and any listing or proposed listing on a securities exchange will be set forth
in the applicable Prospectus Supplement.
Shares of the Common Stock are listed on the New York Stock Exchange.
------------------------
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 March 25, 1998.
<PAGE> 12
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED
HEREIN OR THEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE SECURITIES OR AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY,
SECURITIES IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE
DATES.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a registration statement on Form S-3 (together
with all amendments and exhibits, referred to as the "Registration Statement")
under the Securities Act of 1933, as amended, with respect to the 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 pertaining
to the Securities and the Company, reference is made to the Registration
Statement.
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 Commission. Such reports
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. 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. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
other information regarding the Registrant. In addition, copies of such reports
and other information concerning the Company may also be inspected and copied at
the library of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act (File No. 1-8968) are incorporated herein by reference: (a)
Form 8-A, filed on September 4, 1986, for registration of Common Stock, (b) Form
8-A, filed on October 5, 1988, for registration of Series A Preferred Stock
Purchase Rights, (c) Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "Form 10-K"), which contains the consolidated financial
statements of the Company and its subsidiaries by incorporation by reference to
the 1997 Annual Report and, (d) Form 10-K/A, dated June 25, 1997, which contains
the Annual Report of the Anadarko Employee Savings Plan on Form 11-K. All other
documents filed by the Company pursuant to Sections 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 Securities 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 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 statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE> 13
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits unless such exhibits are specifically
incorporated by reference in such documents). Requests for such documents should
be directed to Suzanne Suter, Corporate Secretary, Anadarko Petroleum
Corporation, 17001 Northchase Drive, Houston, Texas 77060-2141. The Company's
telephone number is (281) 875-1101.
3
<PAGE> 14
THE COMPANY
The Company is one of the world's largest independent oil and gas
exploration and production companies with 708 million energy equivalent barrels
of proved reserves as of December 31, 1997.
The Company's reserve mix has shifted dramatically in recent years,
primarily due to major crude oil discoveries both in the U.S. and Algeria, which
have resulted in a larger and more balanced portfolio of energy reserves. As of
year-end 1997, crude oil, condensate and natural gas liquids reserves accounted
for 59 percent of the Company's total reserves.
About 74 percent of the Company's proved reserves are located in the U.S.,
primarily in the mid-continent (Kansas, Oklahoma and Texas) area, offshore in
the Gulf of Mexico and in Alaska. At year-end 1997, all of the Company's
production was in the U.S. The Company also owns and operates gas gathering
assets in its U.S. core producing areas.
Internationally, the Company is exploring for and developing crude oil
reserves in Algeria's Sahara Desert. As of December 31, 1997, the Company has
recorded 184.1 million barrels of proved crude oil and condensate reserves in
Algeria, which accounts for about 26 percent of Anadarko's total proved
reserves. First oil production from the Hassi Berkine South Field is expected in
May 1998. Development of other commercial fields in Algeria is also underway.
The Company is also participating in other exploration projects in Eritrea,
Jordan, Peru, the North Atlantic Ocean and Tunisia.
The principal subsidiaries of the Company include: Anadarko Algeria
Corporation, Anadarko Energy Services Company; and, Anadarko Gathering Company.
The Company's executive offices are located at 17001 Northchase Drive, Houston,
Texas 77060-2141, where the telephone number is (281) 875-1101.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement relating to an
offering of Securities, the net proceeds from the sale of the Securities will be
used for general corporate purposes, including the refinancing of outstanding
indebtedness and the financing of capital expenditures. Any specific allocation
of the net proceeds of an offering of Securities to a specific purpose will be
determined at the time of such offering and will be described in the related
Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
- -----------------------------------------------------------------
1993 1994 1995 1996 1997
- --------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
2.68 2.11 1.24 3.34 3.04
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings include income before income taxes
and fixed charges. Fixed charges include interest and amortization of debt
expenses, and the estimated interest component of rentals.
No shares of Preferred Stock were outstanding during any of the periods
presented. Accordingly, the ratio of earnings to fixed charges and preferred
stock dividends for each of the periods presented is the same as the ratio of
earnings to fixed charges.
4
<PAGE> 15
DESCRIPTION OF DEBT SECURITIES
The following description 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 unsecured obligations of the Company. The
Senior Debt Securities are to be issued under the Indenture (the "Senior
Indenture") by and between the Company and Harris Trust and Savings Bank (the
"Senior Trustee") and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities are
to be issued under the Indenture (the "Subordinated Indenture") to be entered
into by and between the Company and First Chicago NBD (the "Subordinated
Trustee").
The Senior Indenture and the Subordinated Indenture are sometimes
hereinafter collectively referred to as the "Indentures." The Senior Trustee and
the Subordinated Trustee are sometimes hereinafter collectively referred to as
the "Trustees." References set forth in the following description of Debt
Securities are to sections of both Indentures unless otherwise indicated.
The terms of the Debt Securities include those stated in the applicable
Indentures and those made part of such Indentures by reference to the Trust
Indenture Act of 1939, as amended. The Debt Securities are subject to all such
terms, and prospective purchasers of Debt Securities are referred to the
applicable Indentures and the Trust Indenture Act for a statement of those
terms. The statements under this caption relating to the Debt Securities and the
Indentures are summaries and do not purport to be complete. Such summaries use
certain terms which are defined in the Indentures and are qualified in their
entirety by express reference to the Indentures which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
GENERAL PROVISIONS APPLICABLE TO BOTH INDENTURES
The Indentures do not limit the aggregate principal amount of debentures,
notes or other evidences of indebtedness which may be issued thereunder and
provide that Debt Securities may be issued thereunder from time to time in one
or more series.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby (the "Offered Debt Securities") for
the following terms of the Offered Debt Securities: (1) the title of the Offered
Debt Securities; (2) any limit on the aggregate principal amount of the Offered
Debt Securities; (3) the date or dates on which the Offered Debt Securities will
mature; (4) the rate or rates (which may be fixed or variable) per annum at
which the Offered Debt Securities will bear interest, if any, and the date from
which such interest will accrue; (5) the dates on which any such interest will
be payable and the Regular Record Dates for such Interest Payment Dates; (6) any
mandatory or optional sinking fund or purchase fund or analogous provisions; (7)
if applicable, the date after which and the price or prices at which the Offered
Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed at the option of the Company or of the Holder thereof
and the other detailed terms and provisions of such optional or mandatory
redemption; (8) if applicable, any terms by which the Subordinated Securities
may be convertible into Common Stock; (9) any restrictive covenants included for
the benefit of Holders of the Offered Debt Securities; (10) any additional
Events of Default provided with respect to the Offered Debt Securities; (11) the
currency of payment of the principal of (and premium, if any) and interest on
the Offered Debt Securities; (12) any index used to determine the amount of
payments of the principal of (and premium, if any) and interest on the Offered
Debt Securities; (13) whether the Offered Debt Securities are to be issued in
whole or part in the form of a Global Note or Notes and, if so, the identity of
the Depositary for such Global Note or Notes; (14) the terms and conditions, if
any, upon which a Global Note or Notes may be exchanged in whole or in part for
other definitive Offered Debt Securities; and (15) any other terms of the
Offered Debt Securities. (Section 301)
5
<PAGE> 16
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of (and premium, if any) and interest on the Offered Debt
Securities will be payable, and the Offered Debt Securities will be exchangeable
and transfers thereof will be registrable, at the applicable Corporate Trust
Offices of the Trustees, provided that at the option of the Company, payment of
any interest may be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register. (Sections 202, 305 and 1002)
The Prospectus Supplement relating to a series of Offered Debt Securities
will specify the currency or currencies in which the principal and interest are
to be paid, the denomination of the Offered Debt Securities and whether Global
Notes are to be issued. (Section 302) Special provisions relating to a series of
Offered Debt Securities denominated in or payable by reference to a currency
other than U.S. dollars, and any applicable currency exchange and tax
information, will be described in the Prospectus Supplement relating to such
series. No service charge will be made for any registration of transfer or
exchange of the Offered Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Section 305)
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
stated principal amount. Special federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Offered Debt Securities, the covenants applicable to the
Debt Securities would not necessarily afford holders protection in the event of
a highly leveraged or other transaction involving the Company or in the event of
a material adverse change in the Company's financial condition or results of
operations.
Global Notes
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Notes that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. The specific terms of the depositary arrangement with respect to
any Debt Securities of a series will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a Global Note, the Depositary for such Global Note
will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Note to the
accounts of institutions that have accounts with such Depositary (the
"participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities, or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Note will be limited to participants or persons that hold
interests through participants. Ownership of beneficial interests in such Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depositary for such Global Note (with respect
to interests of participants) or by participants or persons that hold through
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may limit the ability
to transfer beneficial interests in a Global Note.
So long as the Depositary for a Global Note, or its nominee, is the owner
of such Global Note, such Depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the Debt Securities represented by
such Global Note for all purposes under the Senior Indenture. Except as set
forth below, owners of beneficial interests in a Global Note will not be
entitled to have Debt Securities of the series represented by such Global Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in definitive form and will not
6
<PAGE> 17
be considered the owners or holders thereof under the Senior Indenture.
Accordingly, each person owning a beneficial interest in a Global Note 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 under the Senior Indenture. The Senior
Indenture provides that the Depositary may grant proxies and otherwise authorize
participants to take any action which a Holder is entitled to take under the
Senior Indenture. The Company understands that under existing industry practice,
in the event that the Company requests any action of Holders or a beneficial
owner desires to take any action a Holder is entitled to take, the Depositary
would authorize the participants to take such action and that the participants
would take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Payment of principal, premium, if any, and interest on Debt Securities
registered in the name of or held by a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner or
the holder of the Global Note representing such Debt Securities. None of the
Company, the Trustee, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Note for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium or interest in respect of a
Global Note, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Note as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in such Global Note held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of such participants.
A Global Note may not be transferred except as a whole by the Depositary
for such Global Note to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary. A Global
Note is exchangeable for Debt Securities registered in the names of persons
other than the Depositary with respect to such Global Note or its nominee only
if (x) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or if at any time such Depositary
ceases to be a clearing agency registered under the Exchange Act, (y) the
Company executes and delivers to the Trustee a Company Order that all such
Global Notes shall be exchangeable or (z) there shall have occurred and be
continuing an Event of Default or an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default with respect to the
Debt Securities. Any Global Note that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Debt Securities registered in such names as
the Depositary with respect to such Global Note shall direct. (Section 305)
Events of Default
The following are Events of Default under each Indenture with respect to
Debt Securities of any series issued thereunder: (a) failure to pay any interest
on any Debt Security of that series when due, continued for 60 days; (b) failure
to pay the principal of (or premium, if any, on) any Debt Security of that
series when due; (c) failure to make sinking fund payments in respect of any
Debt Security of that series when due, continued for 60 days; (d) failure to
perform any other covenant of the Company in the applicable Indenture (other
than a covenant included in such Indenture solely for the benefit of a series of
Debt Securities other than that series), continued for 90 days after written
notice as provided in such Indenture; (e) default by the Company in payment of
any principal of any Funded Debt outstanding in an aggregate principal amount in
excess of $10,000,000 causing such Funded Debt to become, or to be declared, due
prior to its stated maturity and such acceleration is not cured within 30 days
after notice; (f) certain events in bankruptcy, insolvency or reorganization;
and (g) any other Event of Default provided with respect to Debt Securities of
that series. (Section 501) If an Event of
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Default provided with respect to Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the applicable Trustee or the
Holders of at least 25% in principal amount of the Outstanding Debt Securities
of that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all Debt
Securities of that series to be due and payable immediately. However, any time
after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before judgment or decree based on such acceleration
has been obtained, the Holders of a majority in principal amount of Outstanding
Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. (Section 502) For information as to waiver of defaults,
see "Modification and Waiver".
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provision relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
Each of the Indentures provides that, subject to the duties of the
applicable Trustee to act with the required standard of care if an Event of
Default shall occur and be continuing, such Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to such
Trustee reasonable security or indemnity. (Section 603) Subject to such
provisions for security or indemnification of the applicable Trustee, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to such Trustee or exercising
any trust or power conferred on such Trustee with respect to the Debt Securities
of that series. (Section 512)
The Company will be required to furnish to each Trustee annually a
statement as to any defaults in the performance of its obligations under the
applicable Indenture. (Section 1006)
Consolidation, Merger and Sale of Assets
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate with or merge into any other Person, or convey,
transfer or lease its assets substantially as an entirety to any Person,
provided that the Person formed by such consolidation or into which the Company
is merged, and the Person which acquires by conveyance or transfer or leases the
assets of the Company substantially as an entirety, is organized under the laws
of any United States jurisdiction and assumes the Company's obligations on the
Debt Securities and under the Indentures, that after giving effect to the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and that certain other conditions are met. (Article Eight)
Modification and Waiver
Modification and amendments of each Indenture may be made by the Company
and the applicable Trustee with the consent of the Holders of a majority in
principal amount of the Outstanding Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the Holder of each Outstanding Debt Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security; (b) reduce the principal amount
of (or premium, if any) or interest on, any Debt Security; (c) reduce the amount
of principal of an Original Issue Discount Security payable upon acceleration of
the Maturity thereof; (d) change the place or currency of payment of principal
of (or premium, if any) or interest on, any Debt Security; (e) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security; or (f) reduce the percentage in principal amount of Outstanding
Debt Securities of any series, the consent of the Holders of which is
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<PAGE> 19
required for modification or amendment of the applicable Indenture or for waiver
of compliance with certain provisions of the applicable Indenture or for waiver
of certain defaults. (Section 902)
Without the consent of any Holder of Outstanding Debt Securities, the
Company may amend or supplement each of the Indentures and each series of Debt
Securities to cure any ambiguity or inconsistency or to provide for Debt
Securities in bearer form in addition to or in place of registered Debt
Securities or to make any other provisions that do not adversely affect the
rights of any Holder of Outstanding Debt Securities. (Section 901)
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
that series waive any past default under the Indenture with respect to that
series, except a default in the payment of the principal of (or premium, if any)
or interest on any Debt Security of that series or in respect of a provision
which under the Indenture cannot be modified or amended without the consent of
the Holder of each Outstanding Debt Security of that series affected. (Section
513)
Defeasance
The Indentures provide that the Company may elect to defease and be
discharged from any and all obligations with respect to any Debt Securities
(except for the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, 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"), upon the deposit with
the applicable Trustee (or other qualifying trustee), in trust for such purpose,
of money, and/or U.S. Government Obligations (as defined), which through the
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 scheduled due dates therefor. (Article Thirteen)
In the event of a defeasance as provided above with respect to any Debt
Securities, holders of such Debt Securities would be able to look only to the
trust fund established for payments of principal of (and premium, if any) and
interest on such Debt Securities until maturity. Further, under federal income
tax laws, such a defeasance could be a taxable exchange of such Debt Securities
for interests in the trust. As a consequence, a Holder may recognize gain or
loss equal to the difference between the Holder's cost or other tax basis for
such Debt Securities and the value of the holder's interest in the trust, and
thereafter may be required to include in income a share of the income, gain and
loss of the trust.
SENIOR INDENTURE PROVISIONS
Limitation on Liens
The Senior Indenture provides that if the Company or any Restricted
Subsidiary shall incur, assume or guarantee any Debt secured by a Mortgage on
any Principal Property, on any shares of stock of any Restricted Subsidiary or
on any Restricted Subsidiary Indebtedness, the Company will secure, or cause
such Restricted Subsidiary to secure, the Senior Securities equally and ratably
with (or prior to) such secured Debt, unless after giving effect thereto the
aggregate amount of all such Debt so secured would not exceed 10% of the
Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries.
This restriction will not apply to, and there shall be excluded in computing
secured Debt for the purpose of such restriction, Debt secured by (a) Mortgages
existing at the date of the Senior Indenture, (b) Mortgages on property, on
shares of stock or Restricted Subsidiary Indebtedness of any corporation
existing at the time such corporation becomes a Restricted Subsidiary, (c)
Mortgages in favor of the Company or any Restricted Subsidiary, (d) Mortgages on
property, shares of stock, or Restricted Subsidiary Indebtedness existing at the
time of acquisition thereof (including acquisition through merger, consolidation
or other reorganization) and certain purchase money Mortgages and construction
cost Mortgages, (e) certain Mortgages in favor of governmental
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<PAGE> 20
bodies (including Mortgages in connection with tax-exempt indebtedness), (f)
certain Mortgages to secure partial, progress, advance or other payments or any
Debt incurred to finance the purchase price or cost of construction, development
or repair, alteration or improvement of property, (g) Mortgages on oil, gas,
coal or other minerals in place or on geothermal resources in place and related
interests incurred to finance production, development or acquisition costs, (h)
Mortgages on certain equipment, (i) Mortgages arising in connection with certain
government contracts and (j) certain extensions, renewals or replacements of any
Debt secured by any Mortgage referred to in the foregoing clauses (a) through
(i), inclusive. (Section 1005) The Senior Indenture will not restrict the
incurrence of unsecured Debt by the Company or its Subsidiaries.
Certain Summary Definitions
"Consolidated Net Tangible Assets" means the aggregate amount of assets of
the Company and its Restricted Subsidiaries after deducting (a) all current
liabilities (excluding any Funded Debt) and (b) all goodwill, trade names and
trademarks, patents, unamortized debt discount and expense and other like
intangibles.
"Principal Property" means any plant or real property interest located in
the United States or offshore the United States owned by the Company or any
Restricted Subsidiary, the gross book value of which exceeds 2% of Consolidated
Net Tangible Assets, unless the Board of Directors determines such property is
not of material importance to the total business of the Company. As of December
31, 1997, approximately 13% of Consolidated Net Tangible Assets would be within
the definition of Principal Properties.
"Restricted Subsidiary" means a subsidiary of the Company except a
subsidiary (a) which neither transacts any substantial portion of its business
nor regularly maintains any substantial portion of its fixed assets within the
United States or offshore the United States or (b) which is engaged primarily in
financing the operations of the Company or its Subsidiaries, or both.
Regarding the Senior Trustee
The Senior Trustee is an affiliate of the Bank of Montreal ("BOM"). The
Company has a $225,000,000 Revolving Credit Agreement and a $125,000,000 364-Day
Credit Agreement with a group of commercial banks, including BOM. Pursuant to
terms of these agreements, BOM has a commitment to loan the Company an aggregate
of $40,000,000.
SUBORDINATED INDENTURE PROVISIONS
Conversion Rights
The Prospectus Supplement will provide whether the Offered Debt Securities
will consist of convertible Subordinated Securities and, if so, the initial
conversion price per share at which such convertible Subordinated Securities
will be convertible into Common Stock. Subject to prior redemption of
convertible Subordinated Securities, the holders of such Securities will be
entitled at any time on or before the close of business on the maturity date
thereof to convert such Securities (or, in the case of convertible Subordinated
Securities of denominations in excess of $1,000 any portion of which is $1,000
or an integral multiple of $1,000) into shares of Common Stock at the initial
conversion price set forth in the Prospectus Supplement. No adjustment will be
made on conversion of any convertible Subordinated Securities for interest
accrued thereon or, except as set forth below, for dividends on any securities
issued upon such conversion. Certificates for shares of Common Stock issued, on
or prior to the Expiration Date, hereinafter referred to, or Distribution Date,
as defined below under "Rights Agreement", upon conversion of convertible
Subordinated Securities shall also evidence one right (a "Right"), in respect of
each such share, pursuant to the Rights Agreement, dated as of October 4, 1988
(the "Rights Agreement") between the Company and Manufacturers Hanover Trust
Company, as then in effect. See "Description of Capital Stock, Rights Agreement
and Restated Certificate of Incorporation -- Rights Agreement" for a description
of the Rights and the Rights
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Agreement. "Expiration Date" means the earlier of (i) October 20, 1998 or (ii)
the redemption of the Rights.
In order to exercise the right of conversion, the Holder of any such
convertible Subordinated Securities must surrender his convertible Subordinated
Securities to the Company at any office or agency of the Company maintained for
such purpose. The convertible Subordinated Securities to be surrendered must be
accompanied by written notice to the Company that the Holder elects to convert
such Securities.
If any convertible Subordinated Security, whether or not called for
redemption, is converted between a record date for the payment of interest and
the next succeeding interest payment date, such Security must be accompanied by
funds payable to the Company equal to the interest payable to the registered
holder on such interest payment date on the principal amount so converted. In
the case of any convertible Subordinated Security or portion thereof called for
redemption, conversion rights expire at the close of business on the Redemption
Date, even if such redemption occurs at a time when conversion of the
Subordinated Security portion thereof is in the best interests of the Holder.
(Sections 1501, 1502 and 1503)
Except where Subordinated Securities surrendered for conversion must be
accompanied by such payment, no interest on converted Subordinated Securities
will be payable by the Company on any interest payment date subsequent to the
date of conversion.
No fractional shares of Common Stock will be issued upon conversion but, in
lieu thereof, an adjustment in cash will be made based on the market price at
the close of business on the date of conversion. (Section 1503)
The Conversion Price will be subject to adjustment in the event of: (i) the
payment of certain stock dividends on the Common Stock; (ii) the issuance of
certain rights or warrants to all holders of the Common Stock entitling them to
subscribe for or purchase Common Stock at a price less than the market price;
(iii) the subdivision of Common Stock into a greater number of shares of Common
Stock; (iv) the distribution by the Company to all holders of the Common Stock
of evidences of indebtedness or assets of the Company (excluding rights or
warrants and any dividends or distributions mentioned above); and (v) the
reclassification of Common Stock into other securities. (Section 1504) In case
of any consolidation or merger of the Company with or into any other corporation
(other than a consolidation or merger which does not result in any
reclassification, change or conversion of Common Stock), or in case of any sale
or transfer of substantially all the assets of the Company, any Holder of any
Subordinated Securities will be entitled, after the occurrence of any such
event, to receive on conversion the kind and amount of shares of capital stock
and other securities, cash or other property receivable upon such event by a
holder of the number of shares of Common Stock into which such Securities might
have been converted immediately prior to the occurrence of the event. (Section
1511) In addition to the foregoing adjustments, the Company will be permitted to
make such decreases in the Conversion Price as it considers to be necessary in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of Common Stock.
(Section 1504) No adjustment for dividends other than certain stock dividends on
the Common Stock is to be made upon conversion. (Section 1502)
Subordination
The payment of the principal of (and premium, if any) and interest on the
Subordinated Securities is expressly subordinated, to the extent and in the
manner set forth in the Subordinated Indenture, in right of payment to the prior
payment in full of all present and future Senior Indebtedness of the Company.
(Section 1401) In the event of any insolvency or bankruptcy case or proceeding
or any receivership, liquidation, dissolution or other winding up of the
Company, the Holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all Senior
Indebtedness before the Holders of the Subordinated Securities are entitled to
receive any payment on the Subordinated Securities (subject to the power of
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<PAGE> 22
a court of competent jurisdiction to make other equitable provision in a lawful
plan of reorganization under applicable bankruptcy laws), except that in any
such case or proceeding the Holders of the Subordinated Securities may be
entitled to receive securities of the Company which are subordinate and subject
to the prior payment in full of all Senior Indebtedness then outstanding. In the
event that the Subordinated Securities are declared due and payable before their
stated maturity because of the occurrence of an Event of Default, the Holders of
Senior Indebtedness then outstanding shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior
Indebtedness before the Holders of the Subordinated Securities are entitled to
receive any payment on account of the Subordinated Securities. During the
continuation of any default in the payment of principal of (or premium, if any)
or interest on any Senior Indebtedness beyond any applicable period of grace,
unless and until such default in payment shall have been cured or waived or
shall have ceased to exist, or in the event any judicial proceeding shall be
pending with respect to any such default, no payments may be made on the
Subordinated Securities by the Company. (Article Fourteen) By reason of such
subordination, in the event of insolvency or other specified eventualities, the
Holders of the Subordinated Securities may recover less, ratably, and the
holders of Senior Indebtedness may recover more, ratably, than other creditors
of the Company.
"Senior Indebtedness" means principal of (and premium, if any) and unpaid
interest on (a) indebtedness (secured or unsecured) incurred, assumed or
guaranteed, directly or indirectly, by the Company either before, on or after
the date of the Subordinated Indenture and which is for money borrowed
(including any obligation to pay or reimburse any bank in respect of letter of
credit drawings, payment of drafts or similar transactions), or which is
evidenced by notes, debentures, bonds or other similar securities whether or not
for money borrowed and (b) renewals, extensions or refundings of any such
indebtedness, unless it is provided by the instrument creating, evidencing,
renewing, extending or refunding the same or pursuant to which the same is
outstanding, that such indebtedness is not senior in right of payment to the
Subordinated Securities. (Section 101)
As of December 31, 1997, the Company had $955,733,000 aggregate principal
amount of Senior Indebtedness outstanding. The Subordinated Indenture does not
restrict the amount of additional Senior Indebtedness which may be incurred by
the Company.
Regarding the Subordinated Trustee
The Company has a $225,000,000 Revolving Credit Agreement and a
$125,000,000 364-Day Credit Agreement with a group of commercial banks,
including the Subordinated Trustee. Pursuant to the terms of these agreements,
the Subordinated Trustee has a commitment to loan the Company an aggregate of
$40,000,000.
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DESCRIPTION OF CAPITAL STOCK, RIGHTS AGREEMENT AND
RESTATED CERTIFICATE OF INCORPORATION
The following summaries of the Company's Preferred Stock, Common Stock and
the Rights Agreement do not purport to be complete and are qualified in their
entirety by reference to the Restated Certificate of Incorporation of the
Company and the Rights Agreement. The Restated Certificate of Incorporation and
the Rights Agreement are filed as exhibits to the Registration Statement of
which this Prospectus is a part. The summaries use terms which are defined in
such exhibits.
GENERAL
Under the Company's Restated Certificate of Incorporation, the Company is
authorized to issue (i) 200,000,000 shares of Common Stock, of which 60,885,994
shares were issued and outstanding at December 31, 1997, and (ii) 2,000,000
shares of Preferred Stock, none of which are issued and outstanding as of the
date of this Prospectus.
COMMON STOCK
Holders of the Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled, subject to any
preferential rights of holders of preferred stock, to receive such dividends, if
any, as may be declared from time to time by the Board in its discretion out of
funds legally available therefor. Upon any liquidation or dissolution of the
Company, the holders of the Common Stock are entitled, subject to any
preferential rights of holders of preferred stock, to receive pro rata all
assets remaining available for distribution to stockholders after payment of all
liabilities. The Common Stock has no preemptive or other subscriptive rights,
and there are no conversion rights or redemption or sinking fund provisions with
respect to the Common Stock. The vote of the holders of a majority of the Common
Stock is required for any action by the stockholders of the Company, except as
described under "Restated Certificate of Incorporation" below. The Company's
eight member Board is divided into three classes of directors serving staggered
three-year terms. The Company's Common Stock is listed on the New York Stock
Exchange under the symbol "APC".
PREFERRED STOCK
The Board, without further action by the stockholders, is authorized to
issue shares of preferred stock in one or more series, and to determine
preference as to dividends and in liquidation and voting, conversion, redemption
and other rights more favorable with respect to dividends and liquidation than
those of the holders of the Common Stock. The particular rights, preferences and
privileges of any series of Preferred Stock will be set forth in the Prospectus
Supplement. Such preferences and rights as may be established could have the
effect of impeding the acquisition of control of the Company. No such Preferred
Stock is outstanding as of the date of this Prospectus. Pursuant to the Rights
Agreement the Board has designated the Series A Junior Participating Preferred
Stock. If so specified in the applicable Prospectus Supplement, the Preferred
Stock may be represented by Depositary Shares entitling the holder
proportionally to all rights and preferences of the Preferred Stock.
RIGHTS AGREEMENT
On October 4, 1988, the Board adopted the Rights Agreement and declared a
dividend of one Right for each outstanding share of Common Stock. At the same
time, the Board redeemed rights which had been issued pursuant to the rights
agreement adopted on September 10, 1986.
Pursuant to the Rights Agreement, the Company will have outstanding one
Right for each share of Common Stock which is issued and outstanding prior to
the date the Rights become exercisable. Until the Rights become exercisable,
they will be evidenced by certificates for shares of Common Stock and
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<PAGE> 24
will automatically trade with such stock. If and when the Rights become
exercisable, Rights certificates will be distributed and the Rights will become
separately transferable.
Each Right will entitle the registered holder to purchase from the Company
one two-hundredth of a share (a "Unit") of Series A Junior Participating
Preferred Stock of the Company, at a price of $80.00 per Unit (the "Purchase
Price"), subject to adjustment. In general, the Rights become exercisable (and
transferable apart from the Common Stock) on the earlier of (i) ten days
following a public announcement that a Person or group (an "Acquiring Person")
has acquired beneficial ownership of 20% or more of the Common Stock (the "Stock
Acquisition Date"), (ii) ten business days following the commencement of an
offer to acquire beneficial ownership of 25% or more of the Common Stock or
(iii) ten days after a Person has acquired at least 15% of the Common Stock and
the Board determines that (x) beneficial ownership by such person of such shares
is intended to cause the Company to repurchase the Common Stock owned by such
person or to pressure the Company into taking action intended to provide such
person with short-term financial gains under circumstances where the best
long-term interests of the Company and its stockholders would not be served or
(y) such person's beneficial ownership of the Common Stock is causing or
reasonably likely to cause a material adverse impact on the business or
prospects of the Company (any such person being referred to herein as an
"Adverse Person"). The date on which the Rights become exercisable is referred
to as the "Distribution Date".
In the event that (i) a Person becomes the beneficial owner of 25% or more
of the then outstanding shares of Common Stock (except pursuant to an offer for
all outstanding shares of Common Stock which a majority of the independent
directors on the Board determines to be fair to and otherwise in the best
interest of the Company and its stockholders), or (ii) the Board determines that
a Person is an Adverse Person, each holder of a Right will thereafter have the
right to receive, upon exercise, Common Stock (or other consideration) having a
value equal to two times the Purchase Price. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were beneficially owned by any Acquiring Person or Adverse
Person will be null and void. However, Rights are not exercisable following the
occurrence of either of the events set forth above until such time as the Rights
are no longer redeemable by the Company.
In general, in the event that, following the Stock Acquisition Date, (i)
the Company shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) any
Person (other than a Subsidiary of the Company) shall consolidate with, or merge
with or into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock
of such Person having a value equal to two times the Purchase Price of the
Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
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Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, to make changes which do not adversely affect the interests of
holders of Rights, or to shorten or lengthen any time period under the Rights
Agreement; except that no amendment to adjust the time period governing
redemption may be made if the Rights are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a Person or group that attempts to acquire the Company
in a manner which causes the Rights to become exercisable for shares of Common
Stock at less than fair market value unless the offer is conditioned on a
substantial number of Rights being acquired. The Rights, however, should not
affect any prospective offeror willing to make an offer at a fair price and
otherwise in the best interests of the Company and its stockholders, as
determined by a majority of the Directors who are not officers of the Company
and who are not affiliated with an Acquiring Person, or willing to negotiate
with the Board. The Rights should not interfere with any merger or other
business combination approved by the Board since the Board may, at its option,
at any time until ten days following the Stock Acquisition Date redeem all but
not less than all the then outstanding Rights at the Redemption Price.
The Rights will also adversely affect a Person who desires to obtain
control of the Company without acquiring 100% ownership and then to engage in
specified self-dealing transactions. The Rights will have no effect, however, on
a Person who is willing to acquire control of the Company and wait until the
Rights expire, without engaging in any self-dealing transactions, before
acquiring 100% ownership. The Rights will not affect a transaction approved by
the Board prior to the acquisition by any person or group of 20% of the Common
Stock, because the Rights may be redeemed before the consummation of such
transaction.
The Rights will expire at the close of business on October 20, 1998, unless
redeemed earlier by the Company. In general, the Company may redeem the Rights,
at a price of $0.01 per Right, at any time until ten days following the Stock
Acquisition Date, but Rights may not be redeemed if the Board has previously
declared a person to be an Adverse Person although the redemption right may be
reinstated under certain conditions.
RESTATED CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation contains a "fair price"
provision, the purpose of which is to give greater assurance to the holders of
the Company's capital stock that they will receive fair and equitable treatment
in the event of certain "Business Combinations" with an "Interested Stockholder"
or certain related parties (or in which an "Interested Stockholder" or any such
related party has an interest other than proportionately as a stockholder) by
requiring that the Business Combination satisfy certain procedural safeguards,
or that the transaction be approved by the affirmative vote of not less than 80%
of all of the capital stock which by its terms may be voted on all matters
submitted to the stockholders of the Company generally ("Voting Stock").
The term "Interested Stockholder" is defined to include beneficial owners
of 5% or more of the Voting Stock. The term "Business Combination" is defined to
include, among other things, (a) a merger or consolidation of the Company or any
Subsidiary or adoption of a plan of liquidation of the Company, (b) a sale,
other disposition, loan or other arrangement (or a series of such transactions)
involving assets with a Fair Market Value (as defined) of $25,000,000 or more or
constituting more than 5% of total assets or, in the case of capital stock,
stockholders' equity of the entity in question, and (c) any amendment of the
By-Laws of the Company.
In addition to any affirmative stockholder vote otherwise applicable, a
Business Combination with an Interested Stockholder or certain related parties
(or in which an Interested Stockholder or any such related party has an interest
except proportionately as a stockholder) requires (1) the 80% vote
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<PAGE> 26
referred to above, (2) approval by a majority of the Continuing Directors (as
defined) or (3) satisfaction of, among others, the following requirements:
(a) The consideration per share to be received in the Business
Combination by stockholders of each class shall be in cash or in the form
used to acquire beneficial ownership of the largest number of shares of
such class previously acquired by the Interested Stockholder. Such
consideration shall equal at least the highest of:
(i) the highest per share price offered or paid by the Interested
Stockholder for shares of such class within the three-year period prior
to the date of announcement of the Business Combination or in the
transaction in which the Interested Stockholder became such;
(ii) the Fair Market Value per share of such class on the date of
announcement of the Business Combination or the date on which the
Interested Stockholder became such, whichever is higher; or
(iii) the highest preferential amount per share (if any) to which
holders of shares of such class are entitled in the event of a
liquidation, dissolution or winding up of the Company;
(b) After the date on which the Interested Stockholder becomes such,
dividends shall not have been reduced (except as approved by a majority of
the Continuing Directors) and the Interested Stockholder shall not have
acquired additional shares of stock, except in certain limited
circumstances; and
(c) The Interested Stockholder shall not have made any major change in
the Company's business or equity capital structure without the approval of
a majority of the Continuing Directors.
The Restated Certificate of Incorporation further provides that
stockholders shall be entitled to cumulative voting at any time during which
there is a 30% Stockholder (defined generally to include any beneficial owner of
30% or more of the Voting Stock).
The existence of these provisions may make a merger or takeover of the
Company more difficult or discourage a merger or takeover of the Company, or the
acquisition of control of the Company, by another person or entity, and, as a
consequence, will make the removal of incumbent management more difficult.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell offered Securities to or through one or more
underwriters or dealers, and also may sell offered Securities directly to other
purchasers or through agents or through a combination of any such methods of
sale. Any underwriter or agent involved in the offer and sale of offered
Securities will be named in the Prospectus Supplement. The distribution of
offered Securities may be effected from time to time in one or more transactions
at a fixed price or prices, which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices.
The Company may from time to time authorize underwriters or dealers acting
as the Company's agents to offer and sell offered Securities upon the terms and
conditions to be set forth in the Prospectus Supplement. In connection with the
sale of offered Securities, underwriters or dealers may receive compensation
from the Company or from purchasers of offered 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 offered Securities
may be deemed to be underwriters, and any discounts or commissions received by
them from the Company and any profit on the resale of offered Securities by them
may be deemed to be underwriting discounts and commissions under the Securities
16
<PAGE> 27
Act of 1933 (the "1933 Act"). Any such person who may be deemed to be an
underwriter will be identified, and any such compensation received from the
Company will be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company as to each
distribution, underwriters, dealers and agents who participate in the
distribution of offered Securities may be entitled to indemnification or
contribution by the Company against certain liabilities, including liabilities
under the 1933 Act, and to reimbursement by the Company for certain expenses.
Certain of the underwriters, dealers or agents may engage in transactions
with and perform services for the Company in the ordinary course of business.
The specific terms and manner of sale of offered Securities will be set
forth or summarized in the Prospectus Supplement.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase offered Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases will be
subject to acceptance by the Company. The obligations of any purchaser under any
such contract will be subject to the condition that the purchase of offered Debt
Securities may not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
persons will not have any responsibility in respect of the validity or
performance of such contracts.
VALIDITY OF SECURITIES
The validity of the offered Securities will be passed upon for the Company
by Davis Polk & Wardwell and for any underwriters, dealers or agents by Hughes
Hubbard & Reed LLP.
EXPERTS
The consolidated financial statements of Anadarko Petroleum Corporation and
subsidiaries as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997 incorporated by reference in the
Registration Statement have been incorporated herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of such firm as experts in
accounting and auditing.
17
<PAGE> 28
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Recent Developments.................. S-3
Use of Proceeds...................... S-3
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.......................... S-3
Description of Series B Preferred
Stock.............................. S-4
Description of Depositary Shares..... S-7
Book-Entry Procedures and
Settlement......................... S-9
Underwriting......................... S-10
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 4
Use of Proceeds...................... 4
Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.......................... 4
Description of Debt Securities....... 5
Description of Capital Stock, Rights
Agreement and Restated Certificate
of Incorporation................... 13
Plan of Distribution................. 16
Validity of Securities............... 17
Experts.............................. 17
</TABLE>
======================================================
======================================================
2,000,000 DEPOSITARY SHARES
ANADARKO LOGO
EACH REPRESENTING 1/10TH OF A SHARE
OF 5.46% CUMULATIVE PREFERRED STOCK,
SERIES B
-----------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------
SALOMON SMITH BARNEY
MORGAN STANLEY DEAN WITTER
MAY 4, 1998
======================================================
