<PAGE> 1
FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NO. 33-52683
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 27, 1994
$125,000,000
[LOGO] UNION TEXAS PETROLEUM HOLDINGS, INC.
8 3/8% SENIOR NOTES DUE 2005
------------------------
Interest on the Notes is payable semiannually on September 15 and March 15
of each year, commencing September 15, 1995. The Notes will mature on March 15,
2005. The Notes may be redeemed at any time, at the option of the Company, in
whole or in part, at a price equal to 100% of their principal amount plus
accrued interest plus a Make-Whole Premium calculated by reference to the then-
prevailing Treasury Yield and the remaining life of the Notes. The Notes will be
senior unsecured obligations of the Company and will rank pari passu in right of
payment with the Company's obligations under its credit facilities and its 8.25%
Senior Notes due 1999 and senior in right of payment to all subordinated
indebtedness of the Company. The Company's obligations under the Notes will be
unconditionally guaranteed by certain of its subsidiaries for the purpose of
assuring that the Notes will not be structurally subordinated to the Company's
obligations under its credit facilities, 8.25% Senior Notes due 1999 or any
other funded indebtedness of the Company that is guaranteed, from time to time,
by subsidiaries of the Company. The Indenture relating to the Notes will provide
for the release and addition of subsidiaries of the Company as guarantors and
for the limitation of obligations of each guarantor under certain circumstances.
The guarantee of the Notes by any subsidiary may be released if, but only so
long as, no other funded indebtedness of the Company is guaranteed by such
subsidiary. The Notes will be issued in the form of one or more fully registered
global Notes which will be deposited with, or on behalf of, The Depository Trust
Company, as depositary. Ownership of beneficial interests in a global Note will
be limited to institutions that have accounts with The Depository Trust Company
and to persons that may hold interests through such institutions. See
"Description of the Notes." The Notes are not entitled to any sinking fund.
------------------------
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 TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE(1) DISCOUNT(2) COMPANY(3)
---------------- ---------------- -------------
<S> <C> <C> <C>
Per Note....................................... 99.431% 0.65% 98.781%
Total.......................................... $124,288,750 $812,500 $123,476,250
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from March 23, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $225,000 payable by the Company.
------------------------
The Notes are being offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the Notes
will be made through the facilities of The Depository Trust Company on or about
March 23, 1995.
GOLDMAN, SACHS & CO.
CHEMICAL SECURITIES INC.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
------------------------
The date of this Prospectus Supplement is March 16, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RATIO OF EARNINGS TO FIXED CHARGES
The following are the ratios of earnings to fixed charges for each of the
fiscal years in the five-year period ended December 31, 1994.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------
1990 1991 1992 1993 1994
- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C>
3.47 4.94 7.93 1.61 7.31(1)
</TABLE>
- ---------------
(1) Assuming the $125 million of Senior Notes offered hereby were issued on
January 1, 1994 and the estimated net proceeds therefrom were applied as
described in "Use of Proceeds," the pro forma ratio of earnings to fixed
charges for the year ended December 31, 1994 would be 6.49.
Earnings, as used to calculate the ratio of earnings to fixed charges,
consist of consolidated earnings before income taxes and fixed charges. Fixed
charges consist of interest on all indebtedness (including capital lease
obligations), amortization of debt expense, dividends on preferred stock, if
any, and the percentage of rental expense on operating leases which is deemed
representative of the interest factor.
USE OF PROCEEDS
The net proceeds from the sale of the 8 3/8% Senior Notes due 2005 (the
"Notes") offered hereby are estimated to be approximately $123.3 million (after
deducting underwriting discounts and commissions and offering expenses). The
Company intends to use such proceeds to reduce a portion of the Company's debt
under its $350 million revolver incurred in connection with the Company's
acquisition of a 9.42% unit interest in the undeveloped Britannia natural gas
and condensate field in the U.K. North Sea. Such repayment of debt may include
amounts to be repaid to affiliates of the Underwriters. On February 28, 1995,
the Company had a total of approximately $302 million outstanding under its $350
million revolver, which has a final maturity of April 30, 1998. At December 31,
1994, the $350 million revolver bore interest at the weighted average rate of
6.54% per annum.
S-2
<PAGE> 3
DESCRIPTION OF THE NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the accompanying Prospectus, to which description reference is hereby made.
Capitalized terms not defined herein have the meanings assigned to such terms in
the accompanying Prospectus.
The summary contained in this Prospectus Supplement of certain provisions
of the Indenture dated as of March 15, 1995 (the "Indenture") between the
Company and The First National Bank of Chicago as trustee (the "Trustee") does
not purport to be complete and is subject to and qualified in its entirety by
reference to the Indenture and the Notes.
The Notes are senior unsecured obligations of the Company and will be
limited to $125 million aggregate principal amount and will mature on March 15,
2005. The Notes will bear interest from March 23, 1995 at the rate per annum set
forth on the cover page hereof, payable semi-annually on September 15 and March
15 of each year, commencing September 15, 1995, to the persons in whose names
such Notes are registered, subject to certain exceptions, at the close of
business on the September 1 or March 1, as the case may be, next preceding such
interest payment date. Principal and interest will be payable, and transfer of
the Notes will be registrable, at the office of the Trustee, but payment of
interest may be made at the option of the Company by check mailed to the address
of the person entitled thereto as shown on the register of the notes maintained
by the Registrar (the "Note Register"). The Notes will be issuable in
denominations of $1,000 and integral multiples thereof.
The discharge and defeasance provisions and the covenant provisions
described in the accompanying Prospectus under "Description of the Debt
Securities" will apply to the Notes. The Notes are redeemable prior to maturity
at the option of the Company. See "-- Optional Redemption" below. The Notes are
not entitled to any sinking fund.
The Notes will be issued in the form of one or more fully registered global
Notes which will be deposited with, or on behalf of, The Depository Trust
Company, as depositary (the "Depositary"), located in the Borough of Manhattan,
The City of New York, and will be registered in the name of the Depositary or a
nominee of the Depositary.
Ownership of beneficial interests in a global Note will be limited to
participants and to persons that may hold interests through institutions that
have accounts with the Depositary ("participants"). Ownership of beneficial
interests by participants in a global Note will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary for such global Note. Ownership of beneficial interests in such
global Note by persons that hold through participants will be shown on, and the
transfer of that ownership interest within each participant will be effected
only through, records maintained by such participants.
Payment of principal of and interest on the Notes represented by any such
global Note will be made to the Depositary or its nominee, as the case may be,
as the sole registered owner and the sole Holder of the Notes represented
thereby for all purposes under the Indenture. None of the Company, the Trustee
or any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depositary's records relating to or payments
made on account of beneficial ownership interests in a global Note representing
any Notes or any other aspect of the relationship between the Depositary and its
participants or the relationship between such participants and the owners of
beneficial interests in a global Note owning through such participants or for
maintaining, supervising or reviewing any of the Depositary's records relating
to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or interest on any such global Note, the Depositary will
credit, on its book-entry registration and transfer system, the accounts of
participants with payments in amounts proportionate to their respective
S-3
<PAGE> 4
beneficial interests in the principal amount of such global Note as shown on the
records of the Depositary. The accounts to be credited shall be designated by
the Underwriters. Payments by participants to owners of beneficial interests in
a global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for customer accounts registered in "street name," and will be the sole
responsibility of such participants.
No global Note may be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor of the Depositary or a nominee of such successor.
A global Note representing Notes is exchangeable for definitive Notes in
registered form, only if (x) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such global Note or if at any
time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 (the "Exchange Act"), (y) the Company in its
sole discretion determines that such global Note shall be exchangeable for
definitive Notes in registered form and notifies the Trustee thereof or (z) an
Event of Default with respect to the Notes represented by such global Note has
occurred and is continuing. Any global Note that is exchangeable pursuant to the
preceding sentence shall be exchangeable for definitive Notes issuable in
authorized denominations in registered form, aggregating a like amount. Such
definitive Notes shall be registered in the names of the owners of the
beneficial interests in such global Note as the Depositary shall direct.
Except as provided above, owners of beneficial interests in such a global
Note will not be entitled to receive physical delivery of Notes in definitive
form and will not be considered the holders thereof for any purpose under the
Indenture, and no global Note representing Notes shall be exchangeable.
Accordingly, each person owning a beneficial interest in such 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 Indenture or such
global Note. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global Note.
The Indenture provides that the Depositary may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a holder is entitled to
give or take under the Indenture or a global Note. The Company understands that
under existing industry practices, in the event that the Company requests any
action of holders or that an owner of a beneficial interest in such a global
Note desires to give or take any action which a holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
S-4
<PAGE> 5
GUARANTEES
The following Subsidiaries of the Company (collectively, the "Guarantors"),
each of which also is a guarantor of the Company's obligations under the Credit
Facility (collectively, the Company's credit facilities, as defined in the
accompanying Prospectus) will unconditionally guarantee (the "Guarantees") on a
joint and several basis the Company's obligations to pay principal, premium, if
any, and interest with respect to the Notes: Union Texas East Kalimantan
Limited, Union Texas Petroleum Energy Corporation, Union Texas International
Corporation, Union Texas Products Corporation and Unistar, Inc. The provisions
regarding consolidation, merger and sale of assets of the Company, as described
in the accompanying Prospectus under "Description of the Debt Securities," will
refer, as applicable, to any consolidation, merger or sale of assets of any
Guarantor.
For purposes of this Prospectus Supplement, the term "Notes," except where
the context requires otherwise, includes the Guarantees. The Indenture provides
for the release and addition of subsidiaries of the Company as guarantors and
for the limitation of obligations of each guarantor under certain circumstances.
See "Description of the Debt Securities -- Provisions Applicable Solely to
Senior Debt Securities."
OPTIONAL REDEMPTION
The Notes will be redeemable, at the option of the Company, at any time in
whole or from time to time in part, upon not less than 30 and not more than 60
days' notice mailed to each holder of Notes to be redeemed at the holder's
address appearing in the Note Register, on any date prior to maturity at a price
equal to 100% of the principal amount thereof plus accrued interest to the
Redemption Date (subject to the right of holders of record on the relevant
record date to receive interest due on an interest payment date that is on or
prior to the Redemption Date) plus a Make-Whole Premium, if any.
The amount of the Make-Whole Premium with respect to any Note (or portion
thereof) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the Redemption Date,
of:
(A) each interest payment that, but for such redemption, would have
been payable on the Note (or portion thereof) being redeemed on such
Interest Payment Date occurring after the Redemption Date (excluding any
accrued interest for the period prior to the Redemption Date); and
(B) the principal amount that, but for such redemption, would have
been payable at the final maturity of the Note (or portion thereof) being
redeemed;
over
(ii) the principal amount of the Note (or portion thereof) being redeemed.
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield (as defined below).
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company fails to make such appointment at least 10 business days
prior to the Redemption Date, or if the institution so appointed is unwilling or
unable to make such calculation, such calculation will be made by Goldman, Sachs
& Co. or, if such firm is unwilling or unable to make such calculation, by an
independent investment banking institution of national standing appointed by the
Trustee (in any such case, an "Independent Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield" means
a rate of interest per annum equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant
S-5
<PAGE> 6
maturity that corresponds to the remaining term to maturity of the Notes,
calculated to the nearest 1/12 of a year (the "Remaining Term"). The Treasury
Yield will be determined as of the third business day immediately preceding the
applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100 of 1%, with any figure of
1/200 of 1% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
If less than all of the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed pro rata or by lot. The Trustee may select for
redemption Notes and portions of Notes in amounts of $1,000 or whole multiples
of $1,000, provided that if all of the Notes of a holder are to be redeemed, the
entire outstanding amount of Notes held by such holder, even if not a whole
multiple of $1,000, will be redeemed.
The Notes will not be entitled to the benefit of any sinking fund or other
mandatory redemption provisions.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement
dated the date hereof between the Company and the several Underwriters named
below, the Company has agreed to sell to each of the Underwriters, and each of
the Underwriters has severally agreed to purchase from the Company, the
principal amount of the Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- -------------
<S> <C>
Goldman, Sachs & Co.................................................. $ 31,250,000
Chemical Securities Inc. ............................................ 31,250,000
J.P. Morgan Securities Inc........................................... 31,250,000
Salomon Brothers Inc ................................................ 31,250,000
-------------
Total ..................................................... $ 125,000,000
=============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes offered hereby,
if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.40% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% of the principal amount of the Notes to certain brokers and dealers. After
the Notes are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
S-6
<PAGE> 7
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given that an
active public trading market for the Notes will develop. The absence of an
active public trading market could have an adverse effect on the liquidity and
value of the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Underwriters have in the past and may in the future provide investment
banking and other related services to the Company and its affiliates in the
ordinary course of their respective businesses. In addition, in the ordinary
course of their respective businesses, affiliates of Chemical Securities Inc.
and J.P. Morgan Securities Inc. have engaged, and may in the future engage, in
commercial banking transactions with the Company and its affiliates. As
discussed under "Use of Proceeds," the Company intends to use a portion of the
proceeds from the offering of the Notes to repay certain bank debt, and
affiliates of Chemical Securities Inc. and J.P. Morgan Securities Inc. are,
among others, lenders of such bank debt.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Andrews &
Kurth L.L.P., Houston, Texas, and for the Underwriters by Simpson Thacher &
Bartlett, New York, New York.
S-7
<PAGE> 8
PROSPECTUS
UNION TEXAS PETROLEUM HOLDINGS, INC.
DEBT SECURITIES
---------------------
Union Texas Petroleum Holdings, Inc. (the "Company") may offer from time to
time unsecured debt securities ("Debt Securities") consisting of debentures,
notes and/or other evidences of unsecured indebtedness in one or more series, or
any combination of the foregoing, at an aggregate initial offering price not to
exceed $200,000,000, or its equivalent if some or all of the Debt Securities are
denominated in one or more foreign currencies, at prices and on terms to be
determined at or prior to the time of sale in light of market conditions at the
time of sale.
Specific terms of the particular Debt Securities in respect of which this
Prospectus is being delivered will be set forth in one or more accompanying
Prospectus Supplements (each a "Prospectus Supplement"), together with the terms
of the offering of the Debt Securities and the initial price and the net
proceeds to the Company from the sale thereof. The Prospectus Supplement will
set forth with regard to the particular Debt Securities, without limitation, the
following: the specific designation, aggregate principal amount, ranking as
senior debt or subordinated debt, authorized denomination, maturity, rate or
method of calculation of interest and dates for payment thereof, any
exchangeability, conversion, redemption, prepayment or sinking fund provisions,
the currency or currencies or currency unit or currency units in which
principal, premium, if any, or interest, if any, is payable, any modifications
of or additions to the covenants described in this Prospectus and any other
specific terms thereof. The Company's obligations under the Debt Securities may
be guaranteed by certain of its subsidiaries for the purpose of providing that
the Debt Securities will not be structurally subordinated to the Company's
obligations under its credit facilities, 8.25% Senior Notes due 1999 or any
other funded indebtedness of the Company that is guaranteed, from time to time,
by such subsidiaries of the Company. The amounts payable by the Company in
respect of Debt Securities may be calculated by reference to the value, rate or
price of one or more specified commodities, currencies or indices to the extent
set forth in the Prospectus Supplement. The Prospectus Supplement will also
contain information, where applicable, about certain United States federal
income tax considerations relating to the Debt Securities covered by the
Prospectus Supplement.
The Company may sell the Debt Securities directly, through agents
designated from time to time or through underwriters or dealers. If any agents
of the Company or any underwriters or dealers are involved in the sale of the
Debt Securities, the names of such agents, underwriters or dealers, any
applicable commissions and discounts, and the net proceeds to the Company will
be set forth in the applicable Prospectus Supplement. See "Plan of Distribution"
for possible indemnification arrangements for agents, underwriters and dealers.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS.ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is May 27, 1994.
<PAGE> 9
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY DEBT SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT 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 THEREOF OR THAT THE INFORMATION
CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
AVAILABLE INFORMATION
Union Texas Petroleum Holdings, Inc. is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at certain of the Commission's Regional Offices located at 7
World Trade Center, 13th Floor, New York, NY 10048 and 500 West Madison Street,
Suite 1400, Chicago, IL 60601. Copies of such materials can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, at prescribed rates. In addition, the
Company's common stock, par value $.05 per share, is listed on the New York
Stock Exchange and the Pacific Stock Exchange, and the Company's 8.25% Senior
Notes due 1999 (the "8.25% Senior Notes") are listed on the New York Stock
Exchange. The Company's reports, proxy statements and other information filed
under the Exchange Act may also be inspected and copied at the offices of the
New York Stock Exchange, 20 Broad Street, New York, NY 10005 and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, CA 94104.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement and to the
exhibits and schedules filed therewith. All of these documents may be inspected
without charge at the Commission's principal office in Washington, D.C., and
copies thereof may be obtained from the Commission at the prescribed rates or
may be examined without charge at the public reference facilities of the
Commission.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-9019)
pursuant to the Exchange Act are incorporated herein by reference: the Company's
Annual Report on Form 10-K for the year ended December 31, 1993; its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994; and its Current
Reports on Form 8-K filed April 21, 1994 and April 28, 1994.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of any series of Debt 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 contained in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein, shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified shall not be deemed to constitute a part of this Prospectus except as
so modified, and any statement so superseded shall not be deemed to constitute
part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all documents which
are incorporated herein by reference, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to the Company, at its principal
executive offices at 1330 Post Oak Boulevard, Houston, TX 77056, Attention:
Corporate Secretary, telephone (713) 623-6544.
---------------------
Quantities of natural gas are expressed in this Prospectus in terms of
thousand cubic feet ("Mcf"), million cubic feet ("MMcf") or billion cubic feet
("Bcf"). Oil is quantified in terms of barrels ("Bbls"). Gas is converted into a
barrel of oil equivalent ("boe") based on 5.8 Mcf of gas to one barrel of oil.
---------------------
IN CONNECTION WITH THE OFFERING OF DEBT SECURITIES, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF SUCH SECURITIES OFFERED HEREBY OR OTHER SECURITIES OF THE COMPANY AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 10
THE COMPANY
The Company, the successor to a corporation founded in 1896, is an
independent (non-integrated) oil and gas company with worldwide operations. At
December 31, 1993, the Company had net proved oil and gas reserves of 381
million boe. The Company's average net daily oil and gas production during 1993
was approximately 40,000 Bbls and 373 MMcf, respectively. Substantially all of
the Company's oil and gas activities are currently conducted outside of the
United States, primarily in the U.K. sector of the North Sea, Indonesia and
Pakistan. The Company participates worldwide in new venture exploration for oil
and gas. Current activity includes interests in prospects in the United Kingdom,
eastern Indonesia, Pakistan, Alaska, offshore Argentina, offshore Ireland and
offshore Tunisia. The Company also owns an interest in a U.S.-based
petrochemicals business.
As used herein, the "Company" means Union Texas Petroleum Holdings, Inc.
and its subsidiaries unless the context requires otherwise. Two limited
partnerships organized and controlled by an affiliate of Kohlberg Kravis Roberts
& Co. own approximately 38% of the Company's issued and outstanding common
stock. The address and telephone number of the Company's principal executive
offices are 1330 Post Oak Boulevard, Houston, TX 77056, (713) 623-6544.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debt
Securities for general corporate purposes, which may include the repayment of
outstanding indebtedness. Any specific allocations of the proceeds to a
particular purpose that have been made at the date of any Prospectus Supplement
will be described therein.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges was as follows for the
years and periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
- ---------------------------------------- --------------
1989 1990 1991 1992 1993 1993 1994
- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
3.60 3.47 4.94 7.93 1.61 7.17 10.35
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of pretax income plus fixed charges. Fixed charges consist of interest
expense, capitalized interest, amortization of discount and financing costs and
the portion of rent expense which is deemed to be representative of the interest
component of rent expense. During the third quarter of 1993, the Company
recorded a non-cash charge to depreciation, depletion and amortization of $103
million pretax ($48 million after-tax) for the write-down of its investment in
the U.K. North Sea's Piper field. Excluding the effect of the Piper write-down,
the ratio of earnings to fixed charges for 1993 would have been 4.45.
3
<PAGE> 11
DESCRIPTION OF THE DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate ("Offered Debt Securities"). The particular terms of the Offered Debt
Securities and the extent to which such general provisions may apply will be
described in a Prospectus Supplement relating to such Offered Debt Securities.
The Debt Securities will be general unsecured obligations of the Company
and will constitute either senior debt securities or subordinated debt
securities. In the case of Debt Securities that will be senior debt securities
("Senior Debt Securities"), the Debt Securities will be issued under an
Indenture (the "Senior Indenture") to be entered into between the Company and
The First National Bank of Chicago, as trustee under the Senior Indenture. In
the case of Debt Securities that will be subordinated debt securities
("Subordinated Debt Securities"), the Debt Securities will be issued under an
Indenture (the "Subordinated Indenture") to be entered into between the Company
and The First National Bank of Chicago, as trustee under the Subordinated
Indenture. The Senior Indenture and the Subordinated Indenture are sometimes
hereinafter referred to herein individually as an "Indenture" and collectively
as the "Indentures." Copies of the forms of the Indentures have been filed as
exhibits to the Registration Statement. The First National Bank of Chicago, as
trustee under each of the Indentures (and any successor thereto under each
Indenture), is referred to herein as the "Trustee." The statements under this
caption relating to the Debt Securities and the Indentures are summaries only
and do not purport to be complete. Such summaries make use of terms defined in
the Indentures. Wherever such terms are used herein or particular provisions of
an Indenture are referred to, such terms or provisions, as the case may be, are
incorporated by reference as part of the statements made herein, and such
statements are qualified in their entirety by such reference. Certain defined
terms in the Indentures are capitalized herein. The italicized references below
apply to the article or section numbers in the Senior Indenture and Subordinated
Indenture, respectively, or to both Indentures if only one reference is
provided, unless otherwise indicated.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
The Indentures do not limit the aggregate principal amount of Debt
Securities which can be issued thereunder and provide that Debt Securities may
be issued from time to time thereunder in one or more series, each in an
aggregate principal amount authorized by the Company prior to issuance. The Debt
Securities may be issued at various times with different maturity dates and
different principal repayment provisions, may bear interest at different rates,
may be payable in currencies other than United States dollars, in composite
currencies or in amounts determined by reference to the price, rate or value of
one or more specified commodities, currencies or indices, and may otherwise
vary, all as provided in the Indentures. The Company has from time to time
entered into, and will in the future enter into, credit agreements to fund its
operations, herein referred to collectively as the "Credit Facility." Such
credit agreements may be secured by the assets of the Company, secured by the
assets of subsidiaries of the Company or guaranteed by subsidiaries of the
Company. To the extent that the Credit Facility is so secured or guaranteed, the
lenders under such Credit Facility may have priority over the holders of the
Debt Securities with respect to the assets of the Company or its subsidiaries
which secure such Credit Facility and may have priority over the holders of the
Debt Securities and the guarantees thereof.
General. Unless otherwise indicated in a Prospectus Supplement, the Debt
Securities will not benefit from any covenant or other provision that would
afford holders of such Debt Securities special protection in the event of a
highly leveraged transaction involving the Company.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Offered Debt Securities: (i) the title and aggregate principal
amount of the Offered Debt Securities; (ii) the date or dates on which the
Offered Debt Securities will mature; (iii) the rate or rates (which may be fixed
or variable) per annum, if any, at which the Offered Debt Securities will bear
interest or the method of determining such rate or rates; (iv) the date or dates
from which such interest, if any, will accrue and the date or dates at which
such interest, if any, will be payable; (v) the terms for redemption or early
4
<PAGE> 12
payment, if any, including any mandatory or optional sinking fund or analogous
provision; (vi) the terms for conversion or exchange, if any, of the Offered
Debt Securities; (vii) whether, and the extent to which, the Company's
obligations under the Offered Debt Securities will be guaranteed by any of the
Company's subsidiaries; (viii) whether such Offered Debt Securities will be
issued in fully registered form or in bearer form or any combination thereof;
(ix) whether such Offered Debt Securities will be issued in the form of one or
more global securities and whether such global securities are to be issuable in
temporary global form or permanent global form; (x) information with respect to
book-entry procedures, if any; (xi) the currency, currencies or currency unit or
units in which such Offered Debt Securities will be denominated and in which the
principal of, and premium and interest, if any, on such Offered Debt Securities
will be payable; (xii) whether, and the terms and conditions on which, the
Company or a holder may elect that, or the other circumstances under which,
payment of principal of, or premium or interest, if any, on such Offered Debt
Securities is to be made in a currency or currencies or currency unit or units
other than that in which such Offered Debt Securities are denominated; (xiii)
any index or formula to be used to determine the amount of payments of principal
of (and premium, if any) and interest on such Offered Debt Securities and any
commodities, currencies, currency units or indices, or value, rate or price,
relevant to such determination; and (xiv) any other specific terms of the
Offered Debt Securities. (Section 301) Reference is also made to the applicable
Prospectus Supplement for information with respect to (x) the classification of
the Offered Debt Securities as Senior Debt Securities or Subordinated Debt
Securities, (y) the price (expressed as a percentage of the aggregate principal
amount of the Offered Debt Securities) at which the Offered Debt Securities will
be issued, if other than 100 percent, and (z) any additional covenants that may
be included in the terms of the Offered Debt Securities.
No service charge will be made for any registration of transfer or exchange
of the 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)
The Company currently conducts all of its operations through subsidiaries,
and the holders of Debt Securities will generally have a junior position to any
claims of creditors and any preferred stockholders of the Company's
subsidiaries, except as applicable under the terms of any guarantee of any
Senior Debt Securities. Claims of creditors of such subsidiaries, including
trade creditors, secured creditors, taxing authorities and creditors holding
guarantees, and claims of holders of any preferred stock will generally have
priority as to the assets of such subsidiaries over the claims and equity
interests of the Company and, thereby, indirectly, the holders of indebtedness
of the Company, including the Debt Securities. To the extent the Offered Debt
Securities are Senior Debt Securities guaranteed by certain of the Company's
subsidiaries, such Senior Debt Securities will rank senior to or pari passu with
certain indebtedness of such subsidiary. See "-- Provisions Applicable Solely to
Senior Debt Securities."
Offered Debt Securities may be sold at a discount (which may be
substantial) below their stated principal amount bearing no interest or interest
at a rate which at the time of issuance is below market rates. Any material
United States federal income tax consequences and other special considerations
applicable thereto will be described in the Prospectus Supplement relating to
any such Offered Debt Securities.
If any of the Offered Debt Securities are sold for any foreign currency or
currency unit or if the principal of, or premium or interest, if any, on any of
the Offered Debt Securities is payable in any foreign currency or currency unit,
the restrictions, elections, tax consequences, specific terms and other
information with respect to such Offered Debt Securities and such foreign
currency or currency unit will be set forth in the Prospectus Supplement
relating thereto.
Covenants. The Indentures require the Company to covenant, among other
things, with respect to each series of Debt Securities: (i) to duly and
punctually pay the principal of (and premium, if any) and interest, if any, on
such series of Debt Securities; (ii) to maintain an office or agency in each
Place of Payment where Debt Securities may be presented or surrendered for
payment, transferred or exchanged and where notices to the Company may be
served; (iii) if the Company shall act as its own Paying Agent for any series of
Debt Securities, to segregate and hold in trust for the benefit of the Persons
entitled
5
<PAGE> 13
thereto a sum sufficient to pay the principal (and premium, if any) or interest,
if any, so becoming due; (iv) to deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement to the effect that the Company
has fulfilled all its obligations under the Indentures throughout such year; (v)
to preserve its corporate existence; (vi) to maintain its properties; and (vii)
to pay taxes and other claims, in each case, as required by the Indentures.
(Article Eleven; Article Ten)
Events of Default. Unless otherwise provided with respect to any series of
Debt Securities, the following are Events of Default under each Indenture with
respect to the Debt Securities of such series issued under the Indenture: (a)
failure to pay principal of (or premium, if any, on) any Debt Security of such
series when due; (b) failure to pay any interest on any Debt Security of such
series when due, continued for 30 days; (c) failure to deposit any mandatory
sinking fund payment, when due, in respect of the Debt Securities of such
series; (d) failure to perform any other covenant of the Company in the
applicable Indenture (other than a covenant included in the applicable Indenture
for the benefit of a series of Debt Securities other than such series),
continued for 60 days after written notice as provided in the applicable
Indenture; (e) the acceleration of the maturity of any Indebtedness of the
Company or any Restricted Subsidiary (other than the Securities or any
Non-Recourse Indebtedness) that has an outstanding principal amount of $20
million or more individually or in the aggregate; (f) a default in the payment
of principal or interest in respect of any Indebtedness of the Company or any
Restricted Subsidiary (other than the Securities or any Non-Recourse
Indebtedness) having an outstanding principal amount of $20 million or more
individually or in the aggregate, and such default shall be continuing for a
period of 30 days without the Company or such Restricted Subsidiary, as the case
may be, effecting a cure of such default; (g) certain events of bankruptcy,
insolvency or reorganization; and (h) any other Event of Default as may be
established with respect to Debt Securities of such series (including, without
limitation, any Event of Default arising out of a default which results in the
acceleration of certain Indebtedness or a default in the payment of any amounts
due on certain Indebtedness). (Sections 301 and 601; Sections 301 and 501) If an
Event of Default with respect to any outstanding series of Debt Securities
occurs and is continuing, either the Trustee or the holders of at least 25% in
principal amount of the outstanding Debt Securities of such series (subject to
the following sentence, in the case of an Event of Default described in clause
(a), (b), (c) or (f) above) or at least 25% in principal amount of all
outstanding Debt Securities under the Indenture (subject to the following
sentence, in the case of other Events of Default) may declare the principal
amount of all the Debt Securities of the applicable series (or of all
outstanding Debt Securities under the applicable Indenture, as the case may be)
to be due and payable immediately. If an Event of Default described in clause
(e) shall occur, the principal amount of the Debt Securities of all series ipso
facto shall become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holder. At any time after a
declaration of acceleration has been made, but before a judgment has been
obtained, the holders of a majority in principal amount of the outstanding Debt
Securities of such series (or all outstanding Debt Securities under the
applicable Indenture, as the case may be) may, under certain circumstances,
rescind and annul such acceleration. (Section 602; Section 502) Depending on the
terms of other Indebtedness of the Company outstanding from time to time, an
Event of Default under an Indenture may give rise to cross defaults on such
other Indebtedness of the Company.
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities, give to the
holders of the Debt Securities of such series notice of all uncured and unwaived
defaults known to it; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or any interest on, or
any sinking fund installment with respect to, any Debt Securities of such
series, the Trustee will be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interest of the
holders of the Debt Securities of such series; and provided, further, that such
notice shall not be given until at least 30 days after the occurrence of a
default in the performance, or breach, of any covenant or warranty of the
Company under such Indenture other than for the payment of the principal of (or
premium, if any) or any interest on, or any sinking fund installment with
respect to, any Debt Securities of such series. For the purpose of this
provision, "default" with respect to Debt Securities of any series means any
event which
6
<PAGE> 14
is, or after notice or lapse of time, or both, would become, an Event of Default
with respect to the Debt Securities of such series. (Section 702; Section 602)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, all outstanding Debt Securities
under the applicable Indenture) have the right, subject to certain limitations,
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series (or of all
outstanding Debt Securities under the applicable Indenture). (Section 612;
Section 512) Each Indenture provides that in case an Event of Default shall
occur and be continuing with respect to the Debt Securities of any series, the
Trustee shall exercise such of its rights and powers under the applicable
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs. (Section 701; Section 601) Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under either Indenture at the request of any of the holders of the Debt
Securities unless they shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request. (Section 703; Section 603)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, all outstanding Debt Securities
under the applicable Indenture) may on behalf of the holders of all Debt
Securities of such series (or of all outstanding Debt Securities under the
applicable Indenture) waive any past default under the Indenture, except a
default in the payment of the principal of (or premium, if any) or interest on
any Debt Security or in respect of a provision which under the applicable
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Debt Security affected. (Section 613; Section 513) The holders
of a majority in principal amount of the outstanding Debt Securities affected
thereby may on behalf of the holders of all such Debt Securities waive
compliance by the Company with certain restrictive provisions of the Indenture.
(Section 1110; Section 1008)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under each
Indenture and as to any default in such performance. (Section 1109; Section
1007)
Modification. Modifications and amendments of each Indenture may be made by
the Company and the Trustee with the consent of the holders of a majority in
principal amount of the outstanding Debt Securities under the Indenture 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 date of the principal of, or any installment of
interest on, any Debt Security, (b) reduce the principal amount of, or the
premium (if any) or interest on, any Debt Security, (c) change the Place of
Payment or currency, currencies, or currency unit or units of payment of
principal of, or premium (if any) or interest on, any Debt Security, (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security or (e) reduce the percentage in principal amount of
outstanding Debt Securities the consent of whose holders is required for
modification or amendment of the Indentures or for waiver of compliance with
certain provisions of the Indentures or for waiver of certain defaults. (Section
1002; Section 902)
Each Indenture provides that the Company and the Trustee may, without the
consent of any holders of Debt Securities, enter into supplemental indentures
for the purposes, among other things, of adding to the Company's covenants,
securing the Debt Securities, adding additional Events of Default, establishing
the form or terms of Debt Securities or curing ambiguities or inconsistencies in
the applicable Indenture, provided such action to cure ambiguities or
inconsistencies shall not adversely affect the interests of the holders of the
Debt Securities in any material respect. (Section 1001; Section 901)
Consolidation, Merger and Sale of Assets. The Company, without the consent
of any holders of outstanding Debt Securities, may consolidate with or merge
into, or convey, transfer or lease its assets substantially as an entirety to,
any Person, provided that the Person formed by such consolidation or into
7
<PAGE> 15
which the Company is merged or which acquires or leases the assets of the
Company substantially as an entirety is a corporation, partnership or trust
organized under the laws of any United States jurisdiction and assumes by
supplemental indenture the Company's obligations on the Debt Securities and
under the Indenture, 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 occurred and be continuing, and that certain
other conditions are met. Upon compliance with these provisions by a successor
Person, the Company will (except in the case of a lease) be relieved of its
obligations under the Indenture and the Debt Securities. (Article Nine; Article
Eight)
Discharge and Defeasance. The Company may terminate its obligations under
each Indenture with respect to Debt Securities of any series, other than its
obligation to pay the principal of (and premium, if any) and interest on such
Debt Securities and certain other obligations, if it (i) irrevocably deposits or
causes to be irrevocably deposited with the Trustee as trust funds money or U.S.
Government Obligations maturing as to principal and interest sufficient to pay
the principal of, any interest on, and any mandatory sinking funds in respect
of, all outstanding Debt Securities of such series on the stated maturity of
such payments or on any redemption date, (ii) has delivered to the Trustee an
opinion of counsel to the effect that the holders of Debt Securities of such
series will not recognize income, gain or loss for United States federal income
tax purposes as a result of such discharge and will be subject to United States
federal income tax on the same amount and in the same manner and at the same
time as would have been the case if such discharge had not occurred, and (iii)
complies with any additional conditions specified to be applicable with respect
to the covenant defeasance of Debt Securities of such series, and no default or
Event of Default with respect to the Debt Securities of such series shall have
occurred and be continuing on the date of such deposit or, insofar as they
relate to certain events of bankruptcy or insolvency, at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period). (Section 501; Section 401)
The terms of any series of Debt Securities may also provide for legal
defeasance pursuant to each Indenture. In such case, if the Company (i)
irrevocably deposits or causes to be irrevocably deposited money or U.S.
Government Obligations as described above and complies with the other provisions
described above (except that the opinion referred to in clause (ii) above must
be based on a ruling by the Internal Revenue Service or other change under
applicable United States federal income tax law), (ii) makes a request to the
Trustee to be discharged from its obligations on the Debt Securities of such
series and (iii) complies with any additional conditions specified to be
applicable with respect to legal defeasance of Debt Securities of such series,
then the Company shall be deemed to have paid and discharged the entire
indebtedness on all the outstanding Debt Securities of such series, and the
obligations of the Company under the applicable Indenture and the Debt
Securities of such series to pay the principal of (and premium, if any) and
interest on the Debt Securities of such series shall cease, terminate and be
completely discharged and the holders thereof shall thereafter be entitled only
to payment out of the money or U.S. Government Obligations deposited with the
Trustee as aforesaid, unless the Company's obligations are revived and
reinstated because the Trustee is unable to apply such trust fund by reason of
any legal proceeding, order or judgment. (Sections 503 and 504; Sections 403 and
404)
Form, Exchange, Registration and Transfer. Debt Securities are issuable in
definitive form as Registered Debt Securities, as Bearer Debt Securities or
both. Unless otherwise indicated in an applicable Prospectus Supplement, Bearer
Debt Securities will have interest coupons attached. Debt Securities are also
issuable in temporary or permanent global form. (Section 301)
Registered Debt Securities of any series will be exchangeable for other
Registered Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, with
respect to any series of Bearer Debt Securities, at the option of the holder,
subject to the terms of the applicable Indenture, Bearer Debt Securities (with
all unmatured coupons, except as provided below, and all matured coupons in
default) of such series will be exchangeable into Registered Securities of the
same series of any authorized denominations and of a like aggregate principal
amount
8
<PAGE> 16
and tenor. Bearer Debt Securities surrendered in exchange for Registered Debt
Securities between a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered without the coupon
relating to such date for payment of interest, and interest accrued as of such
date will not be payable in respect of the Registered Debt Security issued in
exchange for such Bearer Debt Security, but will be payable only to the holder
of such coupon when due in accordance with the terms of the applicable
Indenture. (Section 305)
In connection with its sale during the restricted period (as defined
below), no Bearer Debt Security (including a Debt Security in permanent global
form that is either a Bearer Debt Security or exchangeable for Bearer Debt
Securities) shall be mailed or otherwise delivered to any location in the United
States (as defined under "-- Limitations on Issuance of Bearer Debt
Securities"), and a Bearer Debt Security may be delivered outside the United
States in definitive form in connection with the original issuance only if prior
to delivery the Person entitled to receive such Bearer Debt Security furnishes
written certification, in the form required by the applicable Indenture, to the
effect that such Bearer Debt Security is owned by: (a) a Person (purchasing for
its own account) who is not a United States Person (as defined under
"-- Limitations on Issuance of Bearer Debt Securities"); (b) a United States
Person who (i) is a foreign branch of a United States financial institution
purchasing for its own account or for resale or (ii) acquired such Bearer Debt
Security through the foreign branch of a United States financial institution and
who for purposes of the certification holds such Bearer Debt Security through
such financial institution on the date of certification and, in either case,
such United States financial institution certifies to the Company or the
distributor selling the Bearer Debt Security within a reasonable time stating
that it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder, or (c) a United States or foreign financial
institution for purposes of resale within the "restricted period" as defined in
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7). A financial
institution described in clause (c) of the preceding sentence (whether or not
also described in clauses (a) and (b)) must certify that it has not acquired the
Bearer Debt Security for the purpose of resale, directly or indirectly, to a
United States Person or to a person within the United States or its possessions.
In the case of a Bearer Debt Security in permanent global form, such
certification must be given in connection with notation of a beneficial owner's
interest therein in connection with the original issuance of such Debt Security
or upon exchange of a portion of a temporary global Security. (Section 303) See
"-- Limitations on Issuance of Bearer Debt Securities."
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Debt Securities and
referred to in an applicable Prospectus Supplement, without a service charge and
upon payment of any taxes and other governmental charges as described in the
applicable Indenture. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the document of title and identity of the Person making the request. The
Company has appointed the Trustee as Security Registrar. (Section 305) If a
Prospectus Supplement refers to any transfer agents (in addition to the Security
Registrar) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that, if Debt Securities of a series are issuable
solely as Registered Debt Securities, the Company will be required to maintain a
transfer agent in each Place of Payment for such series and, if Debt Securities
of a series are issuable as Bearer Debt Securities, the Company will be required
to maintain (in addition to the Security Registrar) a transfer agent in a Place
of Payment located outside the United States for Registered Securities of such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities. (Section 1102; Section 1002)
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of
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<PAGE> 17
business 15 days prior to the selection of Debt Securities of that series for
redemption and ending on the close of business on, (A) if Debt Securities of the
series are issuable only as Registered Debt Securities, the day of mailing of
the relevant notice of redemption and, (B) if Debt Securities of the series are
issuable as Bearer Debt Securities, the day of the first publication of the
relevant notice of redemption, except that, if Securities of the series are also
issuable as Registered Debt Securities and there is no publication, the day of
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any Registered Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Registered Debt Security being
redeemed in part; or (iii) exchange any Bearer Debt Security called for
redemption, except to exchange such Bearer Debt Security for a Registered Debt
Security of that series and like tenor which is simultaneously surrendered for
redemption. (Section 305)
Payment and Paying Agents. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of principal of and any premium and interest on
Bearer Debt Securities will be payable, subject to any applicable laws and
regulations in the designated currency or currency unit, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time, at the option of the holder, by check or by transfer to an account
maintained by the payee until a bank located outside the United States;
provided, however, that the written certification described above under
"-- Form, Exchange, Registration and Transfer" has been delivered prior to the
first actual payment of interest. (Section 307) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on Bearer Debt Securities
on any Interest Payment Date will be made only against surrender to the Paying
Agent of the coupon relating to such Interest Payment Date. (Section 1101;
Section 1001) No payment with respect to any Bearer Debt Security will be made
at any office or agency of the Company in the United States or by check mailed
to any address in the United States or by transfer to any account maintained
with a bank located in the United States, nor shall any payments be made in
respect of Bearer Debt Securities upon presentation to the Company or its
designated Paying Agents within the United States. Notwithstanding the
foregoing, payments of principal of and any premium and interest on Bearer Debt
Securities denominated and payable in U.S. dollars will be made at the office of
the Company's Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount thereof in United States dollars at all
offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions. (Section 1102;
Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Debt Securities will
be made in the designated currency or currency unit at the office of such Paying
Agent or Paying Agents as the Company may designate from time to time, except
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 such address shall
appear in the Security Register. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on Registered Debt
Securities will be made to the Person in whose name such Registered Debt
Security is registered at the close of business on the Regular Record Date for
such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York will be designated as a Paying Agent for the Company for payments with
respect to Debt Securities which are issuable solely as Registered Debt
Securities, and the Company will maintain a Paying Agent outside the United
States for payments with respect to Debt Securities (subject to limitations
described above in the case of Bearer Debt Securities) which are issuable solely
as Bearer Debt Securities, or as both Registered Debt Securities and Bearer Debt
Securities. Any Paying Agents outside the United States and any other Paying
Agents in the United States initially designated by the Company for the Debt
Securities will be named in an applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts, except that, if Debt Securities of a series are issuable solely as
Registered Debt Securities, the Company will be required to maintain a Paying
Agent in each Place of Payment for such series and, if Debt Securities of a
series are issuable as Bearer Debt Securities, the Company will be required to
maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York
for principal payments
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with respect to any Registered Debt Securities of the series (and for payments
with respect to Bearer Debt Securities of the series in the circumstances
described above, but not otherwise), and (ii) a Paying Agent in a Place of
Payment located outside the United States where securities of such series and
any coupons appertaining thereto may be presented and surrendered for payment;
provided that if the Debt Securities of such series are listed on any stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent in a city located outside the
United States, as may be required, for the Debt Securities of such series.
(Section 1102; Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed at the end of three years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to the Company, and the holder of such Debt Security or any coupon will
thereafter look only to the Company for payment thereof. (Section 1103; Section
1003)
Temporary Global Securities. If so specified in an applicable Prospectus
Supplement, all or any portion of the Debt Securities of a series which are
issuable as Bearer Debt Securities will initially be represented by one or more
temporary global Debt Securities, without interest coupons, to be deposited with
a common depositary in London for the Euroclear System ("Euroclear") and CEDEL
S.A ("CEDEL") for credit to the designated accounts. On and after the date
determined as provided in any such temporary global Debt Security and described
in an applicable Prospectus Supplement, each such temporary global Debt Security
will be exchangeable for definitive Bearer Debt Securities, definitive
Registered Debt Securities or all or a portion of a permanent global security,
or any combination thereof, as specified in an applicable Prospectus Supplement,
but, unless otherwise specified in an applicable Prospectus Supplement only upon
written certification in the form and to the effect described under "-- Form,
Exchange, Registration and Transfer." No Bearer Debt Security delivered in
exchange for a portion of a temporary global Debt Security will be mailed or
otherwise delivered to any location in the United States in connection with such
exchange. (Section 304)
Unless otherwise specified in an applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Debt Security payable in respect
of an Interest Payment Date occurring prior to the issuance of definitive Debt
Securities or a permanent global Debt Security will be paid to each of Euroclear
and CEDEL with respect to the portion of the temporary global Debt Security held
for its account. Each of Euroclear and CEDEL will undertake in such
circumstances to credit such interest received by it in respect of a temporary
global Debt Security to the respective accounts for which it holds such
temporary global Debt Security only upon receipt in each case of written
certification in the form and to the effect described above under "-- Form,
Exchange, Registration and Transfer" as of the relevant Interest Payment Date
regarding the portion of such temporary global Debt Security on which interest
is to be so credited. (Section 304)
Permanent Global Securities. If any Debt Securities of a series are
issuable in permanent global form, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such permanent global Debt Securities may exchange such interest for Debt
Securities of such series and of like tenor and principal amount in any
authorized form and denomination. No Bearer Debt Security delivered in exchange
for a portion of a permanent global Debt Security shall be mailed or otherwise
delivered to any location in the United States in connection with such exchange.
(Section 305) A Person having a beneficial interest in a permanent global Debt
Security will, except with respect to payment of principal of and any premium
and interest on such permanent global Debt Security, be treated as a holder of
such principal amount of Outstanding Debt Securities represented by such
permanent global Debt Security as shall be specified in a written statement of
the holder of such permanent global Debt Security or, in the case of a permanent
global Debt Security in bearer form, of the operator of Euroclear or CEDEL which
is provided to the Trustee by such Person. Principal of and any premium and
interest on a permanent global Debt Security will be payable in the manner
described in the applicable Prospectus Supplement. (Section 203)
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Book-Entry Debt Securities. The Debt Securities of a series may be issued
in whole or in part, in the form of one or more global Debt Securities that
would be deposited with a depositary or a nominee identified in the applicable
Prospectus Supplement. The specific terms of any depositary arrangement with
respect to any portion of a series of Debt Securities and the rights of, and
limitations on, owners of beneficial interests in any such global Debt Security
representing all or a portion of a series of Debt Securities will be described
in the applicable Prospectus Supplement. (Section 204)
Limitations on Issuance of Bearer Debt Securities. In compliance with
United States federal tax laws and regulations, Bearer Debt Securities
(including securities in permanent global form that are either Bearer Debt
Securities or exchangeable for Bearer Debt Securities) will not be offered or
sold during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)) (generally, the first 40 days after
the closing date, and with respect to unsold allotments, until sold) within the
United States or to United States Persons (each as defined below) other than to
an office located outside the United States of a United States financial
institution (as defined in Section 1.165-12(c)(1)(v) of the United States
Treasury Regulations), purchasing for its own account or for resale or for the
account of certain customers, that provides a certificate stating that it agrees
to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Code
and the United States Treasury Regulations thereunder, or to certain other
Persons described in Section 1.163-5(c)(2)(i)(D)(l)(iii)(B) of the United States
Treasury Regulations. Moreover, such Bearer Debt Securities will not be
delivered in connection with their sale during the restricted period within the
United States. Any underwriters, agents and dealers participating in the
offering of Bearer Debt Securities must covenant that they will not offer or
sell during the restricted period any Bearer Debt Securities within the United
States or to United States Persons (other than the persons described above) or
deliver in connection with the sale of Bearer Debt Securities during the
restricted period any Bearer Debt Securities within the United States and that
they have in effect procedures reasonably designed to ensure that their
employees and agents who are directly engaged in selling the Bearer Debt
Securities are aware of the restrictions described above. No Bearer Debt
Security (other than a temporary global Bearer Debt Security) will be delivered
in connection with its original issuance nor will interest be paid on any Bearer
Debt Security until receipt by the Company of the written certification
described above under "-- Form, Exchange, Registration and Transfer." Each
Bearer Debt Security, other than a temporary global Bearer Debt Security, will
bear a legend to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein "United States Person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States and any estate or trust the income of
which is subject to United States federal income taxation regardless of its
source, and "United States" means the United States of America (including the
states and the District of Columbia) and its possessions.
Meetings. The Indentures contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting may be called at any time by
the Trustee, and also, upon request, by the Company or the holders of at least
25% in principal amount of the Outstanding Debt Securities of such series, in
any such case upon notice given as described under "-- Notices" below. Except
for any consent that must be given by the holder of each Outstanding Debt
Security affected thereby, as described under "-- Modification" above, any
resolution presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in
principal amount of the Outstanding Debt Securities of that series; provided,
however, that except for any consent that must be given by the holder of each
Outstanding Debt Security affected thereby, as described under "-- Modification"
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage, which is less than a majority in
principal amount of the Outstanding Debt Securities of a series may be adopted
at a meeting or adjourned meeting duly reconvened at which a quorum is present
by the affirmative vote of the holders of such specified percentage in principal
amount of the Outstanding
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Debt Securities of that series. Subject to the proviso set forth above, any
resolution passed or action taken at any meeting of holders of Debt Securities
of any series duly held in accordance with the Indenture will be binding on all
holders of Debt Securities of that series and any related coupons. The quorum at
any meeting called to adopt a resolution, and at any reconvened meeting, will be
Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series. (Article Fourteen)
Notices. Except as otherwise provided in the Indentures, notices to holders
of Bearer Debt Securities will be given by publication at least twice in a daily
newspaper in The City of New York and in such other city or cities as may be
specified in such Debt Securities. Notices to holders of Registered Debt
Securities will be given by mail to the addresses of such holders as they appear
in the Security Register. (Section 107)
The Trustee. The Indentures provide that the Trustee shall authenticate and
deliver Debt Securities of a particular series in accordance with a Company
Order. Each Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases and to realize certain property received with respect to any such
claims, as security or otherwise. (Section 713; Section 613) The Trustee is one
of the lenders under the Company's Credit Facility. The Trustee is permitted to
engage in other transactions, except that, if it acquires any conflicting
interest and there is a default under the Debt Securities, it must eliminate
such conflict or resign. (Section 708; Section 608)
Governing Law. The Indentures are, and the Debt Securities will be,
governed by and construed in accordance with the laws of the State of New York,
but without giving effect to principles of conflicts of law.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
Senior Debt Securities will be issued under the Senior Indenture and will
rank pari passu in right of payment with the Company's obligations under its
Credit Facility, its 8.25% Senior Notes and all other unsecured and
unsubordinated debt of the Company, and will be senior in right of payment to
all existing and future debt of the Company that is, by its terms, expressly
subordinated to the Senior Debt Securities. The guarantees, if any, of the
Senior Debt Securities by certain subsidiaries of the Company will rank pari
passu with any then existing obligations of any such subsidiaries under the
Credit Facility, the 8.25% Senior Notes and all other unsecured and
unsubordinated debt of such subsidiary, and will be senior in right of payment
to all existing and future debt of such subsidiary that is, by its terms,
expressly subordinated to the Senior Debt Securities.
Certain Subsidiaries of the Company, each of which may also be a guarantor
of the Company's obligations under the Credit Facility (collectively, the
"Guarantors"), may unconditionally guarantee (the "Guarantees") on a joint and
several basis the Company's obligations to pay principal, premium, if any, and
interest with respect to Senior Debt Securities of any series (the "Guaranteed
Securities"). Each of the Guarantees will be an unsecured obligation of the
Guarantor providing such Guarantee. Any Guarantee of a Senior Debt Security will
rank pari passu with the guarantee provided by such Guarantor under the Credit
Facility and the 8.25% Senior Notes and with all existing and future unsecured
indebtedness of such Guarantor that is not, by its terms, expressly subordinated
in right of payment to such Guarantee.
Under the terms of the Indenture, a Guarantor may be released from its
Guarantee if such Guarantor is not a guarantor of any Funded Indebtedness of the
Company other than the Guaranteed Securities, provided that no default or Event
of Default under the Indenture has occurred and is continuing. The Indenture
will also provide that if any Subsidiary of the Company guarantees any Funded
Indebtedness of the Company other than the Guaranteed Securities at any time
subsequent to the date on which the Guaranteed Securities are originally issued
(including, without limitation, following any release of such Subsidiary from
its Guarantee as described above), then the Company will cause the Guaranteed
Securities to be equally and ratably guaranteed by such Subsidiary.
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The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under its Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal,
state or foreign law. Each Guarantor that makes a payment or distribution under
a Guarantee shall be entitled to a contribution from each other Guarantor in a
pro rata amount based on the Adjusted Net Assets of each Guarantor.
Although holders of the Guaranteed Securities will be direct creditors of
the Guarantors thereof by virtue of the Guarantees, existing or future creditors
of the Guarantors could avoid or subordinate Guarantees, in whole or in part,
under fraudulent conveyance laws to the extent they were successful in
establishing that (i) a Guarantee was incurred with intent to hinder, delay or
defraud any present or future creditor or contemplated insolvency with a design
to prefer one or more creditors to the exclusion in whole or in part of others
or (ii) any of the Guarantors did not receive fair consideration or reasonably
equivalent value for issuing its Guarantee and that it (w) was insolvent at the
time of such issuance, or (x) was rendered insolvent by reason of such issuance,
or (y) was engaged in a business or transaction for which its assets constituted
unreasonably small capital to carry on its business, or (z) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured. Under the circumstances referred to in clause (ii), but not clause
(i), above, the provision of the Indenture described in the previous paragraph
generally would limit the obligations of each Guarantor to the maximum amount
that would not constitute a fraudulent conveyance or transfer under applicable
law. To the extent any Guarantee was avoided as a fraudulent conveyance or held
unenforceable for any other reason (or limited pursuant to such provision) the
holders of the Guaranteed Securities would cease to have any claim (or, as
applicable, have only a limited claim) in respect of a Guarantor, and would be
solely creditors of the Company or any Guarantor whose Guarantee was not avoided
or held unenforceable (or to the extent not so limited). In such event (and to
the extent of any such limitation), the claims of the holders of the Guaranteed
Securities would be subject to the prior payment of all liabilities and
preferred stock claims of the Subsidiaries who were not valid Guarantors.
Covenant Providing for Limitation on Liens. Nothing in the Senior Indenture
or the Senior Debt Securities will in any way restrict or prevent the Company or
any Restricted Subsidiary from issuing, assuming, guaranteeing or otherwise
incurring any Indebtedness, provided, however, the Senior Indenture will provide
that the Company will not, and will not permit any Restricted Subsidiary to,
issue, assume or guarantee any Indebtedness for borrowed money secured by any
Lien on any property or asset now owned or hereafter acquired by the Company or
such Restricted Subsidiary without making effective provision whereby any and
all Senior Debt Securities then or thereafter outstanding will be secured by a
Lien equally and ratably with any and all other obligations thereby secured for
so long as any such obligations shall be so secured.
Notwithstanding the foregoing, the Company or any Restricted Subsidiary
may, without so securing the Senior Debt Securities, issue, assume or guarantee
Indebtedness secured by the following Liens:
(a) Liens existing on the date on which the Senior Debt Securities are
originally issued or provided for under the terms of agreements existing on
such date;
(b) Liens on property securing (i) all or any portion of the cost of
exploration, drilling or development of such property, (ii) all or any
portion of the cost of acquiring, constructing, altering, improving or
repairing any property or assets, real or personal, or improvements used or
to be used in connection with such property or (iii) Indebtedness incurred
by the Company or any Restricted Subsidiary to provide funds for the
activities set forth in clauses (i) and (ii) above;
(c) Liens securing Indebtedness owed by a Restricted Subsidiary to the
Company or to any other Restricted Subsidiary;
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(d) Liens on the property of any Person existing at the time such
Person becomes a Subsidiary of the Company and not incurred as a result of
(or in connection with or in anticipation of) such Person becoming a
Subsidiary of the Company, provided that such Liens do not extend to or
cover any property or assets of the Company or any of its Subsidiaries
other than the property so acquired;
(e) Liens on any property securing (i) Indebtedness incurred in
connection with the construction, installation or financing of pollution
control or abatement facilities or other forms of industrial revenue bond
financing or (ii) Indebtedness issued or guaranteed by the United States or
any State thereof or any department, agency or instrumentality of either;
(f) any Lien on any asset securing Non-Recourse Indebtedness of the
Company or any Restricted Subsidiary or on any asset of Union Texas East
Kalimantan Limited securing Joint Venture Indebtedness;
(g) any Lien extending, renewing or replacing (or successive
extensions, renewals or replacements of) any Lien of any type permitted
under clauses (a) through (f) above, provided that such Lien extends to or
covers only the property that is subject to the Lien being extended,
renewed or replaced;
(h) certain Liens arising in the ordinary course of business of the
Company and the Restricted Subsidiaries; or
(i) Liens (exclusive of any Lien of any type otherwise permitted under
clauses (a) through (h) above) securing Indebtedness of the Company or any
Restricted Subsidiary in an aggregate principal amount which, together with
the aggregate amount of Attributable Indebtedness deemed to be outstanding
in respect of all Sale/Leaseback Transactions entered into pursuant to
clause (a) of the covenant described under "Limitation on Sale/Leaseback
Transactions" below (exclusive of any such Sale/Leaseback Transactions
otherwise permitted under clauses (a) through (h) above), does not at the
time such Indebtedness is incurred exceed 10% of the Consolidated Net Worth
of the Company (as shown in the most recent audited consolidated balance
sheet of the Company and its Subsidiaries).
The following types of transactions will not be prohibited or otherwise
limited by the foregoing covenant: (i) the sale, granting of Liens with respect
to, or other transfer of, crude oil, natural gas or other petroleum hydrocarbons
in place for a period of time until, or in an amount such that, the transferee
will realize therefrom a specified amount (however determined) of money or of
such crude oil, natural gas or other petroleum hydrocarbons; (ii) the sale or
other transfer of any other interest in property of the character commonly
referred to as a production payment, overriding royalty, forward sale or similar
interest; and (iii) the granting of Liens required by any contract or statute in
order to permit the Company or any Restricted Subsidiary to perform any contract
or subcontract made by it with or at the request of the United States or any
State thereof or of any foreign government or any department, agency,
organization or instrumentality thereof, or to secure partial, progress, advance
or other payments to the Company or any Restricted Subsidiary by such
governmental unit pursuant to the provisions of any contract or statute.
(Section 1107 of the Senior Indenture)
Covenant Providing for Limitation on Sale/Leaseback Transactions. The
Senior Indenture will provide that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with any
Person (other than the Company or a Restricted Subsidiary) unless:
(a) the Company or such Restricted Subsidiary would be entitled to
incur Indebtedness, in a principal amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, secured by a
Lien on the property subject to such Sale/Leaseback Transaction pursuant to
the covenant described under "Limitation on Liens" above without equally
and ratably securing the Senior Debt Securities pursuant to such covenant;
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(b) after the date on which the Senior Debt Securities are originally
issued and within a period commencing six months prior to the consummation
of such Sale/Leaseback Transaction and ending six months after the
consummation thereof, the Company or such Restricted Subsidiary shall have
expended for property used or to be used in the ordinary course of business
of the Company and the Restricted Subsidiaries (including amounts expended
for the exploration, drilling or development thereof, and for additions,
alterations, repairs and improvements thereto) an amount equal to all or a
portion of the net proceeds of such Sale/Leaseback Transaction and the
Company shall have elected to designate such amount as a credit against
such Sale/Leaseback Transaction (with any such amount not being so
designated to be applied as set forth in clause (c) below); or
(c) the Company, during the 12-month period after the effective date
of such Sale/Leaseback Transaction, shall have applied to the voluntary
defeasance or retirement of any Pari Passu Indebtedness an amount equal to
the greater of the net proceeds of the sale or transfer of the property
leased in such Sale/Leaseback Transaction and the fair value, as determined
by the Board of Directors of the Company, of such property at the time of
entering into such Sale/Leaseback Transaction (in either case adjusted to
reflect the remaining term of the lease and any amount expended by the
Company as set forth in clause (b) above), less an amount equal to the
principal amount of Pari Passu Indebtedness voluntarily defeased or retired
by the Company within such 12-month period and not designated as a credit
against any other Sale/Leaseback Transaction entered into by the Company or
any Restricted Subsidiary during such period. (Section 1106 of the Senior
Indenture)
The term "Adjusted Net Assets" of a Guarantor is defined in the Senior
Indenture as at any date, the lesser of (x) the amount by which the fair value
of the property of such Guarantor at such date exceeds the total amount of
liabilities, including, without limitation, the probable amount of contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date) of such Guarantor at such date, but excluding
liabilities under the Guarantee of such Guarantor, and (y) the amount by which
the present fair saleable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date and after giving effect to any
collection from any Subsidiary of such Guarantor in respect of any obligations
of such Subsidiary under the Guarantee of such Guarantor), excluding debt in
respect of the Guarantee of such Guarantor, as they become absolute and matured.
The term "Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, is defined in the Senior Indenture as at the time of
determination, the present value (discounted at a rate equivalent to the
Company's then current weighted average cost of funds for borrowed money as at
the time of determination, compounded on a semi-annual basis) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
The term "Capitalized Lease Obligation" of any Person is defined in the
Senior Indenture as any obligation of such Person to pay rent or other amounts
under a lease of property, real or personal, that is required to be capitalized
for financial reporting purposes in accordance with generally accepted
accounting principles; and the amount of such obligation shall be the
capitalized amount thereof determined in accordance with generally accepted
accounting principles.
The term "Consolidated Net Worth" of the Company is defined in the Senior
Indenture as the consolidated stockholder's equity of the Company and its
Subsidiaries, as determined in accordance with generally accepted accounting
principles.
The term "Funded Indebtedness" is defined in the Senior Indenture as all
Indebtedness (including Indebtedness incurred under any revolving credit, letter
of credit or working capital facility) that matures by its terms, or that is
renewable at the option of any obligor thereon to a date, more than one year
after the date on which such Indebtedness is originally incurred.
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The term "Hedging Obligations" of any Person is defined in the Senior
Indenture as the obligations of such Person pursuant to any interest rate swap
agreement, foreign currency exchange agreement, interest rate collar agreement,
option or future contract or other similar agreement or arrangement relating to
interest rates or foreign exchange rates.
The term "Indebtedness" of any Person at any date is defined in the Senior
Indenture as, without duplication, (i) all indebtedness of such Person for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person in respect of letters of credit or other
similar instruments (or reimbursement obligations with respect thereto), other
than standby letters of credit incurred by such Person in the ordinary course of
business, (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of others secured by a lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person, (vii) all Indebtedness of others guaranteed by such Person to the extent
of such guarantee and (viii) all Hedging Obligations of such Person.
The term "Joint Venture Indebtedness" is defined in the Senior Indenture as
obligations secured by a Lien on the interests of the Company or a Restricted
Subsidiary, as the case may be, arising under production sharing contracts or
related supply contracts, if such Lien covers ratably the interests of
Pertamina, the Indonesian national oil company, and all production sharing
contractors thereunder.
The term "Lien" is defined in the Senior Indenture as, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset (including, without limitation, any production
payment, advance payment or similar arrangement with respect to minerals in
place), whether or not filed, recorded or otherwise perfected under applicable
law. For the purposes of this Indenture, the Company or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capitalized Lease Obligation (other than any Capitalized Lease Obligation
relating to any building, structure, equipment or other property used or to be
used in the ordinary course of business of the Company and the Restricted
Subsidiaries) or other title retention agreement relating to such asset.
The term "Non-Recourse Indebtedness" is defined in the Senior Indenture as,
at any date, the aggregate amount at such date of Indebtedness of the Company or
a Subsidiary in respect of which the recourse of the holder of such
Indebtedness, whether direct or indirect and whether contingent or otherwise, is
effectively limited to specified assets.
The term "Pari Passu Indebtedness" is defined in the Senior Indenture as
any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall be
subordinated in right of payment to the Securities.
The term "Restricted Subsidiary" is defined in the Senior Indenture as (i)
each Subsidiary of the Company executing this Indenture, (ii) Union Texas
Petroleum Limited so long as it is a Subsidiary of the Company and (iii) any
Subsidiary of the Company that is a successor corporation of any Subsidiary of
the Company referred to in clauses (i) and (ii). The status of any Subsidiary of
the Company as a Restricted Subsidiary shall continue, irrespective of any
release of any Guarantee provided under the Senior Indenture, so long as it is a
Subsidiary of the Company.
The term "Sale/Leaseback Transaction" is defined in the Senior Indenture as
any arrangement with any Person providing for the leasing by the Company or any
Restricted Subsidiary, for a period of more than three years, of any real or
tangible personal property, which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such Person in
contemplation of such leasing.
17
<PAGE> 25
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
General. Subordinated Debt Securities will be issued under the Subordinated
Indenture and will rank pari passu with certain other subordinated debt of the
Company that may be outstanding from time to time and will rank junior to all
Senior Indebtedness (including any Senior Debt Securities) of the Company that
may be outstanding from time to time.
Subordination. The payment of the principal of (and premium, if any) and
interest on the Subordinated Debt 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 Senior Indebtedness of the Company.
(Section 1301 of the Subordinated Indenture)
In the event of any dissolution or winding up, or total or partial
liquidation or reorganization of the Company, whether in bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the holders of
Senior Indebtedness will 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 Debt Securities are entitled to receive any payment
on account of principal (or premium, if any) or interest on the Subordinated
Debt Securities. (Section 1302 of the Subordinated Indenture)
Unless otherwise indicated in the applicable Prospectus Supplement, no
payment in respect of the Subordinated Debt Securities shall be made if, at the
time of such payment, there exists a default in payment of all or any portion of
any Senior Indebtedness, and such default shall not have been cured or waived in
writing or the benefits of such subordination in the Subordinated Indenture
shall not have been waived in writing by or on behalf of the holders of such
Senior Indebtedness. In addition, unless otherwise provided in the applicable
Prospectus Supplement, during the continuance of any event of default (other
than a default referred to in the immediately preceding sentence) with respect
to any Senior Indebtedness permitting the holders to accelerate the maturity
thereof and upon written notice thereof given to the Trustee, with a copy to the
Company (the delivery of which shall not affect the validity of the notice to
the Trustee), by any holder of Senior Indebtedness or its representative, then,
unless and until such an event of default shall have been cured or waived or
shall have ceased to exist, no payment shall be made by the Company with respect
to the principal of or interest on the Subordinated Debt Securities or to
acquire any of the Subordinated Debt Securities or on account of the redemption
provisions of the Subordinated Debt Securities. Only one such payment blockage
period may be commenced within any consecutive 365-day period with respect to
the Subordinated Debt Securities. No event of default which existed or was
continuing on the date of the commencement of any 180-day payment blockage
period with respect to the Senior Indebtedness initiating such payment blockage
period shall be, or be made, the basis for the commencement of a second payment
blockage period by a holder or representative of such Senior Indebtedness,
whether or not within a period of 365 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (and, in the case of any such waiver, no payment shall be made
by the Company to the holders of Senior Indebtedness in connection with such
waiver other than amounts due pursuant to the terms of the Senior Indebtedness
as in effect at the time of such default). (Section 1302 of the Subordinated
Indenture)
The term "Indebtedness", as applied to any Person, is defined in the
Subordinated Indenture as all indebtedness, whether or not represented by bonds,
debentures, notes or other securities, created or assumed by such Person for the
repayment of money borrowed, and obligations, computed in accordance with
generally accepted accounting principles, as lessee under leases that should be,
in accordance with generally accepted accounting principles, recorded as capital
leases. All Indebtedness of others guaranteed as to payment of principal by such
Person or in effect guaranteed by such Person through a contingent agreement to
purchase such Indebtedness shall for all purposes hereof be deemed to be
Indebtedness of such Person.
The term "Senior Indebtedness" is defined in the Subordinated Indenture as
Indebtedness, either outstanding as of the date of the Subordinated Indenture or
issued subsequent to the date of the Subordinated Indenture, unless such
Indebtedness is either subordinated by its terms in right of payment to any
other Indebtedness of the Company or pari passu with subordinated Indebtedness
of any series,
18
<PAGE> 26
provided that the term "Senior Indebtedness" shall not include (i) Indebtedness
of the Company to any Subsidiary for money borrowed or advanced from such
Subsidiary or (ii) amounts owed (except to banks and other financial
institutions) for goods, materials or services purchased in the ordinary course
of business.
If Subordinated Debt Securities are issued under the Subordinated
Indenture, the aggregate principal amount of Senior Indebtedness outstanding as
of a recent date will be set forth in the applicable Prospectus Supplement. The
Subordinated Indenture does not restrict the amount of Senior Indebtedness that
the Company may incur.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in and/or outside the United
States: (i) through underwriters, (ii) through dealers acting as principal or as
agent, (iii) directly to a limited number of purchasers or to a single
purchaser; or (iv) through agents. The applicable Prospectus Supplement with
respect to the Offered Debt Securities will set forth the terms of the offering
of the Offered Debt Securities, including the name or names of any underwriters,
the purchase price of the Offered Debt Securities and the proceeds to the
Company from such sale, any delayed delivery arrangements, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If underwriters are used in the sale, the Offered Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Offered Debt
Securities will be named in the Prospectus Supplement relating to such offering
and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters to purchase the Offered Debt Securities will be
subject to conditions precedent, and the underwriters will be obligated to
purchase all the Offered Debt Securities if any are purchased.
If dealers are utilized in the sale of Offered Debt Securities in respect
of which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealers acting as principals or agents. The dealers may then
resell such Offered Debt Securities to the public at varying prices to be
determined by such dealers at the time of resale. The terms of the transaction
will be set forth in the Prospectus Supplement relating thereto to the extent
required by the Securities Act.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect to which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement relating thereto to the extent required
by the Securities Act. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
The Debt Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales, including the terms of any bidding or auction process, will be described
in the Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase Offered Debt
19
<PAGE> 27
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the applicable Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business or otherwise.
The Debt Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be an active trading market
for any of the Debt Securities.
LEGAL MATTERS
The validity of the Debt Securities is being passed upon for the Company by
Andrews & Kurth L.L.P., Houston, Texas.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of Union Texas Petroleum Holdings, Inc. for the
year ended December 31, 1993, have been so incorporated in reliance on the
report of Price Waterhouse, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of Union
Texas Petroleum Holdings, Inc. for the three-month periods ended March 31, 1994
and 1993, incorporated by reference in this Prospectus, Price Waterhouse
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report dated April 26, 1994, incorporated by reference herein, states that they
did not audit and they do not express an opinion on that unaudited consolidated
financial information. Price Waterhouse has not carried out any significant or
additional audit tests beyond those which would have been necessary if their
report had not been included. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. Price Waterhouse is not subject to the
liability provisions of section 11 of the Securities Act for their report on the
unaudited consolidated financial information because that report is not a
"report" or a "part" of the registration statement prepared or certified by
Price Waterhouse within the meaning of sections 7 and 11 of the Securities Act.
20
<PAGE> 28
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING 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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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Ratio of Earnings to Fixed Charges.... S-2
Use of Proceeds....................... S-2
Description of the Notes.............. S-3
Underwriting.......................... S-6
Legal Matters......................... S-7
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of the Debt Securities.... 4
Plan of Distribution.................. 19
Legal Matters......................... 20
Experts............................... 20
</TABLE>
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$125,000,000
UNION TEXAS
PETROLEUM HOLDINGS, INC.
8 3/8% SENIOR NOTES
DUE 2005
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UNION TEXAS PETROLEUM
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GOLDMAN, SACHS & CO.
CHEMICAL SECURITIES INC.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
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