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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 2000
REGISTRATION NO. 333-41130
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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LONE STAR TECHNOLOGIES, INC.
(and certain subsidiaries named in footnote (*) below)
(Exact name of registrant as specified in its charter)
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DELAWARE 75-2085454
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
RHYS J. BEST
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
LONE STAR TECHNOLOGIES, INC.
15660 NORTH DALLAS PARKWAY, SUITE 500
DALLAS, TEXAS 75248
P.O. BOX 803546
DALLAS, TEXAS 75380
(972) 770-6401
15660 NORTH DALLAS PARKWAY, SUITE 500
DALLAS, TEXAS 75248
P.O. BOX 803546
DALLAS, TEXAS 75380
(972) 770-6401
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including area code, of registrant's principal executive number, including area code, of agent for service)
offices)
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COPIES TO:
DAVID E. MORRISON
FULBRIGHT & JAWORSKI L.L.P.
2200 ROSS AVENUE, SUITE 2800
DALLAS, TEXAS 75201-2784
(214) 855-8000 (PHONE)
(214) 855-8200 (FAX)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule462(b)under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1)(2)(3) OFFERING PRICE(1)(2)(3) REGISTRATION FEE
<S> <C> <C> <C> <C>
PRIMARY OFFERING.........................
Debt...................................
Preferred Stock........................
Common Stock...........................
Depositary Shares(4)...................
Warrants...............................
Guarantees(5)..........................
Subtotal............................. $250,000,000 $66,000
SECONDARY OFFERING.......................
Common Stock........................... 1,000,000 shares $47,910,000(6) $12,649
TOTAL.................................... -- 100% $297,910,000(7) $78,649(8)
Fees previously paid................... -- -- -- $50,806
Total fees due....................... -- -- -- $27,843
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o). Certain information as to each class of securities to be
registered is not specified in accordance with General Instruction II.D. to
Form S-3 under the Securities Act of 1933, as amended. We are registering
for issuance and sale in the primary offering an indeterminate dollar amount
of debt securities, preferred stock, common stock, depositary shares,
warrants and guarantees. In addition, these securities may be issued upon
conversion, redemption, or exercise of debt securities, preferred stock,
depositary shares or warrants.
(2) No separate consideration will be received for any securities registered
hereunder that are issued in exchange for, or upon conversion of, as the
case may be, the debt securities, preferred stock or depositary shares
registered hereunder.
(3) The proposed maximum offering price per unit of each security will be
determined from time to time by the registrants in connection with, and at
the time of, the issuance by the registrants of the securities registered
hereunder.
(4) The depositary shares registered hereunder will be evidenced by depositary
receipts issued pursuant to a deposit agreement. If the registrants elect to
offer to the public fractional interests in shares of preferred stock, then
depositary receipts will be distributed to those persons purchasing the
fractional interests and the shares will be issued to the depositary under
the deposit agreement.
(5) Guarantees that may be provided by Lone Star subsidiaries of the payment of
the principal and interest on the debt securities. No additional
consideration will be received for the guarantees and, pursuant to
Rule 457(n), no additional fee is required.
(6) Estimated solely for the purpose of determining the registration fee on the
basis of the average of the high and low prices of the common stock on the
New York Stock Exchange on October 18, 2000 ($47.91).
(7) The aggregate principal amount of the debt securities may be increased if
any debt securities are issued at an original issue discount by an amount
such that the gross proceeds to be received by the registrants shall be
equal to the above amount to be registered. In no event will the aggregate
initial offering price of all securities issued from time to time pursuant
to this registration statement exceed $250,000,000. The aggregate amount of
common stock is further limited to that which is permissible under
Rule 415(a)(4).
(8) The aggregate amount of the registration fee is $78,649. A registration fee
of $27,843 has been remitted in connection with this registration statement
filed October 20, 2000, and a registration fee of $50,806 was previously
paid with respect to 4,312,500 common shares included in the registration
statement filed with the SEC on July 11, 2000.
(*) The following subsidiaries of Lone Star are co-registrants for the purpose
of providing guarantees, if any, of payments on debt securities registered
hereunder and are incorporated in the states and have the I.R.S. Employer
Identification Numbers indicated: Lone Star Steel Company, a Delaware
corporation (75-0399517); Fintube Technologies, Inc., an Oklahoma
corporation (75-2848958).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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EXPLANATORY NOTE
This registration statement contains two prospectuses covering the offering,
issuance and sale of (i) debt securities, subsidiary guarantees of debt
securities, preferred stock, common stock, depositary shares and warrants of
Lone Star Technologies, Inc. ("Basic Prospectus") and (ii) common stock of Lone
Star Technologies, Inc. that may be issued and sold under a sales agreement that
Lone Star Technologies, Inc. intends to enter into with a sales manager to be
named in a prospectus supplement ("Sales Agreement Prospectus"). The complete
Basic Prospectus immediately follows this explanatory note. The Sales Agreement
Prospectus follows the Basic Prospectus included herein.
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SUBJECT TO COMPLETION, DATED OCTOBER 20, 2000
PROSPECTUS
[Logo]
$250,000,000
LONE STAR TECHNOLOGIES, INC.
Debt Securities
Preferred Stock
Common Stock
Depositary Shares
Warrants
By this prospectus, we may offer and sell from time to time up to
$250,000,000 of debt securities, preferred stock, common stock, depositary
shares and warrants. This prospectus covers guarantees, if any, of our payment
obligations under any debt securities, given by one or more of our subsidiaries
named in this prospectus, on terms to be determined at the time of the offering.
We will provide specific terms of these securities in supplements to this
prospectus. This prospectus may not be used to sell securities unless
accompanied by a supplement to this prospectus.
The selling stockholder may sell up to 1,000,000 shares of common stock
being registered in connection with this prospectus. For additional information
on the methods of sale, you should refer to the section entitled "Plan of
Distribution."
Our common stock is listed on the New York Stock Exchange under the symbol
"LSS."
YOU SHOULD CAREFULLY REVIEW AND CONSIDER THE INFORMATION UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS AND UNDER THE SAME HEADING
IN THE APPLICABLE PROSPECTUS SUPPLEMENT BEFORE INVESTING IN OUR SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October , 2000.
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TABLE OF CONTENTS
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PAGE
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About This Prospectus....................................... 3
About the Company........................................... 3
Where You Can Find More Information......................... 3
Cautionary Statement Concerning Forward-Looking
Statements................................................ 5
Risk Factors................................................ 6
Use of Proceeds............................................. 14
Ratio of Earnings to Fixed Charges.......................... 15
Description of Debt Securities.............................. 16
Description of Capital Stock................................ 21
Description of Depositary Shares............................ 23
Description of Warrants..................................... 24
Selling Stockholder......................................... 26
Plan of Distribution........................................ 26
Legal Matters............................................... 27
Experts..................................................... 27
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$250,000,000. One of our stockholders may also sell up to 1,000,000 shares of
our common stock in one or more offerings. This prospectus provides you with a
general description of the securities we or the selling stockholder may offer.
Each time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement,
together with additional information described under the heading "Where You Can
Find More Information."
The terms "Lone Star," "we," "our" and "us" refer to Lone Star
Technologies, Inc. and its consolidated subsidiaries unless the context suggests
otherwise. The term "you" refers to a prospective investor. The address of our
principal executive offices is 15660 North Dallas Parkway, Suite 500, Dallas,
Texas 75248, and our telephone number is (972) 770-6401. Our mailing address is
P.O. Box 803546, Dallas, Texas 75380. Our website is located at
www.lonestartech.com. Information contained on our website does not constitute,
and shall not be deemed to constitute, part of this prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information contained in
this prospectus is accurate as of any date other than the date on the front
cover of this prospectus. We are not making an offer of these securities in any
state where the offer is not permitted.
ABOUT THE COMPANY
We are the leading domestic manufacturer of premium welded "oil country
tubular goods," which are steel tubular products used in the completion and
production of oil and natural gas wells. We are also a major manufacturer of
line pipe, which is used in the gathering and transmission of oil and natural
gas. In addition, we are a leading manufacturer of specialty tubing products
used in power technology, automotive, construction, agricultural and industrial
applications. In January 2000, we acquired the assets of Fintube Limited
Partnership, the largest specialty tubing manufacturer of heat recovery finned
tubulars, which are used in various power technology applications, including in
the construction of gas-fired, combined cycle power generation plants. Also, in
April 2000 we completed an acquisition of the assets of Bellville Tube
Corporation, a manufacturer of casing, tubing and line pipe for the oil and gas
industry.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
at 7 World Trade Center, Suite 1300, New York, New York 10048. Our filings with
the SEC are also available to the public over the Internet at the SEC's website
at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference
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the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
all of the securities are sold.
- Annual Report on Form 10-K, as amended, for the year ended December 31,
1999.
- Current Report on Form 8-K filed November 22, 1999 (date of event
November 16, 1999).
- Current Report on Form 8-K filed January 18, 2000 (date of event
January 3, 2000), Amendment No. 1 to the Form 8-K filed February 3, 2000,
Amendment No. 2 to the Form 8-K filed March 17, 2000, Amendment No. 3 to
the Form 8-K filed March 29, 2000 and Amendment No. 4 to the Form 8-K
filed June 1, 2000. The Form 8-K, as amended, includes audited financial
statements of Fintube Limited Partnership and unaudited pro forma
financial statements of Lone Star reflecting the acquisition by Lone Star
of the Fintube assets.
- Current Report on Form 8-K filed March 16, 2000 (date of event March 8,
2000).
- Quarterly Report on Form 10-Q, for the three month and six month periods
ended June 30, 2000.
- Current Report on Form 8-K filed April 17, 2000 (date of event March 31,
2000) and Amendment No. 1 to the Form 8-K filed June 14, 2000. The
Form 8-K, as amended, includes audited financial statements of Bellville
Tube Corporation and unaudited pro forma financial statements of Lone Star
reflecting the acquisition by Lone Star of the Bellville assets.
- Current Report on Form 8-K filed July 11, 2000 (date of event July 11,
2000).
- Current Report on Form 8-K filed July 18, 2000 (date of event July 17,
2000).
- Current Report on Form 8-K filed July 28, 2000 (date of event July 27,
2000).
- Current Report on Form 8-K filed August 4, 2000 (date of event August 4,
2000).
- Current Report on Form 8-K filed September 5, 2000 (date of event
August 29, 2000).
- Current Report on Form 8-K filed October 18, 2000 (date of event
October 16, 2000).
- Current Report on Form 8-K filed October 20, 2000 (date of event
October 18, 2000).
- Current Report on Form 8-K filed October 20, 2000 (date of event
October 19, 2000).
- Registration Statement on Form 8-A filed April 9, 1997 containing a
description of the Lone Star common stock.
You may request a copy of these filings at no cost by writing or telephoning
us at the following address:
Lone Star Technologies, Inc.
P.O. Box 803546
Dallas, Texas 75380
Attention: Sharon Goodrich
(972) 770-6401
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document that also is
or is deemed to be incorporated by reference in this prospectus modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the documents we
have incorporated by reference contain forward-looking statements. The words
"believe," "expect" "estimate" and "anticipate" and similar expressions identify
forward-looking statements. Forward-looking statements include those that
address activities, events or developments that we expect or anticipate will or
may occur in the future. These forward-looking statements include statements
regarding our financial position, business strategy and other plans and
objectives for future operations and any other statements which are not
historical facts. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot assure you that the actual
results or developments we anticipate will be realized or, even if substantially
realized, that they will have the expected effects on our business or
operations. Among the factors that could cause actual results to differ
materially from our expectations are the following:
- natural gas and oil price volatility;
- domestic and foreign competition;
- steel price volatility;
- inventory fluctuations;
- our ability to successfully manage our business;
- fluctuations in industry-wide inventory levels;
- fluctuations in construction levels of gas-fired, combined cycle power
generation plants;
- general economic conditions;
- the presence or absence of governmentally imposed trade restrictions; and
- similar matters and other factors disclosed under "Risk Factors" and
elsewhere in this prospectus or in any prospectus supplement.
These factors expressly qualify all subsequent oral and written forward-looking
statements attributable to us or persons acting on our behalf.
A forward-looking statement may include a statement of the assumptions or
bases underlying the forward-looking statement. We believe we have chosen these
assumptions or bases in good faith and that they are reasonable. However, we
caution you that assumed facts or bases almost always vary from actual results,
and the differences between assumed facts or bases and actual results can be
material, depending on the circumstances. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus, any prospectus supplement and the documents we
have incorporated by reference. Except for our ongoing obligations to disclose
material information as required by the federal securities laws, we do not have
any intention or obligation to update forward-looking statements after we
distribute this prospectus and the applicable prospectus supplement.
5
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RISK FACTORS
BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS, ANY PROSPECTUS SUPPLEMENT AND THE DOCUMENTS WE HAVE INCORPORATED BY
REFERENCE INTO THIS DOCUMENT BEFORE PURCHASING OUR SECURITIES. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED AND YOU MAY LOSE ALL OF YOUR
INVESTMENT.
THE VOLATILITY OF OIL AND GAS MARKETS AFFECTS DEMAND FOR OUR PRINCIPAL PRODUCTS,
AND DOWNTURNS IN THESE MARKETS COULD CAUSE OUR REVENUES TO DECREASE.
The sale of casing, tubing and line pipe to the oil and gas industry
constitutes the most significant source of our revenues. The oil and gas
industry has historically been volatile. Downturns in the oil and gas markets
and general economic conditions could cause demand for our principal products to
decrease, which would adversely affect our revenues and results of operations.
Demand for our oilfield products depends primarily upon the number of oil
and natural gas wells being drilled, completed and re-worked and the depth and
drilling conditions of these wells. The level of these activities depends
primarily on natural gas and oil industry expectations as to future prices.
Natural gas and oil prices are subject to significant fluctuations in response
to relatively minor changes in supply, market uncertainty and a variety of
additional factors that are beyond our control. These factors include:
- worldwide and domestic supplies of and demand for oil and natural gas;
- the volatility of natural gas and oil prices;
- the instability of domestic and foreign natural gas and oil production;
- political instability or armed conflict in oil and gas producing regions;
- the price, fluctuation in inventories and level of imports of oil and gas
casing, tubing and line pipe;
- the level of consumer and industrial demand;
- the price and availability of alternative fuels;
- the availability of pipeline capacity;
- weather conditions;
- domestic and foreign governmental regulations, especially trade laws and
taxes; and
- the overall economic environment including the demand for electricity.
We expect natural gas and oil prices to continue to be volatile in the
future. We cannot predict future natural gas and oil price movements, and we
cannot give you any assurances as to the level of future demand for our
products.
THE COMPETITION FOR RAW MATERIALS WE USE IN OUR BUSINESS AND THE VOLATILITY OF
OUR RAW MATERIAL COSTS COULD ADVERSELY AFFECT OUR OPERATIONS.
Purchased steel represents approximately 50% of our cost of goods sold. The
price and availability of steel slabs, coils, scrap and wire rod that we use in
our manufacturing processes are highly competitive and volatile. Various
factors, most of which are beyond our control, affect the supply and price of
steel. These factors include:
- supply and demand factors;
6
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- freight costs and transportation availability;
- inventory levels of brokers and distributors;
- the price and availability of imported steel pipe and tubing;
- trade duties and taxes; and
- labor disputes.
Changes in steel prices can affect the pricing levels of our products. We
seek to maintain our profit margin by attempting to increase the price of our
products in response to an increase in steel costs. Frequently, increases in the
prices of our products do not fully compensate us for steel price increases and
generally lag behind increases in steel prices. As a result, we typically have a
limited ability to recover increases in steel costs. We cannot predict whether
the availability of steel slabs and coils will constrain our operations.
OUR ACQUISITION OF FINTUBE'S AND BELLVILLE'S BUSINESSES AND ANY OTHER
ACQUISITIONS MIGHT DISRUPT OUR BUSINESS IF OUR EXPECTATIONS ARE NOT MET OR IF WE
ARE UNABLE TO OPERATE ANY ACQUIRED BUSINESS SUCCESSFULLY.
In January 2000, we purchased the assets of Fintube Limited Partnership. We
have retained Fintube's personnel to conduct its business in generally the same
manner as it was conducted prior to the acquisition. We cannot assure you,
however, that we will be successful in maintaining this continuity or that our
plans regarding the operation of the acquired Fintube business or our existing
business will not change. Any disruptions in personnel or operations could be
compounded by our lack of familiarity with the finned tube business and could
result in quality problems, inefficiencies in production or dissatisfied or lost
customers. Similarly, we have retained Bellville Tube Corporation's personnel
since our completed acquisition of Bellville's assets in April 2000. Any loss of
key Bellville personnel could be disruptive to our business.
We may consider other strategic acquisitions from time to time. We can give
you no assurance that our acquisition activities will perform in accordance with
our expectations. We must necessarily base any assessment of potential
acquisitions on inexact and incomplete information and assumptions with respect
to operations, profitability and other matters that may prove to be incorrect.
We cannot assure you that our management would recognize the risks and
uncertainties associated with any future acquisitions or that we recognized all
the risks and uncertainties in the Fintube and Bellville acquisitions.
MARKET VOLATILITY AND DOWNTURNS OF INDUSTRIES WHICH USE OUR FINTUBE PRODUCTS FOR
HEAT RECOVERY APPLICATIONS COULD REDUCE DEMAND FOR THOSE PRODUCTS AND ADVERSELY
AFFECT OUR REVENUES.
Our Fintube subsidiary produces boiler tubes, finned tubes and other
products used in a variety of heat recovery applications, including power
generation, industrial plant processing and petrochemical businesses. Our
Fintube business is therefore dependent on power plant construction, the cost of
alternative fuels for power generation and other factors. To a lesser extent,
our Fintube business is dependent on industrial plant processing and
petrochemical plant construction. This construction activity and the
corresponding demand for our Fintube products are also related to natural gas
and oil prices and are therefore subject to the volatility of the oil and gas
market. Demand for these products fluctuates significantly in response to a
number of economic, market and other factors, most of which are beyond our
control. A decrease in demand for these products could adversely affect our
results of operations. Some of the factors affecting demand are:
- the level of consumer and industrial demand for electrical power
generation;
- instability and volatility of oil prices and domestic and foreign oil
production levels, which factors can affect investment in petrochemical
plants;
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- the price and level of imports of foreign products;
- worldwide and domestic supplies of natural gas;
- construction of new gas-fired power generation plants;
- the price and availability of alternative fuels;
- weather conditions;
- domestic and foreign governmental regulations and taxes; and
- the overall economic environment.
We cannot predict future economic and market movements, and we cannot give
you any assurances as to the level of future demand for our Fintube products.
CHANGES IN INDUSTRY MANUFACTURING CAPACITY AND FLUCTUATIONS IN INVENTORY OF OIL
AND GAS CASING AND TUBING PRODUCTS AND LINE PIPE COULD ADVERSELY AFFECT OUR
SALES.
Industry-wide inventory levels of tubular goods for the oil and gas industry
can vary significantly from period to period. Demand for oilfield tubular
products from the manufacturer could decline and is often volatile due to
inventory supply resulting from reduced end user purchases, new manufacturing
capacity and/or increased imports. Any oversupply of oilfield tubular products
would have a direct adverse effect on the demand for new production of our
oilfield tubular goods when customers draw from existing inventory rather than
purchase new products. Moreover, short term fluctuations in demand for oilfield
tubular products can occur due to the inability of distributors to buy these
products because of capital constraints, the desire of distributors to reduce
inventory to lessen the personal property taxes they must pay and other market
outlook considerations. As a result, our oil and gas casing and tubing sales
could decline, thereby adversely affecting our results of operations. Excessive
inventories could have a material adverse effect on price levels. We cannot
assure you that any new or excess domestic capacity will be substantially
absorbed during periods of increased domestic drilling activity since foreign
producers of oil and gas casing and tubing and line pipe may increase their
exports to the United States market.
EASING OF UNITED STATES GOVERNMENT IMPORT TRADE RESTRICTIONS COULD INCREASE
FOREIGN COMPETITION IN OUR INDUSTRY AND HARM OUR BUSINESS, PARTICULARLY IN THE
CASE OF OIL AND GAS CASING AND TUBING AND LINE PIPE.
The domestic steel industry historically has faced significant competition
from foreign steel producers. The level of imports of oil country tubular goods,
which has varied significantly over time, affects the domestic market for these
goods. High levels of imports reduce the volume sold by domestic producers and
tend to suppress selling prices, both of which have an adverse impact on our
business.
The level of imports of oil and gas casing and tubing and line pipe is
affected by:
- overall world demand for oil and gas casing and tubing and line pipe;
- inventory levels of casing, tubing and line pipe;
- the purchasing pattern of distributors and end users;
- domestic and foreign trade policy; and
- the relative value of the United States dollar.
Many foreign steel producers are owned, controlled or subsidized by their
governments and their decisions with respect to production and sales may be
influenced more by political and economic policy considerations than by
prevailing market conditions. Actions motivated by these factors could increase
competition and cause our sales to decrease.
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The United States government is currently imposing duties on the imports of
various oil and gas casing and tubing products from some foreign countries in
response to antidumping and countervailing duty cases filed by several domestic
steel companies. In February 2000, the United States government granted relief
to the line pipe industry under Section 201 of the Trade Act of 1974 by imposing
restrictions and tariffs on some welded line pipe imports for three years.
Antidumping and countervailing duty orders applicable to our industry are
limited to specific countries, are largely under appeal and may be revoked as a
result of periodic "sunset reviews." Additionally, an individual exporter may
retain revocation as to itself under specific circumstances. If those orders are
revoked in full or in part or the duty rates are lowered, we could be exposed to
increased competition from imports that could have a material adverse effect on
our business. The relief granted to the line pipe industry in February 2000
under Section 201 of the Trade Act of 1974 is also subject to appeal and review,
and a revocation of that relief could harm us.
We cannot predict the United States government's future actions regarding
import duties or other trade restrictions on imports of oil and gas casing and
tubing products or line pipe, or the impact of these actions on our sales of oil
and gas casing and tubing products or line pipe.
OUR PRECISION MECHANICAL TUBULARS AND OTHER BUSINESSES ARE SENSITIVE TO ECONOMIC
DOWNTURNS, WHICH COULD CAUSE OUR REVENUES TO DECREASE.
The demand for our precision mechanical tubulars, flat rolled steel and
other products is also cyclical in nature and is sensitive to general economic
conditions. We manufacture and sell high quality steel tubing in the form of
precision mechanical tubulars used by our customers in the manufacture of
products such as automotive stabilizers, hydraulic cylinders and cranes. The
demand for these products and, in turn, for our precision mechanical tubulars,
is cyclical and dependent on the general economy, the automotive and
construction industries and other factors affecting domestic goods activity. We
cannot assure you that our precision mechanical tubulars inventories will not
become excessive, which could have a material adverse effect on price levels and
the quantity of precision mechanical tubulars sold by us.
WE FACE SIGNIFICANT FOREIGN AND DOMESTIC COMPETITION IN OUR OIL AND GAS CASING
AND TUBING AND FINTUBE BUSINESSES, AND THIS COMPETITION MAY CAUSE US TO LOSE
SALES.
The market for our products, particularly with respect to oil and gas casing
and tubing, line pipe and finned tubes, is highly competitive. We believe that
the principal competitive factors affecting these products are quality,
availability, service and price. We compete with foreign and domestic producers,
including, in the case of oilfield products, manufacturers of seamless products.
Many of the foreign producers benefit from substantially greater assets and
resources than we have and from integrated or consolidated commercial
relationships. Our oil and gas casing and tubing and line pipe products are
subject to competition from domestic and foreign integrated and mini-mill
producers. Our Fintube products face competition from both domestic
manufacturers and from Pacific Rim and other international producers. These
companies may be better able than us to successfully endure downturns in either
the energy or industrial sectors. Currency fluctuations may make our products
less competitive.
In the welded oil and gas casing and tubing and line pipe market, we compete
against manufacturers that may be able to purchase or produce semi-finished
steel, hot rolled coils or scrap at a lower cost than we can. Our Lone Star
Steel subsidiary satisfies its raw material requirements and those of our
Bellville subsidiary by purchasing semi-finished steel, using purchased and
internally generated scrap to make hot rolled coils in its melt shop and hot
strip mill and purchasing coils. Correspondingly, our Fintube subsidiary must
also compete with manufacturers that may be able to purchase or produce coils
more cost-effectively than we can. We cannot assure you that we can satisfy our
subsidiaries' raw material requirements as cost-effectively as our competitors.
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WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS, AND WE MAY REQUIRE ADDITIONAL CAPITAL
IN THE FUTURE WHICH MIGHT NOT BE AVAILABLE TO US.
We operate in capital intensive businesses. We have made, and expect to
make, significant capital expenditures each year both for the recurring
maintenance necessary to keep manufacturing facilities operational and to comply
with environmental and other legal requirements. Additionally, we regularly make
significant capital expenditures for technological improvements and maintenance.
If funding is insufficient at any time in the future, we may be unable to
develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures.
WE HAVE UNDERFUNDED PENSION PLANS, WHICH COULD RESULT IN CLAIMS AGAINST OUR
ASSETS.
Our three defined benefit pension plans for our Lone Star Steel subsidiary's
bargaining unit employees are significantly underfunded. If the plans were
terminated under the distress termination provisions of the Employee Retirement
Income Security Act of 1974, as amended, or "ERISA," the Pension Benefit
Guaranty Corporation, or "PBGC," would have claims against our assets for the
amount necessary to satisfy the plans' unfunded benefit liabilities under the
PBGC's actuarial assumptions.
POTENTIAL CASUALTIES AND PRODUCT LIABILITY CLAIMS RELATING TO THE PRODUCTS WE
MANUFACTURE AND SELL TO THE OIL AND GAS INDUSTRY AND INDUSTRIES USING HEAT
RECOVERY APPLICATIONS COULD HARM OUR BUSINESS.
Our oil and gas casing, tubing and line pipe products are sold primarily for
use in oil and gas drilling and transmission activities, which are subject to
inherent risks, including well failures, line pipe leaks and fires, that could
result in death, personal injury, property damage, pollution or loss of
production. Any of these hazards and risks can result in the loss of
hydrocarbons, environmental pollution, personal injury claims and damage to
property. Correspondingly, defects in our specialty tubing products could result
in death, personal injury, property damage, pollution, damage to equipment and
facilities or inefficient heat recovery. We warrant our oilfield products and
specialty tubing and the alliance products we sell or distribute to be free of
various defects. Actual or claimed defects in our products may give rise to
claims against us for losses and expose us to claims for damages. We cannot
assure you that our insurance will be adequate or available to protect us in the
event of a claim or that the coverage will not be canceled or otherwise
terminated.
POLITICAL AND ECONOMIC CONDITIONS IN FOREIGN COUNTRIES IN WHICH WE OPERATE COULD
ADVERSELY AFFECT US.
Our Lone Star Steel subsidiary's direct foreign revenues as a percentage of
total revenues were approximately 6% in 1999, 8% in 1998 and 9% in 1997. Our
entry into the finned tube business has increased our foreign exposure, as our
Fintube subsidiary maintains manufacturing facilities in Canada and Mexico.
Before our Fintube acquisition, Fintube Limited Partnership had direct and
indirect sales relating to projects outside the United States of approximately
$5.1 million in 1999, $8.6 million in 1998 and $15.8 million in 1997. The
success of our sales to foreign markets depends on numerous factors, many of
which are beyond our control. These factors include economic conditions in the
foreign countries in which we sell our products and services. Our international
sales may also expose us to risks inherent in doing business outside the United
States, including currency fluctuations, restrictions on the repatriation of
profits and assets, compliance with foreign laws and standards and political
risks.
VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO OUR
BUSINESS MAY REQUIRE US TO TAKE ACTIONS WHICH WILL ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS.
Our business is subject to numerous United States and foreign federal,
state, provincial and local laws and regulations, including regulations with
respect to air emissions, wastewater discharges and the generation, handling,
storage, transportation, treatment and disposal of waste materials. Although we
believe we are in substantial compliance with all applicable laws and
regulations, legal requirements are frequently changed and subject to
interpretation, and we are unable to predict the ultimate cost of
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compliance with these requirements or their effect on our operations. We may be
required to make significant expenditures to comply with governmental laws and
regulations. We cannot be certain that existing laws or regulations, as
currently interpreted or reinterpreted in the future, or future laws or
regulations, will not have a material adverse effect on our results of
operations and financial condition.
OUR OPERATIONS ARE SUBJECT TO VARIOUS COLLECTIVE BARGAINING AGREEMENTS, AND WORK
STOPPAGES AND OTHER LABOR PROBLEMS COULD ADVERSELY AFFECT US.
Our subsidiaries are subject to six collective bargaining agreements with
five unions. The majority of our union workers are employees of our Lone Star
Steel subsidiary represented by the United Steelworkers of America. Two of the
other agreements cover substantially all of Lone Star Steel's warehouse and
plant security workers. The remaining three collective bargaining agreements
cover employees of our Fintube subsidiary in Canada and Mexico. These agreements
generally cover wages, health care benefits and retirement plans, seniority, job
classes and work rules. We can give you no assurance that these collective
bargaining agreements will be renewed upon expiration or that new collective
bargaining agreements on terms acceptable to us will be established.
OUR SIGNIFICANT STOCKHOLDERS CONTROL A SUBSTANTIAL PORTION OF OUR OUTSTANDING
COMMON STOCK.
We believe that a significant stockholder group collectively owns almost
one-half of our common stock prior to any sale of shares pursuant to this
prospectus and any sales of common stock by us. Accordingly, these stockholders,
as a group, will be able to significantly influence the outcome of stockholder
votes, including votes concerning the election of directors, the adoption or
amendment of provisions in our certificate of incorporation or bylaws, and the
approval of mergers and other significant corporate transactions. Historically,
this significant stockholder group has generally not affirmatively acted to
control or impact our management. We cannot assure you, however, that this
stockholder group will continue to act in the same manner in the future. One of
the eight members of our Board of Directors serves on our Board at the request
of this significant stockholder group. The existence of these levels of
ownership concentrated in a few persons makes it less likely that any other
holder of common stock will be able to affect our management or direction. These
factors may also have the effect of delaying or preventing a change in our
management or voting control or our acquisition by a third party. In addition,
this group's ownership following this offering may reduce the trading volume.
WE COULD LOSE OUR FEDERAL TAX NET OPERATING LOSS CARRYFORWARDS IF WE, OR THE
CONSOLIDATED GROUP WITH WHOM WE FILE TAX RETURNS, EXPERIENCES AN OWNERSHIP
CHANGE OF MORE THAN 50 PERCENTAGE POINTS.
We had federal income tax net operating loss carryforwards of approximately
$261.6 million at December 31, 1999 that, if not utilized to reduce our taxable
income, will expire between years 2003 and 2014. Our ability to use these net
operating loss carryforwards to reduce taxable income is dependent upon either
us, or the consolidated group with whom we file our tax returns, not
experiencing an ownership change of more than 50 percentage points under rules
contained in the Internal Revenue Code. Since our common stock is publicly
traded, there is no assurance that future trading or other sales of our stock
will not result in an ownership change that could limit the availability of our
net operating loss carryforwards. In addition, a portion of our net operating
loss carryforwards relates to our former subsidiary, American Federal Bank,
F.S.B., and is subject to an agreement with the Federal Deposit Insurance
Corporation under which we may be required to pay that government agency for
certain tax benefits relating to the use of the net operating loss
carryforwards.
WE HAVE A HOLDING COMPANY STRUCTURE AND THE DEBT SECURITIES OFFERED BY THIS
PROSPECTUS WILL BE EFFECTIVELY SUBORDINATED TO OTHER SECURED INDEBTEDNESS.
Lone Star Technologies is a holding company, and our assets primarily
consist of the stock of our Lone Star Steel and Fintube Technologies
subsidiaries. Any debt securities offered by this prospectus
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will be direct unsecured obligations of Lone Star Technologies, which derives
all of its revenues from the operations of its subsidiaries. As a result, Lone
Star Technologies will be dependent on the earnings and cash flow of, and
dividends and distributions or advances from, its subsidiaries to provide the
funds necessary to meet its debt service obligations, including the principal of
and interest on the debt securities. The payment of dividends to us from our
subsidiaries and the payment of interest on or the repayment of any principal of
any loans or advances we make to any of our subsidiaries may be subject to
statutory restrictions and are contingent upon the earnings of our subsidiaries.
Any debt securities offered by this prospectus will be general unsecured
obligations of Lone Star Technologies and will rank equal in right of payment to
all unsubordinated indebtedness of Lone Star Technologies and will rank senior
in right of payment to all subordinated indebtedness of Lone Star Technologies.
The debt securities will be unconditionally guaranteed, jointly and severally,
by each of the subsidiary guarantors. The subsidiary guarantees will be general
unsecured obligations of the subsidiary guarantors and will rank equal in right
of payment to all unsubordinated indebtedness of the subsidiary guarantors and
will rank senior in right of payment to all subordinated indebtedness of the
subsidiary guarantors. However, the debt securities will be effectively
subordinated to any secured indebtedness of Lone Star Technologies and the
secured indebtedness of our subsidiary guarantors to the extent of the value of
the assets securing the indebtedness. If there is a default on that secured
indebtedness, or bankruptcy, liquidation or reorganization of Lone Star
Technologies and its subsidiaries, those assets will be available to satisfy
obligations with respect to the secured indebtedness before making any payment
on the debt securities. Any debt securities offered by this prospectus will not
be secured by any of the assets of Lone Star Technologies or its subsidiaries.
THERE IS NO PUBLIC MARKET FOR THE SECURITIES OFFERED BY THIS PROSPECTUS.
There is no existing trading market for the securities offered by this
prospectus except for the common stock. There can be no assurance regarding the
development of a market for these securities, the ability of the holders to sell
these securities or the price at which the holders may be able to sell the
securities. If such a market were to develop, the securities could trade at
prices that may be higher or lower than the initial offering price depending on
many factors, including prevailing market conditions, Lone Star's operating
results and the market for similar securities.
A FRAUDULENT CONVEYANCE WOULD ADVERSELY AFFECT YOUR RIGHTS AS A HOLDER OF DEBT
SECURITIES SUPPORTED BY SUBSIDIARY GUARANTEES.
Various fraudulent conveyance laws enacted for the protection of creditors
may apply to the subsidiary guarantors' issuance of the guarantees, if any. If
any subsidiary guarantee is issued and to the extent that a court were to find
that it was issued with the intent to hinder, delay or defraud any present or
future creditor or the subsidiary guarantor contemplated insolvency with a
design to prefer one or more creditors over another, or a subsidiary guarantor
did not receive fair consideration or reasonably equivalent value for issuing
its guarantee and the subsidiary guarantor:
- was insolvent;
- was rendered insolvent because of the issuance of the guarantee;
- was engaged or about to engage in a business or transaction for which the
remaining assets of the subsidiary guarantor were unreasonably small to
carry on its business; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay those debts as they matured
then the court could avoid or subordinate the subsidiary guarantee in favor of
the subsidiary guarantor's creditors.
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To the extent a subsidiary guarantee was avoided as a fraudulent conveyance
or held to be unenforceable, holders of any debt securities supported by the
guarantee would cease to have any claim against the subsidiary guarantor and
would be creditors solely of Lone Star Technologies and any subsidiary guarantor
whose guarantee was not avoided or held to be unenforceable. If that occurred,
the claims of the holders of those securities against the issuer of an invalid
subsidiary guarantee would be subject to the prior payment of all liabilities of
that subsidiary guarantor. There can be no assurance that, after providing for
all prior claims, there would be sufficient assets to satisfy the claims of the
holders of debt securities relating to any avoided portions of any of the
subsidiary guarantees.
THERE MAY BE ADDITIONAL RISK FACTORS IN THE FUTURE.
Please see the prospectus supplement and our filings with the SEC
incorporated herein for additional risk factors that may be applicable to a
particular class or issuance of securities or to us in the future.
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USE OF PROCEEDS
Unless otherwise provided in a prospectus supplement, we will use the net
proceeds of the sale of securities described in this prospectus and in any
prospectus supplement to repay existing debt, to acquire other businesses, to
fund development of new products, to fund capital expenditures and to provide
funds for general corporate purposes.
We do not expect to receive any proceeds from the sale of our common stock
by the selling stockholder.
The exact amount of net proceeds to be used and when they will be applied to
corporate purposes will depend on a number of factors, including market
conditions, our funding requirements and the availability of alternative funding
sources. We will disclose in a prospectus supplement any future proposal to use
net proceeds from an offering of our securities to finance a specific purpose,
if applicable.
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RATIO OF EARNINGS TO FIXED CHARGES
We have computed the ratio of earnings to fixed charges for each of the
following periods on a consolidated basis. You should read the ratio of earnings
to fixed charges in conjunction with our consolidated financial statements
(including the notes thereto) incorporated by reference to our most recent
Annual Report on Form 10-K, or most recent quarterly report on Form 10-Q, and
our amended Form 8-K dated June 1, 2000 and June 14, 2000, each as filed with
the SEC.
<TABLE>
<CAPTION>
SIX SIX
FISCAL YEAR ENDED DECEMBER 31, MONTHS MONTHS
----------------------------------------------------------------- ENDED ENDED
PRO FORMA JUNE 30, JUNE 30,
1995 1996 1997 1998 1999 1999(2) 1999 2000
-------- -------- -------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)... 1.88x 3.89x 6.13x (4.38)x 0.13x 1.37x (3.21)x 3.13x
</TABLE>
------------------------------
(1) For purposes of computing the ratio of earnings to fixed charges "earnings"
consist of pretax income from continuing operations which includes earnings
allocable to minority interest ownership partners plus fixed charges
(excluding capitalized interest). "Fixed charges" consists of interest
expensed and capitalized, amortization of capitalized expenses related to
indebtedness, and a portion of rental expense deemed to represent the
interest portion of our lease expense.
(2) The Pro Forma 1999 ratio of earnings to fixed charges gives effect to the
Fintube Limited Partnership and Bellville Tube Corporation acquisitions and
related financing.
Historical earnings were inadequate to cover fixed charges by $32.3 million
in the fiscal year ended 1998 and by $11.4 million for the six months ended
June 30, 1999.
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DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the debt securities to which any prospectus supplement may relate. The
particular terms of the debt securities offered by any prospectus supplement and
the extent, if any, to which the general provisions may not apply to the debt
securities offered will be described in a prospectus supplement relating to the
debt securities.
GENERAL
The senior debt securities will be issued under a senior indenture to be
entered into between us and a trustee named in the applicable prospectus
supplement, and the subordinated debt securities will be issued under a
subordinated indenture also to be entered into between us and a trustee named in
the applicable prospectus supplement. The term "Trustee" refers to the trustee
named in the senior indenture or the subordinated indenture, as appropriate. The
senior indenture and the subordinated indenture are sometimes collectively
called the "Indentures" in this prospectus. The Indentures will be subject to
and governed by the Trust Indenture Act of 1939, as amended, and may be
supplemented from time to time following execution.
The terms of the debt securities will include those stated in the applicable
Indenture and those made part of such Indenture by reference to the Trust
Indenture Act. The debt securities will be subject to all such terms, and
holders of debt securities will be referred to the applicable Indenture and the
Trust Indenture Act for a statement of those terms.
This prospectus briefly summarizes certain provisions contained in the
Indentures, does not purport to be complete, and is subject to, and is qualified
in its entirety by reference to, the Indentures, including the definitions of
certain terms therein, and the Trust Indenture Act. The form of each Indenture
will be filed with the SEC via a Current Report on Form 8-K prior to our initial
offering of debt securities under that Indenture and you should read the
Indenture for provisions that may be important to you.
Lone Star conducts its operations through its subsidiaries. Unless the debt
securities are guaranteed by Lone Star's subsidiaries as described below, the
rights of Lone Star and its creditors, including holders of the debt securities
to participate in the assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that Lone Star may itself be a creditor with
recognized claims against such subsidiary.
TERMS
The debt securities will be direct, unsecured obligations of Lone Star. The
indebtedness represented by the senior debt securities will rank equally with
any other unsecured and unsubordinated indebtedness of Lone Star. The
indebtedness represented by the subordinated debt securities will be
subordinated in right of payment to the prior payment in full of the senior debt
of Lone Star. The applicable prospectus supplement will set forth the terms of
such debt securities, including where applicable:
- the form and title of the debt securities and whether such debt securities
are senior debt securities or subordinated debt securities;
- the aggregate principal amount of the debt securities and any limit on
such aggregate principal amount;
- the date or dates on which the debt securities may be issued;
- the date or dates on which the principal of and premium, if any, on the
debt securities shall be payable;
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- the rate or rates (which may be fixed or variable) at which the debt
securities shall bear interest, if any, and the date or dates from which
such interest shall accrue;
- the dates on which interest, if any, shall be payable and the record dates
for the interest payment dates;
- the place or places where the principal of and premium, if any, and
interest, if any, on the debt securities of the series will be payable;
- the period or periods, if any, within which, the price or prices at which,
and the terms and conditions upon which, the debt securities may be
redeemed at the option of Lone Star or otherwise;
- any optional or mandatory redemption or any sinking fund or analogous
provisions;
- the denominations in which the debt securities of the series shall be
issuable if they are other than denominations of $1,000 and integral
multiples thereof;
- the portion of the principal amount of the debt securities that shall be
payable if the maturity is accelerated under the terms of the applicable
Indenture;
- whether payment of the principal of and premium, if any, and interest, if
any, on the debt securities shall be without deduction for taxes,
assessments, or governmental charges paid by the holders;
- the currency or currencies, or currency unit or currency units, in which
the principal of and premium, if any, and interest, if any, on the debt
securities shall be denominated, payable, redeemable or purchasable, as
the case may be;
- any events of default with respect to the debt securities that differ from
those set forth in the applicable Indenture;
- whether the debt securities will be convertible;
- whether the debt securities of a series shall be issued as a global
certificate or certificates and the identity of the depositary for the
series;
- provisions regarding the convertibility or exchangeability of the debt
securities;
- covenants restricting Lone Star's and its subsidiaries' ability to make
certain types of payments and investments, incur indebtedness and dispose
of assets; and
- any other terms not inconsistent with the provisions of the applicable
Indenture.
Unless otherwise indicated in an applicable prospectus supplement, the debt
securities of any series will be issued only in fully registered form in
denominations of $1,000 or any integral multiple thereof. The debt securities of
a series may be issuable in the form of one or more global certificates, which
will be denominated in an amount equal to all or a portion of the aggregate
principal amount of such debt securities.
Each Indenture will provide that the debt securities may be issued in one or
more series, in each case as established from time to time in, or pursuant to
authority granted by, a resolution of the Board of Directors of Lone Star or as
established in one or more indentures supplemental to the Indenture. All debt
securities of one series do not have to be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the holders
of the debt securities of the series, for issuances of additional debt
securities of the series.
One or more series of debt securities offered by this prospectus may be sold
at a substantial discount below their stated principal amount, bearing no
interest or interest at a rate that at the time
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of issuance is below market rates. The federal income tax consequences and
special considerations applicable to any such series of debt securities will be
described generally in an applicable prospectus supplement.
GLOBAL DEBT SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with, or on
behalf of, a depositary, or its nominee, identified in an applicable prospectus
supplement. Unless and until such global certificate or certificates are
exchanged in whole or in part for debt securities in individually certificated
form, a global debt security may not be transferred or exchanged except as a
whole to a nominee of the depositary for such global debt security, or by a
nominee for the depositary to the depositary, or to a successor of the
depositary or a nominee of such successor, except in the circumstances described
in the applicable prospectus supplement. The specific terms of the depositary
arrangement with respect to a series of debt securities and the rights of, and
limitations on, owners of beneficial interests in a global debt security
representing all or a portion of a series of debt securities will be described
in an applicable prospectus supplement.
SUBSIDIARY GUARANTEES
Certain subsidiaries of Lone Star may provide joint and several guarantees
of Lone Star's payment obligations under a series of debt securities. Any
subsidiary of Lone Star that guarantees any indebtedness of Lone Star will be
required to execute a subsidiary guarantee and become a guarantor under the
applicable Indenture. The obligations of each guarantor under its subsidiary
guarantee will be limited to the maximum amount the guarantors are permitted to
guarantee under applicable law without creating a "fraudulent conveyance". A
description of the terms of any subsidiary guarantee will be contained in the
prospectus supplement relating to the debt securities that are being guaranteed.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, each of
the following will constitute an event of default ("Event of Default") under the
applicable Indenture with respect to debt securities of any series:
- failure to pay any interest on any debt security of that series when due,
continued for a period set forth in the applicable prospectus supplement;
- failure to pay principal of (or premium, if any, on) any debt security of
that series when due and the failure continues for a period set forth in
the applicable prospectus supplement;
- failure to perform or comply with any covenant or warranty of Lone Star
contained in the debt securities of that series or in the applicable
Indenture, continued for a period set forth in the applicable prospectus
supplement after written notice as provided in the Indenture (other than a
default otherwise specifically dealt with in the applicable Indenture or
in any supplemental indenture); and
- any other Event of Default set forth in the applicable supplemental
indenture and prospectus supplement relating to the debt securities of
that series.
If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time outstanding shall occur and be continuing,
then in every such case either the applicable Trustee or the holders of at least
a specified percentage of the aggregate principal amount of the outstanding debt
securities of that series may accelerate the maturity of all debt securities of
that series; provided, however, that after such acceleration, but before a
judgment or decree based on acceleration, the holders of a specified percentage
of the aggregate principal amount of outstanding debt securities of
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that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the nonpayment of accelerated
principal, have been cured or waived as provided in the applicable Indenture.
Each Indenture will provide that no holder of any debt security will have
any right to institute any proceeding with respect to the applicable Indenture
or for any remedy thereunder, unless that holder has previously given to the
Trustee written notice of a continuing Event of Default and unless the holders
of at least a specified percentage of the aggregate principal amount of the
outstanding debt securities of that series have made a written request, and
offered reasonable indemnity, to the Trustee to institute a proceeding as
Trustee, and the Trustee shall not have received from the holders of a majority
in aggregate principal amount of the outstanding debt securities of that
series a direction inconsistent with such request and shall have failed to
institute such proceeding within a specified number of days. However, such
limitations do not apply to a suit instituted by a holder of a debt security for
enforcement of payment of the principal of (and premium, if any) or interest on
such debt security on or after the respective due dates provided in such debt
security.
Subject to provisions in each Indenture relating to its duties in case an
Event of Default shall have occurred and be continuing, neither Trustee is under
an obligation to exercise any of its rights or powers under such Indenture at
the request or direction of any holders of debt securities then outstanding
under such Indenture, unless those holders shall have offered to the Trustee
thereunder reasonable indemnity. Subject to the provisions in each Indenture for
the indemnification of the Trustee thereunder, the holders of a specified
percentage of the aggregate principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee or
exercising any trust or power conferred on that Trustee.
Lone Star will be required to furnish to each Trustee annually a statement
as to the performance by Lone Star of certain of its obligations under the
applicable Indenture and as to any default in such performance.
DEFEASANCE
Each Indenture will provide that, at the option of Lone Star, (A) if
applicable, Lone Star will be discharged from any and all obligations in respect
of the debt securities of any series issued under that Indenture or (B) if
applicable, Lone Star may omit to comply with certain restrictive covenants, and
that the omission shall not be an Event of Default under the applicable
Indenture and the debt securities of any series issued under that Indenture, and
that those debt securities shall no longer be subject to the subordination
provisions in the case of either (A) or (B) upon irrevocable deposit with the
applicable Trustee, in trust, of money and/or U.S. government obligations that
will provide money in an amount sufficient in the opinion of a nationally
recognized accounting firm to pay the principal of and premium, if any, and each
installment of interest, if any, on such debt securities. With respect to
clause (B), the obligations under the applicable Indenture other than with
respect to such covenants and the Events of Default other than the Event of
Default relating to such covenants above shall remain in full force and effect.
This trust may only be established if, among other things:
- with respect to clause (A), Lone Star has received from, or there has been
published by, the Internal Revenue Service ("IRS") a ruling or there has
been a change in law, which in the opinion of counsel provides that
holders of such debt securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred; or, with respect to
clause (B), Lone Star has delivered to the applicable Trustee an opinion
of counsel to the effect that the holders of the debt securities will not
recognize gain or loss for federal
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income tax purposes as a result of the deposit and defeasance and will be
subject to federal income tax on the same amount, in the same manner and
at the same times as would have been the case if the deposit and
defeasance had not occurred;
- no Event of Default or event that, with the passing of time or the giving
of notice, or both, shall constitute an Event of Default with respect to
the debt securities shall have occurred or be continuing;
- Lone Star has delivered to the applicable Trustee an opinion of counsel to
the effect that the deposit shall not cause the Trustee or the trust to be
subject to the Investment Company Act of 1940; and
- certain other customary conditions precedent are met.
SUBORDINATION
Upon any distribution to creditors of Lone Star in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the subordinated debt securities will be subordinated to the extent provided in
the Subordinated Indenture in right of payment to the prior payment in full of
all senior debt, but the obligation of Lone Star to make payment of the
principal of and interest on the subordinated debt securities will not otherwise
be affected. No payment of principal or interest may be made on the subordinated
debt securities at any time if a default on senior debt exists that permits the
holders of the senior debt to accelerate its maturity and the default is the
subject of judicial proceedings or Lone Star receives notice of the default.
After all senior debt is paid in full and until the subordinated debt securities
are paid in full, Holders will be subrogated to the rights of holders of senior
debt to the extent that distributions otherwise payable to Holders have been
applied to the payment of senior debt. If the assets are distributed upon
insolvency, the subordination may cause certain general creditors of Lone Star
to recover more, ratably, than holders of the subordinated debt securities.
MODIFICATION AND WAIVER
Modifications and amendments of either Indenture may be made by Lone Star
and the applicable Trustee with the consent of the holders of a majority in
aggregate principal amount of all outstanding debt securities issued under an
Indenture that are affected by the modification or amendment, but no
modification or amendment may, without the consent of the holder of the
applicable debt security:
- change the stated maturity of the principal of, or any installment of
interest on, the debt security;
- reduce the principal amount of (or the premium), or interest on, the debt
security;
- change the place or currency of payment of principal of (or premium), or
interest on, the debt security;
- impair the right to institute suit for the enforcement of any payment on
or with respect to the debt security;
- reduce the percentage of outstanding debt securities of any series
necessary to modify or amend the applicable Indenture;
- reduce the percentage of aggregate principal amount of outstanding debt
securities of any series necessary for waiver of compliance with certain
provisions of the applicable Indenture or for waiver of certain defaults;
and
- modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or the waiver of past defaults or covenants,
except as otherwise specified.
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The holders of a percentage of the aggregate principal amount, as specified
in the applicable prospectus supplement, of the outstanding debt securities of a
series may waive compliance by Lone Star of certain restrictive provisions of
the applicable Indenture.
THE TRUSTEE
Both Indentures will provide that, except during the continuance of an Event
of Default, the applicable Trustee will perform only the duties as are
specifically set forth in the applicable Indenture. During the existence of an
Event of Default, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise under the circumstances in the conduct of that
person's own affairs.
Both Indentures and the provisions of the Trust Indenture Act incorporated
by reference in the Indentures will contain limitations on the rights of each of
the Trustees, should it become a creditor of Lone Star, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of the claim as security or otherwise. Each of the Trustees will be
permitted to engage in other transactions with Lone Star or any affiliate, but
if it acquires any conflicting interest (as defined in the applicable Indenture
or in the Trust Indenture Act), it must eliminate such conflict or resign.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS
No director, officer, employee or stockholder of Lone Star or any of its
affiliates shall have any personal liability in respect of the obligations of
Lone Star under either of the Indentures or the debt securities by reason of
his, her or its status as a director, officer, employee or stockholder of Lone
Star.
APPLICABLE LAW
The Indentures and the debt securities offered by this prospectus will be
governed by, and construed in accordance with, the laws of the State of New
York.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 80 million shares of common stock,
$1.00 par value per share, and 10 million shares of preferred stock, $1.00 par
value per share.
The following summary of the terms and provisions of our capital stock does
not purport to be complete, and is qualified in its entirety by reference to our
certificate of incorporation and bylaws, which we incorporated by reference as
exhibits to the registration statement, of which this prospectus is a part, and
applicable law.
COMMON STOCK
We are authorized to issue up to 80 million shares of common stock, par
value $1.00 per share. The holders of our common stock are entitled to one vote
for each share held of record on all matters to be voted upon by the
stockholders. The holders of our common stock are entitled to participate
equally in dividends, if any, declared by our Board of Directors out of legally
available funds, and in the distribution of assets in the event of liquidation.
However, the payment of any dividends and the distribution of assets to holders
of our common stock will be subject to any prior rights of any outstanding
shares of our preferred stock. We have never paid cash dividends on our common
stock. The holders of our common stock have no preemptive, conversion or other
rights to subscribe for additional shares of our stock. There are no redemption
rights or sinking fund provisions applicable to our common stock. All
outstanding shares of common stock are, and all shares of common stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and nonassessable.
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PREFERRED STOCK
Our Board of Directors is authorized, without further action by the
stockholders, to issue up to 10 million shares of preferred stock and to
establish, without stockholder approval, one or more classes or series of Lone
Star preferred stock having the number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences, and
limitations that our Board of Directors may designate. No shares of our
preferred stock are issued or outstanding. The issuance of our preferred stock
could adversely affect the voting power of holders of our common stock and
restrict their rights to receive payments upon our liquidation. It could also
have the effect of delaying, deferring or preventing a change in control of Lone
Star. We have no present plan to issue any shares of preferred stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
BOARD OF DIRECTORS. Our certificate of incorporation provides that our
Board of Directors will set the number of members of our Board by resolution and
that our Board will be divided into three classes, each class to be as nearly
equal in number of directors as possible. In addition, under our certificate of
incorporation, directors may be removed only for cause by the affirmative vote
of 80% of the then-outstanding shares of our capital stock entitled to vote.
Thus, the holder or holders of as little as one share more than 20% of the
voting power may veto the removal of any director. Our certificate of
incorporation also provides that vacancies on our Board of Directors will be
filled by the affirmative vote of a majority of the remaining directors, even if
less than a quorum, and that the newly elected director serves for the unexpired
term of his or her predecessor. The likely effect of the classified board and
limitations on the removal of directors and filling of vacancies is an increase
in the time required for the stockholders to change the composition of our Board
of Directors. These classification provisions are subject to the rights of
holders of preferred stock which may be established by our Board of Directors
pursuant to our certificate of incorporation in order to permit the holders of
preferred stock to elect directors under specified circumstances relating to the
payment of dividends by, and the liquidation of, Lone Star.
Our bylaws provide that nominations for the election of directors may be
made by the Board of Directors, by a proxy committee appointed by the Board or
by any stockholder entitled to vote in the election of directors. Under our
bylaws, stockholders intending to nominate director candidates for election must
give proper advance notice to the secretary of Lone Star. The chairman of any
stockholder meeting may refuse to acknowledge the nomination of any person not
nominated in compliance with the procedure established in the bylaws. Although
this does not give the Board of Directors any power to approve or disapprove
stockholder nominations for election of directors, it may have the effect of
precluding a contest for the election of directors if these procedures are not
followed.
STOCKHOLDER MEETINGS. Our certificate of incorporation provides that any
action required or permitted to be taken by our stockholders at an annual
meeting or special meeting of stockholders may not be taken by written consent.
Our certificate of incorporation further provides that special meetings of the
stockholders may be called only by the Chairman of the Board of Directors or by
a majority of the Board of Directors. The foregoing provisions could have the
effect of delaying until the next stockholders' meeting stockholder actions that
are favored by the holders of a majority of the outstanding voting securities of
Lone Star.
SPECIAL VOTE REQUIRED FOR BUSINESS COMBINATIONS. We are subject to the
provisions of Section 203 of the Delaware General Corporation Law, an
anti-takeover law, and provisions in our certificate of incorporation which
relate to transactions with interested stockholders. Subject to certain
exceptions, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which
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the person became an interested stockholder, unless the business combination is
approved in a prescribed manner. For purpose of Section 203, a "business
combination" includes mergers, asset sales having an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets of
the corporation determined on a consolidated basis or the aggregate market value
of all the outstanding stock of the corporation, and other transactions
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is generally a person who, together with affiliates and associates,
owns (or within three years prior to the date of determination of whether the
person is an "interested stockholder" did own) 15% or more of the corporation's
outstanding voting stock.
Our certificate of incorporation contains additional provisions relating to
business combinations that supplement Section 203 and prohibits us from engaging
in a "business combination" with an "interested stockholder" for a period of two
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
As defined in our certificate of incorporation, a "business combination"
includes:
- mergers;
- assets sales and other transactions having an aggregate fair market value
of $100 million or more;
- the adoption of any plan or proposal for the liquidation or dissolution of
Lone Star proposed by any "interested stockholder" or an affiliate of any
"interested stockholder"; and
- any reclassification of securities or other transaction that has the
effect of increasing the proportionate share of the outstanding shares of
any class of equity or convertible securities of Lone Star or any
subsidiary which is directly or indirectly owned by any "interested
stockholder" or any affiliate of any "interested stockholder."
As defined in our certificate of incorporation, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within the prior
two years did own, 20% or more of our outstanding voting stock or who is an
assignee of any shares which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any "interested
stockholder," if the assignment did not involve a public offering within the
meaning of the Securities Act of 1933, as amended.
AMENDING OUR CERTIFICATE OF INCORPORATION AND BYLAWS. The Delaware General
Corporation Law provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws unless the certificate of incorporation
or bylaws, as the case may be, requires a greater percentage. The majority
stockholder vote would be in addition to any separate class vote that might be
required by the terms of any series of preferred stock that might be outstanding
at the time any amendments are submitted to stockholders. Many of the provisions
in our certificate of incorporation require the affirmative vote of 80% or more
of the then-outstanding shares of our capital stock for their amendment.
DESCRIPTION OF DEPOSITARY SHARES
We may offer preferred stock represented by depositary shares and issue
depositary receipts evidencing the depositary shares. Each depositary share will
represent a fraction of a share of preferred stock. Shares of preferred stock of
each class or series represented by depositary shares will be deposited under a
separate deposit agreement among us, a bank or trust company acting as the
"depositary" and the holders of the depositary receipts. Subject to the terms of
the deposit agreement, each owner of a depositary receipt will be entitled, in
proportion to the fraction of a share of preferred stock represented by the
depositary shares evidenced by the depositary receipt, to all the rights and
preferences of the preferred stock represented by such depositary shares. Those
rights include any dividend, voting, conversion, redemption and liquidation
rights. Immediately following the issuance of
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the preferred stock to the depositary, we will cause the depositary to issue
depositary receipts on our behalf.
The forms of the depositary agreement and the related depositary receipts
relating to any particular issue of depositary shares will be filed with the SEC
via a Current Report on Form 8-K prior to our initial offering of the depositary
shares, and you should read those documents for provisions that may be important
to you.
If depositary shares are offered, the applicable prospectus supplement will
describe the terms of such depositary shares, the deposit agreement and, if
applicable, the depositary receipts, including the following, where applicable:
- the payment of dividends or other cash distributions to the holders of
depositary receipts when the dividends or other cash distributions are
made with respect to the preferred stock;
- the voting by a holder of depositary shares of the preferred stock
underlying the depositary shares at any meeting called for that purpose;
- if applicable, the redemption of depositary shares upon our redemption of
shares of preferred stock held by the depositary;
- if applicable, the exchange of depositary shares upon an exchange by us of
shares of preferred stock held by the depositary for debt securities or
common stock;
- if applicable, the conversion of the shares of preferred stock underlying
the depositary shares into shares of our common stock, other shares of our
preferred stock or our debt securities;
- the terms upon which the deposit agreement may be amended and terminated;
- a summary of the fees to be paid by us to the depositary;
- the terms upon which a depositary may resign or be removed by us; and
- any other terms of the depositary shares, the deposit agreement and the
depositary receipts.
If a holder of depositary receipts surrenders the depositary receipts at the
corporate trust office of the depositary, unless the related depositary shares
have previously been called for redemption, converted or exchanged into other
securities of Lone Star, the holder will be entitled to receive at the corporate
trust office the number of shares of preferred stock and any money or other
property represented by the depositary shares. Holders of depositary receipts
will be entitled to receive whole and, to the extent provided by the applicable
prospectus supplement, fractional shares of the preferred stock on the basis of
the proportion of preferred stock represented by each depositary share as
specified in the applicable prospectus supplement. Holders of shares of
preferred stock received in exchange for depositary shares will no longer be
entitled to receive depositary shares in exchange for shares of preferred stock.
If the holder delivers depositary receipts evidencing a number of depositary
shares that is more than the number of depositary shares representing the number
of shares of preferred stock to be withdrawn, the depositary will issue the
holder a new depositary receipt evidencing the excess number of depositary
shares at the same time.
Prospective purchasers of depositary shares should be aware that special
tax, accounting and other considerations may be applicable to instruments such
as depositary shares.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities, common stock, preferred
stock or other securities. We may issue warrants independently or together with
other securities. Warrants sold with other securities may be attached to or
separate from the other securities. If we issue warrants, we will do so under
one or more warrant agreements between us and a warrant agent that we will name
in the prospectus supplement.
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The form of warrant agreement relating to any particular issue of warrants
will be filed with the SEC via a Current Report on Form 8-K prior to our initial
offering of the warrants, and you should read the warrant agreement for
provisions that may be important to you.
The prospectus supplement relating to any warrants being offered will
include specific terms relating to the offering. These terms will include some
or all of the following:
- the title of the warrants;
- the aggregate number of warrants offered;
- the designation, number and terms of the debt securities, common stock,
preferred stock or other securities purchasable on exercise of the
warrants, and procedures that may result in the adjustment of those
numbers;
- the exercise price of the warrants;
- the dates or periods during which the warrants are exercisable;
- the designation and terms of any securities with which the warrants are
issued;
- if the warrants are issued as a unit with another security, the date on
and after which the warrants and the other security will be separately
transferable;
- if the exercise price is not payable in U.S. dollars, the foreign
currency, currency unit or composite currency in which the exercise price
is denominated;
- any minimum or maximum amount of warrants that may be exercised at any one
time;
- any terms, procedures and limitations relating to the transferability,
exchange or exercise of the warrants; and
- any other terms of the warrants.
Warrant certificates will be exchangeable for new warrant certificates of
different denominations at the office indicated in the prospectus supplement.
Prior to the exercise of their warrants, holders of warrants will not have any
of the rights of holders of the securities subject to the warrants.
MODIFICATIONS
We may amend the warrant agreements and the warrants without the consent of
the holders of the warrants to cure any ambiguity, to cure, correct or
supplement any defective or inconsistent provision, or in any other manner that
will not materially and adversely affect the interests of holders of outstanding
warrants.
We may also modify or amend certain other terms of the warrant agreements
and the warrants with the consent of the holders of not less than a majority in
number of the then outstanding unexercised warrants affected. Without the
consent of the holders affected, however, no modification or amendment may:
- shorten the period of time during which the warrants may be exercised; or
- otherwise materially and adversely affect the exercise rights of the
holders of the warrants.
ENFORCEABILITY OF RIGHTS
The warrant agent will act solely as our agent. The warrant agent will not
have any duty or responsibility if we default under the warrant agreements or
the warrant certificates. A warrant holder may, without the consent of the
warrant agent, enforce by appropriate legal action on its own behalf the
holder's right to exercise the holder's warrants.
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SELLING STOCKHOLDER
We are registering 1,000,000 shares covered by this prospectus for secondary
offering on behalf of Alpine Capital, L.P.,a member of a significant stockholder
group that is reported to collectively own nearly half of our outstanding common
stock.
The applicable prospectus supplement relating to any shares of common stock
offered by Alpine Capital will set forth:
- the nature of any position, office, or other material relationship which
Alpine Capital will have had during the prior three years with us or any
of our predecessors or affiliates;
- the number of shares owned by Alpine Capital prior to the offering;
- the number of shares to be offered for Alpine Capital's account; and
- the number of shares and (if 1% or more), the percentage of common stock
to be owned by Alpine Capital after the completion of the offering.
All expenses incurred with the registration of shares of common stock owned
by Alpine Capital will be borne by us, but we will not be obligated to pay any
underwriting fees, discounts, or commissions in connection with the
registration.
PLAN OF DISTRIBUTION
We or the selling stockholder, as appropriate, may sell the securities being
offered by this prospectus:
- directly to purchasers in privately negotiated transactions or otherwise;
- through agents;
- through underwriters;
- through dealers;
- in a block trade in which the broker-dealer so engaged will attempt to
sell the securities as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
- in purchases by a broker-dealer as principal and resale by that
broker-dealer for its own account pursuant to this prospectus;
- through ordinary brokerage transactions in which the broker solicits
purchasers;
- in connection with short sales of our common stock by the selling
stockholder in which shares are redelivered to close out the selling
stockholder's short positions;
- in connection with the selling stockholder's loan or pledge to a
broker-dealer of shares of common stock covered by this prospectus, and
the sale of the shares so loaned or the sale of the shares so pledged upon
a default;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or
- in a combination of any of the above methods.
For purposes of the selling stockholder's plan of distribution, the term
"selling stockholder" includes donees, pledgees, transferees or other successors
in interest selling shares of our common stock received from the selling
stockholder after the date of this prospectus as a gift, distribution or other
transfer not constituting a sale.
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We, or the selling stockholder or designated agents, may directly solicit,
from time to time, offers to purchase the securities. Any particular agent may
be deemed to be an underwriter as that term is defined in the Securities Act of
1933, as amended. We or the selling stockholder will name the agents involved in
the offer or sale of the securities and describe any commissions payable to
these agents in the prospectus supplement. Unless otherwise indicated in the
prospectus supplement, these agents will be acting on a best efforts basis for
the period of their appointment. The agents may be entitled under agreements to
indemnification from us or the selling stockholder against specific liabilities,
including liabilities under the Securities Act. The agents may also be our
customers or may engage in transactions with or perform services for us in the
ordinary course of business.
If any underwriters are utilized in the sale of the securities in respect of
which this prospectus is delivered, we will enter into an underwriting agreement
with those underwriters at the time of sale to them. The names of these
underwriters and the terms of the transaction will be set forth in the
prospectus supplement, which will be used by the underwriters to make resales of
the securities in respect of which this prospectus is delivered to the public.
The underwriters may be entitled, under the relevant underwriting agreement, to
indemnification by us against specific liabilities, including liabilities under
the Securities Act. The underwriters may also be our customers or may engage in
transactions with or perform services for us in the ordinary course of business.
If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, the securities will be sold to the dealer, as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. Dealers may be
entitled to indemnification against specific liabilities, including liabilities
under the Securities Act. The dealers may also be our customers or may engage in
transactions with, or perform services for us in the ordinary course of
business.
The selling stockholder will act independently of Lone Star in making
decisions with respect to the timing, manner and size of each sale of
securities. The selling stockholder and two of its related entities,
Keystone, Inc. and The Anne T. and Robert M. Bass Foundation, have agreed that,
if requested by Lone Star or the underwriters, they will execute a customary
lock-up agreement obligating them not to sell any of our common stock (or
securities convertible into our common stock) for a period of time ending no
more than 90 days after the closing of each offering of those securities by Lone
Star under this prospectus. This lock-up agreement will continue so long as the
selling stockholder and such two related entities continue to hold in the
aggregate more than 5% of our common stock.
The place and time of delivery for the securities in respect of which this
prospectus is delivered will be set forth in the accompanying prospectus
supplement.
LEGAL MATTERS
Unless otherwise specified in a prospectus supplement relating to the
securities, certain legal matters in connection with the securities will be
passed upon for us by Fulbright & Jaworski L.L.P., Dallas, Texas. Any
underwriters will be advised about issues relating to any offering by their
legal counsel to be named in the appropriate prospectus supplement.
EXPERTS
The audited consolidated financial statements and schedules of Lone Star and
Fintube incorporated by reference in this prospectus and elsewhere in the
registration statement to the extent and for the periods indicated in their
reports have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated by reference in this prospectus in reliance
upon the authority of that firm as experts in giving those reports.
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The audited financial statements of Bellville Tube Corporation incorporated
by reference in this prospectus and elsewhere in the registration statement to
the extent and for the periods indicated in their reports have been audited by
Harper & Pearson Company, independent public accountants, and are incorporated
by reference in this prospectus in reliance upon the authority of that firm as
experts in giving those reports.
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SUBJECT TO COMPLETION, DATED OCTOBER 20, 2000
PROSPECTUS
1,100,000 SHARES OF COMMON STOCK
LONE STAR TECHNOLOGIES, INC.
[Logo]
This prospectus relates to the issuance and sale of up to 1,100,000 shares
of our common stock from time to time through a sales manager to be named in
prospectus supplements. These sales, if any, will be made pursuant to the terms
of a sales agreement between the sales manager and us. A form of such sales
agreement will be filed as an exhibit to this registration statement.
Our common stock is listed on the New York Stock Exchange under the symbol
"LSS." Sales of shares of our common stock under this prospectus, if any, will
be made by means of ordinary brokers' transactions through the facilities of the
New York Stock Exchange at prices prevailing at the time of sale. These sales
will be made by the sales manager on a best efforts basis. On October 18, 2000
the last reported sales price of our common stock on the New York Stock Exchange
was $47.00 per share.
The compensation to the sales manager for sales of common stock will be a
specified percentage of the sales proceeds from the sale of shares as set forth
in the applicable prospectus supplement. The net proceeds from any sales under
this prospectus will be used as described under "Use of Proceeds" in this
prospectus. In connection with the sale of common stock on our behalf, the sales
manager may be deemed to be an "underwriter" within the meaning of the
Securities Act, and the compensation of the sales manager may be deemed to be
underwriting commissions or discounts. We have agreed to provide indemnification
and contribution to the sales manager against certain liabilities, including
liabilities under the Securities Act.
YOU SHOULD CAREFULLY REVIEW AND CONSIDER THE INFORMATION UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE A-6 OF THIS PROSPECTUS AND UNDER THE SAME
HEADING IN THE APPLICABLE PROSPECTUS SUPPLEMENT BEFORE INVESTING IN OUR
SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October , 2000.
A-1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
About This Prospectus....................................... A-3
About the Company........................................... A-3
Where You Can Find More Information......................... A-3
Cautionary Statement Concerning Forward-Looking
Statements................................................ A-4
Risk Factors................................................ A-6
Use of Proceeds............................................. A-12
Description of Capital Stock................................ A-12
Plan of Distribution........................................ A-15
Legal Matters............................................... A-15
Experts..................................................... A-15
</TABLE>
A-2
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf process, we may sell up to 1,100,000 shares of common stock in an
"at-the-market" offering described in this prospectus in one or more offerings
up to a total dollar amount of $250,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement, together with additional
information described under the heading "WHERE YOU CAN FIND MORE INFORMATION."
The terms "Lone Star," "we," "our" and "us" refer to Lone Star
Technologies, Inc. and its consolidated subsidiaries unless the context suggests
otherwise. The term "you" refers to a prospective investor. The address of our
principal executive offices is 15660 North Dallas Parkway, Suite 500, Dallas,
Texas 75248, and our telephone number is (972) 770-6401. Our mailing address is
P.O. Box 803546, Dallas, Texas 75380. Our website is located at
www.lonestartech.com. Information contained on our website does not constitute,
and shall not be deemed to constitute, part of this prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information contained in
this prospectus is accurate as of any date other than the date on the front
cover of this prospectus. We are not making an offer of these securities in any
state where the offer is not permitted.
ABOUT THE COMPANY
We are the leading domestic manufacturer of premium welded "oil country
tubular goods," which are steel tubular products used in the completion and
production of oil and natural gas wells. We are also a major manufacturer of
line pipe, which is used in the gathering and transmission of oil and natural
gas. In addition, we are a leading manufacturer of specialty tubing products
used in power technology, automotive, construction, agricultural and industrial
applications. In January 2000, we acquired the assets of Fintube Limited
Partnership, the largest specialty tubing manufacturer of heat recovery finned
tubulars, which are used in various power technology applications, including in
the construction of gas-fired, combined cycle power generation plants. Also, on
April 1, 2000 we completed an acquisition of the assets of Bellville Tube
Corporation, a manufacturer of casing, tubing and line pipe for the oil and gas
industry.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
at 7 World Trade Center, Suite 1300, New York, New York 10048. Our filings with
the SEC are also available to the public over the Internet at the SEC's website
at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until all of the securities are sold.
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- Annual Report on Form 10-K, as amended, for the year ended December 31,
1999.
- Current Report on Form 8-K filed November 22, 1999 (date of event
November 16, 1999).
- Current Report on Form 8-K filed January 18, 2000 (date of event
January 3, 2000), Amendment No. 1 to the Form 8-K filed February 3, 2000,
Amendment No. 2 to the Form 8-K filed March 17, 2000, Amendment No. 3 to
the Form 8-K filed March 29, 2000 and Amendment No. 4 to the Form 8-K
filed June 1, 2000. The Form 8-K, as amended, includes audited financial
statements of Fintube Limited Partnership and unaudited pro forma
financial statements of Lone Star reflecting the acquisition by Lone Star
of the Fintube assets.
- Current Report on Form 8-K filed March 16, 2000 (date of event March 8,
2000).
- Quarterly Report on Form 10-Q, for the three month and six month periods
ended June 30, 2000.
- Current Report on Form 8-K filed April 17, 2000 (date of event March 31,
2000) and Amendment No. 1 to the Form 8-K filed June 14, 2000. The
Form 8-K, as amended, includes audited financial statements of Bellville
Tube Corporation and unaudited pro forma financial statements of Lone Star
reflecting the acquisition by Lone Star of the Bellville assets.
- Current Report on Form 8-K filed July 11, 2000 (date of event July 11,
2000).
- Current Report on Form 8-K filed July 18, 2000 (date of event July 17,
2000).
- Current Report on Form 8-K filed July 28, 2000 (date of event July 27,
2000).
- Current Report on Form 8-K filed August 4, 2000 (date of event August 4,
2000).
- Current Report on Form 8-K filed September 5, 2000 (date of event
August 29, 2000).
- Current Report on Form 8-K filed October 18, 2000 (date of event
October 16, 2000).
- Current Report on Form 8-K filed October 20, 2000 (date of event
October 18, 2000).
- Current Report on Form 8-K filed October 20, 2000 (date of event
October 19, 2000).
- Registration Statement on Form 8-A filed April 9, 1997 containing a
description of the Lone Star common stock.
You may request a copy of these filings at no cost by writing or telephoning
us at the following address:
Lone Star Technologies, Inc.
P.O. Box 803546
Dallas, Texas 75380
Attention: Sharon Goodrich
(972) 770-6401
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document that also is
or is deemed to be incorporated by reference in this prospectus modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the documents we
have incorporated by reference contain forward-looking statements. The words
"believe," "expect"
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"estimate" and "anticipate" and similar expressions identify forward-looking
statements. Forward-looking statements include those that address activities,
events or developments that we expect or anticipate will or may occur in the
future. These forward-looking statements include statements regarding our
financial position, business strategy and other plans and objectives for future
operations and any other statements which are not historical facts. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that the actual results or developments we
anticipate will be realized or, even if substantially realized, that they will
have the expected effects on our business or operations. Among the factors that
could cause actual results to differ materially from our expectations are the
following:
- natural gas and oil price volatility;
- domestic and foreign competition;
- steel price volatility;
- inventory fluctuations;
- our ability to successfully manage our business;
- fluctuations in industry-wide inventory levels;
- fluctuations in construction levels of gas-fired, combined cycle power
generation plants;
- general economic conditions;
- the presence or absence of governmentally imposed trade restrictions; and
- similar matters and other factors disclosed under "Risk Factors" and
elsewhere in this prospectus or in any prospectus supplement.
These factors expressly qualify all subsequent oral and written forward-looking
statements attributable to us or persons acting on our behalf.
A forward-looking statement may include a statement of the assumptions or
bases underlying the forward-looking statement. We believe we have chosen these
assumptions or bases in good faith and that they are reasonable. However, we
caution you that assumed facts or bases almost always vary from actual results,
and the differences between assumed facts or bases and actual results can be
material, depending on the circumstances. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus, any prospectus supplement and the documents we
have incorporated by reference. Except for our ongoing obligations to disclose
material information as required by the federal securities laws, we do not have
any intention or obligation to update forward-looking statements after we
distribute this prospectus and the applicable prospectus supplement.
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RISK FACTORS
BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS, ANY PROSPECTUS SUPPLEMENT AND THE DOCUMENTS WE HAVE INCORPORATED BY
REFERENCE INTO THIS DOCUMENT BEFORE PURCHASING OUR SECURITIES. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED AND YOU MAY LOSE ALL OF YOUR
INVESTMENT.
THE VOLATILITY OF OIL AND GAS MARKETS AFFECTS DEMAND FOR OUR PRINCIPAL PRODUCTS,
AND DOWNTURNS IN THESE MARKETS COULD CAUSE OUR REVENUES TO DECREASE.
The sale of casing, tubing and line pipe to the oil and gas industry
constitutes the most significant source of our revenues. The oil and gas
industry has historically been volatile. Downturns in the oil and gas markets
and general economic conditions could cause demand for our principal products to
decrease, which would adversely affect our revenues and results of operations.
Demand for our oilfield products depends primarily upon the number of oil
and natural gas wells being drilled, completed and re-worked and the depth and
drilling conditions of these wells. The level of these activities depends
primarily on natural gas and oil industry expectations as to future prices.
Natural gas and oil prices are subject to significant fluctuations in response
to relatively minor changes in supply, market uncertainty and a variety of
additional factors that are beyond our control. These factors include:
- worldwide and domestic supplies of and demand for oil and natural gas;
- the volatility of natural gas and oil prices;
- the instability of domestic and foreign natural gas and oil production;
- political instability or armed conflict in oil and gas producing regions;
- the price, fluctuation in inventories and level of imports of oil and gas
casing, tubing and line pipe;
- the level of consumer and industrial demand;
- the price and availability of alternative fuels;
- the availability of pipeline capacity;
- weather conditions;
- domestic and foreign governmental regulations, especially trade laws and
taxes; and
- the overall economic environment including the demand for electricity.
We expect natural gas and oil prices to continue to be volatile in the
future. We cannot predict future natural gas and oil price movements, and we
cannot give you any assurances as to the level of future demand for our
products.
THE COMPETITION FOR RAW MATERIALS WE USE IN OUR BUSINESS AND THE VOLATILITY OF
OUR RAW MATERIAL COSTS COULD ADVERSELY AFFECT OUR OPERATIONS.
Purchased steel represents approximately 50% of our cost of goods sold. The
price and availability of steel slabs, coils, scrap and wire rod that we use in
our manufacturing processes are highly competitive and volatile. Various
factors, most of which are beyond our control, affect the supply and price of
steel. These factors include:
- supply and demand factors;
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- freight costs and transportation availability;
- inventory levels of brokers and distributors;
- the price and availability of imported steel pipe and tubing;
- trade duties and taxes; and
- labor disputes.
Changes in steel prices can affect the pricing levels of our products. We
seek to maintain our profit margin by attempting to increase the price of our
products in response to an increase in steel costs. Frequently, increases in the
prices of our products do not fully compensate us for steel price increases and
generally lag behind increases in steel prices. As a result, we typically have a
limited ability to recover increases in steel costs. We cannot predict whether
the availability of steel slabs and coils will constrain our operations.
OUR ACQUISITION OF FINTUBE'S AND BELLVILLE'S BUSINESSES AND ANY OTHER
ACQUISITIONS MIGHT DISRUPT OUR BUSINESS IF OUR EXPECTATIONS ARE NOT MET OR IF WE
ARE UNABLE TO OPERATE ANY ACQUIRED BUSINESS SUCCESSFULLY.
In January 2000, we purchased the assets of Fintube Limited Partnership. We
have retained Fintube's personnel to conduct its business in generally the same
manner as it was conducted prior to the acquisition. We cannot assure you,
however, that we will be successful in maintaining this continuity or that our
plans regarding the operation of the acquired Fintube business or our existing
business will not change. Any disruptions in personnel or operations could be
compounded by our lack of familiarity with the finned tube business and could
result in quality problems, inefficiencies in production or dissatisfied or lost
customers. Similarly, we have retained Bellville Tube Corporation's personnel
since our completed acquisition of Bellville's assets in April 2000. Any loss of
key Bellville personnel could be disruptive to our business.
We may consider other strategic acquisitions from time to time. We can give
you no assurance that our acquisition activities will perform in accordance with
our expectations. We must necessarily base any assessment of potential
acquisitions on inexact and incomplete information and assumptions with respect
to operations, profitability and other matters that may prove to be incorrect.
We cannot assure you that our management would recognize the risks and
uncertainties associated with any future acquisitions or that we recognized all
the risks and uncertainties in the Fintube and Bellville acquisitions.
MARKET VOLATILITY AND DOWNTURNS OF INDUSTRIES WHICH USE OUR FINTUBE PRODUCTS FOR
HEAT RECOVERY APPLICATIONS COULD REDUCE DEMAND FOR THOSE PRODUCTS AND ADVERSELY
AFFECT OUR REVENUES.
Our Fintube subsidiary produces boiler tubes, finned tubes and other
products used in a variety of heat recovery applications, including power
generation, industrial plant processing and petrochemical businesses. Our
Fintube business is therefore dependent on power plant construction, the cost of
alternative fuels for power generation and other factors. To a lesser extent,
our Fintube business is dependent on industrial plant processing and
petrochemical plant construction. This construction activity and the
corresponding demand for our Fintube products are also related to natural gas
and oil prices and are therefore subject to the volatility of the oil and gas
market. Demand for these products fluctuates significantly in response to a
number of economic, market and other factors, most of which are beyond our
control. A decrease in demand for these products could adversely affect our
results of operations. Some of the factors affecting demand are:
- the level of consumer and industrial demand for electrical power
generation;
- instability and volatility of oil prices and domestic and foreign oil
production levels, which factors can affect investment in petrochemical
plants;
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- the price and level of imports of foreign products;
- worldwide and domestic supplies of natural gas;
- construction of new gas-fired power generation plants;
- the price and availability of alternative fuels;
- weather conditions;
- domestic and foreign governmental regulations and taxes; and
- the overall economic environment.
We cannot predict future economic and market movements, and we cannot give
you any assurances as to the level of future demand for our Fintube products.
CHANGES IN INDUSTRY MANUFACTURING CAPACITY AND FLUCTUATIONS IN INVENTORY OF OIL
AND GAS CASING AND TUBING PRODUCTS AND LINE PIPE COULD ADVERSELY AFFECT OUR
SALES.
Industry-wide inventory levels of tubular goods for the oil and gas industry
can vary significantly from period to period. Demand for oilfield tubular
products from the manufacturer could decline and is often volatile due to
inventory supply resulting from reduced end user purchases, new manufacturing
capacity and/or increased imports. Any oversupply of oilfield tubular products
would have a direct adverse effect on the demand for new production of our
oilfield tubular goods when customers draw from existing inventory rather than
purchase new products. Moreover, short term fluctuations in demand for oilfield
tubular products can occur due to the inability of distributors to buy these
products because of capital constraints, the desire of distributors to reduce
inventory to lessen the personal property taxes they must pay and other market
outlook considerations. As a result, our oil and gas casing and tubing sales
could decline, thereby adversely affecting our results of operations. Excessive
inventories could have a material adverse effect on price levels. We cannot
assure you that any new or excess domestic capacity will be substantially
absorbed during periods of increased domestic drilling activity since foreign
producers of oil and gas casing and tubing and line pipe may increase their
exports to the United States market.
EASING OF UNITED STATES GOVERNMENT IMPORT TRADE RESTRICTIONS COULD INCREASE
FOREIGN COMPETITION IN OUR INDUSTRY AND HARM OUR BUSINESS, PARTICULARLY IN THE
CASE OF OIL AND GAS CASING AND TUBING AND LINE PIPE.
The domestic steel industry historically has faced significant competition
from foreign steel producers. The level of imports of oil country tubular goods,
which has varied significantly over time, affects the domestic market for these
goods. High levels of imports reduce the volume sold by domestic producers and
tend to suppress selling prices, both of which have an adverse impact on our
business.
The level of imports of oil and gas casing and tubing and line pipe is
affected by:
- overall world demand for oil and gas casing and tubing and line pipe;
- inventory levels of casing, tubing and line pipe;
- the purchasing pattern of distributors and end users;
- domestic and foreign trade policy; and
- the relative value of the United States dollar.
Many foreign steel producers are owned, controlled or subsidized by their
governments and their decisions with respect to production and sales may be
influenced more by political and economic policy considerations than by
prevailing market conditions. Actions motivated by these factors could increase
competition and cause our sales to decrease.
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The United States government is currently imposing duties on the imports of
various oil and gas casing and tubing products from some foreign countries in
response to antidumping and countervailing duty cases filed by several domestic
steel companies. In February 2000, the United States government granted relief
to the line pipe industry under Section 201 of the Trade Act of 1974 by imposing
restrictions and tariffs on some welded line pipe imports for three years.
Antidumping and countervailing duty orders applicable to our industry are
limited to specific countries, are largely under appeal and may be revoked as a
result of periodic "sunset reviews." Additionally, an individual exporter may
retain revocation as to itself under specific circumstances. If those orders are
revoked in full or in part or the duty rates are lowered, we could be exposed to
increased competition from imports that could have a material adverse effect on
our business. The relief granted to the line pipe industry in February 2000
under Section 201 of the Trade Act of 1974 is also subject to appeal and review,
and a revocation of that relief could harm us.
We cannot predict the United States government's future actions regarding
import duties or other trade restrictions on imports of oil and gas casing and
tubing products or line pipe, or the impact of these actions on our sales of oil
and gas casing and tubing products or line pipe.
OUR PRECISION MECHANICAL TUBULARS AND OTHER BUSINESSES ARE SENSITIVE TO ECONOMIC
DOWNTURNS, WHICH COULD CAUSE OUR REVENUES TO DECREASE.
The demand for our precision mechanical tubulars, flat rolled steel and
other products is also cyclical in nature and is sensitive to general economic
conditions. We manufacture and sell high quality steel tubing in the form of
precision mechanical tubulars used by our customers in the manufacture of
products such as automotive stabilizers, hydraulic cylinders and cranes. The
demand for these products and, in turn, for our precision mechanical tubulars,
is cyclical and dependent on the general economy, the automotive and
construction industries and other factors affecting domestic goods activity. We
cannot assure you that our precision mechanical tubulars inventories will not
become excessive, which could have a material adverse effect on price levels and
the quantity of precision mechanical tubulars sold by us.
WE FACE SIGNIFICANT FOREIGN AND DOMESTIC COMPETITION IN OUR OIL AND GAS CASING
AND TUBING AND FINTUBE BUSINESSES, AND THIS COMPETITION MAY CAUSE US TO LOSE
SALES.
The market for our products, particularly with respect to oil and gas casing
and tubing, line pipe and finned tubes, is highly competitive. We believe that
the principal competitive factors affecting these products are quality,
availability, service and price. We compete with foreign and domestic producers,
including, in the case of oilfield products, manufacturers of seamless products.
Many of the foreign producers benefit from substantially greater assets and
resources than we have and from integrated or consolidated commercial
relationships. Our oil and gas casing and tubing and line pipe products are
subject to competition from domestic and foreign integrated and mini-mill
producers. Our Fintube products face competition from both domestic
manufacturers and from Pacific Rim and other international producers. These
companies may be better able than us to successfully endure downturns in either
the energy or industrial sectors. Currency fluctuations may make our products
less competitive.
In the welded oil and gas casing and tubing and line pipe market, we compete
against manufacturers that may be able to purchase or produce semi-finished
steel, hot rolled coils or scrap at a lower cost than we can. Our Lone Star
Steel subsidiary satisfies its raw material requirements and those of our
Bellville subsidiary by purchasing semi-finished steel, using purchased and
internally generated scrap to make hot rolled coils in its melt shop and hot
strip mill and purchasing coils. Correspondingly, our Fintube subsidiary must
also compete with manufacturers that may be able to purchase or produce coils
more cost-effectively than we can. We cannot assure you that we can satisfy our
subsidiaries' raw material requirements as cost-effectively as our competitors.
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WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS, AND WE MAY REQUIRE ADDITIONAL CAPITAL
IN THE FUTURE WHICH MIGHT NOT BE AVAILABLE TO US.
We operate in capital intensive businesses. We have made, and expect to
make, significant capital expenditures each year both for the recurring
maintenance necessary to keep manufacturing facilities operational and to comply
with environmental and other legal requirements. Additionally, we regularly make
significant capital expenditures for technological improvements and maintenance.
If funding is insufficient at any time in the future, we may be unable to
develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures.
WE HAVE UNDERFUNDED PENSION PLANS, WHICH COULD RESULT IN CLAIMS AGAINST OUR
ASSETS.
Our three defined benefit pension plans for our Lone Star Steel subsidiary's
bargaining unit employees are significantly underfunded. If the plans were
terminated under the distress termination provisions of the Employee Retirement
Income Security Act of 1974, as amended, or "ERISA," the Pension Benefit
Guaranty Corporation, or "PBGC," would have claims against our assets for the
amount necessary to satisfy the plans' unfunded benefit liabilities under the
PBGC's actuarial assumptions.
POTENTIAL CASUALTIES AND PRODUCT LIABILITY CLAIMS RELATING TO THE PRODUCTS WE
MANUFACTURE AND SELL TO THE OIL AND GAS INDUSTRY AND INDUSTRIES USING HEAT
RECOVERY APPLICATIONS COULD HARM OUR BUSINESS.
Our oil and gas casing, tubing and line pipe products are sold primarily for
use in oil and gas drilling and transmission activities, which are subject to
inherent risks, including well failures, line pipe leaks and fires, that could
result in death, personal injury, property damage, pollution or loss of
production. Any of these hazards and risks can result in the loss of
hydrocarbons, environmental pollution, personal injury claims and damage to
property. Correspondingly, defects in our specialty tubing products could result
in death, personal injury, property damage, pollution, damage to equipment and
facilities or inefficient heat recovery. We warrant our oilfield products and
specialty tubing and the alliance products we sell or distribute to be free of
various defects. Actual or claimed defects in our products may give rise to
claims against us for losses and expose us to claims for damages. We cannot
assure you that our insurance will be adequate or available to protect us in the
event of a claim or that the coverage will not be canceled or otherwise
terminated.
POLITICAL AND ECONOMIC CONDITIONS IN FOREIGN COUNTRIES IN WHICH WE OPERATE COULD
ADVERSELY AFFECT US.
Our Lone Star Steel subsidiary's direct foreign revenues as a percentage of
total revenues were approximately 6% in 1999, 8% in 1998 and 9% in 1997. Our
entry into the finned tube business has increased our foreign exposure, as our
Fintube subsidiary maintains manufacturing facilities in Canada and Mexico.
Before our Fintube acquisition, Fintube Limited Partnership had direct and
indirect sales relating to projects outside the United States of approximately
$5.1 million in 1999, $8.6 million in 1998 and $15.8 million in 1997. The
success of our sales to foreign markets depends on numerous factors, many of
which are beyond our control. These factors include economic conditions in the
foreign countries in which we sell our products and services. Our international
sales may also expose us to risks inherent in doing business outside the United
States, including currency fluctuations, restrictions on the repatriation of
profits and assets, compliance with foreign laws and standards and political
risks.
VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO OUR
BUSINESS MAY REQUIRE US TO TAKE ACTIONS WHICH WILL ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS.
Our business is subject to numerous United States and foreign federal,
state, provincial and local laws and regulations, including regulations with
respect to air emissions, wastewater discharges and the generation, handling,
storage, transportation, treatment and disposal of waste materials. Although we
believe we are in substantial compliance with all applicable laws and
regulations, legal requirements are frequently changed and subject to
interpretation, and we are unable to predict the ultimate cost of
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compliance with these requirements or their effect on our operations. We may be
required to make significant expenditures to comply with governmental laws and
regulations. We cannot be certain that existing laws or regulations, as
currently interpreted or reinterpreted in the future, or future laws or
regulations, will not have a material adverse effect on our results of
operations and financial condition.
OUR OPERATIONS ARE SUBJECT TO VARIOUS COLLECTIVE BARGAINING AGREEMENTS, AND WORK
STOPPAGES AND OTHER LABOR PROBLEMS COULD ADVERSELY AFFECT US.
Our subsidiaries are subject to six collective bargaining agreements with
five unions. The majority of our union workers are employees of our Lone Star
Steel subsidiary represented by the United Steelworkers of America. Two of the
other agreements cover substantially all of Lone Star Steel's warehouse and
plant security workers. The remaining three collective bargaining agreements
cover employees of our Fintube subsidiary in Canada and Mexico. These agreements
generally cover wages, health care benefits and retirement plans, seniority, job
classes and work rules. We can give you no assurance that these collective
bargaining agreements will be renewed upon expiration or that new collective
bargaining agreements on terms acceptable to us will be established.
OUR SIGNIFICANT STOCKHOLDERS CONTROL A SUBSTANTIAL PORTION OF OUR OUTSTANDING
COMMON STOCK.
We believe that a significant stockholder group collectively owns almost
one-half of our common stock prior to any sale of shares pursuant to this
prospectus and any sales of common stock by us. Accordingly, these stockholders,
as a group, will be able to significantly influence the outcome of stockholder
votes, including votes concerning the election of directors, the adoption or
amendment of provisions in our certificate of incorporation or bylaws, and the
approval of mergers and other significant corporate transactions. Historically,
this significant stockholder group has generally not affirmatively acted to
control or impact our management. We cannot assure you, however, that this
stockholder group will continue to act in the same manner in the future. One of
the eight members of our Board of Directors serves on our Board at the request
of this significant stockholder group. The existence of these levels of
ownership concentrated in a few persons makes it less likely that any other
holder of common stock will be able to affect our management or direction. These
factors may also have the effect of delaying or preventing a change in our
management or voting control or our acquisition by a third party. In addition,
this group's ownership following this offering may reduce the trading volume.
WE COULD LOSE OUR FEDERAL TAX NET OPERATING LOSS CARRYFORWARDS IF WE, OR THE
CONSOLIDATED GROUP WITH WHOM WE FILE TAX RETURNS, EXPERIENCES AN OWNERSHIP
CHANGE OF MORE THAN 50 PERCENTAGE POINTS.
We had federal income tax net operating loss carryforwards of approximately
$261.6 million at December 31, 1999 that, if not utilized to reduce our taxable
income, will expire between years 2003 and 2014. Our ability to use these net
operating loss carryforwards to reduce taxable income is dependent upon either
us, or the consolidated group with whom we file our tax returns, not
experiencing an ownership change of more than 50 percentage points under rules
contained in the Internal Revenue Code. Since our common stock is publicly
traded, there is no assurance that future trading or other sales of our stock
will not result in an ownership change that could limit the availability of our
net operating loss carryforwards. In addition, a portion of our net operating
loss carryforwards relates to our former subsidiary, American Federal Bank,
F.S.B., and is subject to an agreement with the Federal Deposit Insurance
Corporation under which we may be required to pay that government agency for
certain tax benefits relating to the use of the net operating loss
carryforwards.
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THERE MAY BE ADDITIONAL RISK FACTORS IN THE FUTURE.
Please see the prospectus supplement and our filings with the SEC
incorporated herein for additional risk factors that may be applicable to a
particular class or issuance of securities or to us in the future.
USE OF PROCEEDS
Unless otherwise provided in a prospectus supplement, we will use the net
proceeds of the sale of securities described in this prospectus and in any
prospectus supplement to repay existing debt, to acquire other businesses, to
fund development of new products, to fund capital expenditures and to provide
funds for general corporate purposes.
The exact amount of net proceeds to be used and the timing of their use will
be applied to corporate purposes will depend on a number of factors, including
market conditions, our funding requirements and the availability of alternative
funding sources. We will disclose in a prospectus supplement any future proposal
to use net proceeds from an offering of our securities to finance a specific
purpose, if applicable.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 80 million shares of common stock,
$1.00 par value per share, and 10 million shares of preferred stock, $1.00 par
value per share.
The following summary of the terms and provisions of our capital stock does
not purport to be complete, and is qualified in its entirety by reference to our
certificate of incorporation and bylaws, which we incorporated by reference as
exhibits to the registration statement, of which this prospectus is a part, and
applicable law.
COMMON STOCK
We are authorized to issue up to 80 million shares of common stock, par
value $1.00 per share. The holders of our common stock are entitled to one vote
for each share held of record on all matters to be voted upon by the
stockholders. The holders of our common stock are entitled to participate
equally in dividends, if any, declared by our Board of Directors out of legally
available funds, and in the distribution of assets in the event of liquidation.
However, the payment of any dividends and the distribution of assets to holders
of our common stock will be subject to any prior rights of any outstanding
shares of our preferred stock. We have never paid cash dividends on our common
stock. The holders of our common stock have no preemptive, conversion or other
rights to subscribe for additional shares of our stock. There are no redemption
rights or sinking fund provisions applicable to our common stock. All
outstanding shares of common stock are, and all shares of common stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and nonassessable.
PREFERRED STOCK
Our Board of Directors is authorized, without further action by the
stockholders, to issue up to 10 million shares of preferred stock and to
establish, without stockholder approval, one or more classes or series of Lone
Star preferred stock having the number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences, and
limitations that our Board of Directors may designate. No shares of our
preferred stock are issued or outstanding. The issuance of our preferred stock
could adversely affect the voting power of holders of our common stock and
restrict their rights to receive payments upon our liquidation. It could also
have the effect of delaying, deferring or preventing a change in control of Lone
Star. We have no present plan to issue any shares of preferred stock.
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DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
BOARD OF DIRECTORS. Our certificate of incorporation provides that our
Board of Directors will set the number of members of our Board by resolution and
that our Board will be divided into three classes, each class to be as nearly
equal in number of directors as possible. In addition, under our certificate of
incorporation, directors may be removed only for cause by the affirmative vote
of 80% of the then-outstanding shares of our capital stock entitled to vote.
Thus, the holder or holders of as little as one share more than 20% of the
voting power may veto the removal of any director. Our certificate of
incorporation also provides that vacancies on our Board of Directors will be
filled by the affirmative vote of a majority of the remaining directors, even if
less than a quorum, and that the newly elected director serves for the unexpired
term of his or her predecessor. The likely effect of the classified board and
limitations on the removal of directors and filling of vacancies is an increase
in the time required for the stockholders to change the composition of our Board
of Directors. These classification provisions are subject to the rights of
holders of preferred stock which may be established by our Board of Directors
pursuant to our certificate of incorporation in order to permit the holders of
preferred stock to elect directors under specified circumstances relating to the
payment of dividends by, and the liquidation of, Lone Star.
Our bylaws provide that nominations for the election of directors may be
made by the Board of Directors, by a proxy committee appointed by the Board or
by any stockholder entitled to vote in the election of directors. Under our
bylaws, stockholders intending to nominate director candidates for election must
give proper advance notice to the secretary of Lone Star. The chairman of any
stockholder meeting may refuse to acknowledge the nomination of any person not
nominated in compliance with the procedure established in the bylaws. Although
this does not give the Board of Directors any power to approve or disapprove
stockholder nominations for election of directors, it may have the effect of
precluding a contest for the election of directors if these procedures are not
followed.
STOCKHOLDER MEETINGS. Our certificate of incorporation provides that any
action required or permitted to be taken by our stockholders at an annual
meeting or special meeting of stockholders may not be taken by written consent.
Our certificate of incorporation further provides that special meetings of the
stockholders may be called only by the Chairman of the Board of Directors or by
a majority of the Board of Directors. The foregoing provisions could have the
effect of delaying until the next stockholders' meeting stockholder actions that
are favored by the holders of a majority of the outstanding voting securities of
Lone Star.
SPECIAL VOTE REQUIRED FOR BUSINESS COMBINATIONS. We are subject to the
provisions of Section 203 of the Delaware General Corporation Law, an
anti-takeover law, and provisions in our certificate of incorporation which
relate to transactions with interested stockholders. Subject to certain
exceptions, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. For purpose of Section 203, a "business combination"
includes mergers, asset sales having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation, and other transactions resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
generally a person who, together with affiliates and associates, owns (or within
three years prior to the date of determination of whether the person is an
"interested stockholder" did own) 15% or more of the corporation's outstanding
voting stock.
Our certificate of incorporation contains additional provisions relating to
business combinations that supplement Section 203 and prohibits us from engaging
in a "business combination" with an "interested stockholder" for a period of two
years after the date of the transaction in which the person
A-13
<PAGE>
became an interested stockholder, unless the business combination is approved in
a prescribed manner. As defined in our certificate of incorporation, a "business
combination" includes:
- mergers;
- assets sales and other transactions having an aggregate fair market value
of $100 million or more;
- the adoption of any plan or proposal for the liquidation or dissolution of
Lone Star proposed by any "interested stockholder" or an affiliate of any
"interested stockholder"; and
- any reclassification of securities or other transaction that has the
effect of increasing the proportionate share of the outstanding shares of
any class of equity or convertible securities of Lone Star or any
subsidiary which is directly or indirectly owned by any "interested
stockholder" or any affiliate of any "interested stockholder."
As defined in our certificate of incorporation, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within the prior
two years did own, 20% or more of our outstanding voting stock or who is an
assignee of any shares which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any "interested
stockholder," if the assignment did not involve a public offering within the
meaning of the Securities Act of 1933, as amended.
AMENDING OUR CERTIFICATE OF INCORPORATION AND BYLAWS. The Delaware General
Corporation Law provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws unless the certificate of incorporation
or bylaws, as the case may be, requires a greater percentage. The majority
stockholder vote would be in addition to any separate class vote that might be
required by the terms of any series of preferred stock that might be outstanding
at the time any amendments are submitted to stockholders. Many of the provisions
in our certificate of incorporation require the affirmative vote of 80% or more
of the then-outstanding shares of our capital stock for their amendment.
A-14
<PAGE>
PLAN OF DISTRIBUTION
We intend to enter into a sales agreement with a sales manager to be named
in a prospectus supplement (the "Sales Manager") under which we may issue and
sell up to 1,100,000 shares of common stock from time to time through the Sales
Manager. The form of the sales agreement will be an exhibit to the registration
statement of which this prospectus is a part and will be incorporated by
reference into this prospectus. The sales, if any, of common stock made under
the sales agreement will be made only by means of ordinary brokers' transactions
on the New York Stock Exchange. The specific terms of our agreement with Sales
Manager will be set forth in a prospectus supplement.
We expect the Sales Manager will sell the shares of common stock subject to
the sales agreement from time to time as agreed upon by us and Sales Manager. We
will designate the maximum amount of shares of common stock to be sold by Sales
Manager daily as reasonably agreed to by Sales Manager. Subject to the terms and
conditions of the sales agreement, Sales Manager will use its best efforts to
sell all of the designated shares of common stock. We may instruct Sales Manager
not to sell shares of common stock if the sales cannot be effected at or above
the price designated by our company in any such instruction. Sales Manager will
not be obligated to attempt to sell shares if the market price is below the
designated price. We or Sales Manager may suspend the offering of shares of
common stock upon proper notice and subject to other conditions.
The compensation to Sales Manager for sales of common stock will equal a
commission rate as specified in a prospectus supplement. The remaining sales
proceeds, after deducting any transaction fees imposed by any governmental or
self-regulatory organization in connection with the sales, will equal our net
proceeds for the sale of the shares.
Settlement for sales of common stock is expected to occur on the third
business day following the date on which any sales are made in return for
payment of the net proceeds to us. There is expected to be no arrangement for
funds to be received in an escrow, trust or similar arrangement. Sales Manager
is expected to act as sales manager on a best efforts basis.
In connection with the sale of common stock on our behalf, Sales Manager may
be deemed to be an "underwriter" within the meaning of the Securities Act, and
compensation of Sales Manager may be deemed to be underwriting commissions or
discounts. We expect to provide indemnification and contribution to Sales
Manager against certain civil liabilities, including liabilities under the
Securities Act. Sales Manager may engage in transactions with, or perform
services for, our company in the ordinary course of business.
The offering of common stock pursuant to the sales agreement is expected to
terminate upon the earlier of (i) the sale of all shares of common stock subject
to the sales agreement or (ii) termination of the sales agreement.
The place and time of delivery for the securities in respect of which this
prospectus is delivered will be set forth in the applicable prospectus
supplement.
LEGAL MATTERS
Unless otherwise specified in a prospectus supplement relating to the
securities, certain legal matters in connection with the securities will be
passed upon for us by Fulbright & Jaworski L.L.P., Dallas, Texas. Any
underwriters will be advised about issues relating to any offering by their
legal counsel to be named in the appropriate prospectus supplement.
EXPERTS
The audited consolidated financial statements and schedules of Lone Star and
Fintube incorporated by reference in this prospectus and elsewhere in the
registration statement to the extent
A-15
<PAGE>
and for the periods indicated in their reports have been audited by Arthur
Andersen LLP, independent public accountants, and are incorporated by reference
in this prospectus in reliance upon the authority of that firm as experts in
giving those reports.
The audited financial statements of Bellville Tube Corporation incorporated
by reference in this prospectus and elsewhere in the registration statement to
the extent and for the periods indicated in their reports have been audited by
Harper & Pearson Company, independent public accountants, and are incorporated
by reference in this prospectus in reliance upon the authority of that firm as
experts in giving those reports.
A-16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Except for the SEC registration fee, all expenses are estimated. All such
expenses will be paid by the registrant.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 78,649
Stock exchange listing fees................................. $ 17,500*
Accounting fees and expenses................................ $ 100,000*
Legal fees and expenses..................................... $ 165,000*
Printing and engraving expense.............................. $ 230,000*
Fees and expenses of trustee and counsel.................... $ 15,000*
Fees of rating agencies..................................... $ 70,000*
Miscellaneous............................................... $ 19,851*
---------
Total..................................................... $ 695,000*
=========
</TABLE>
------------------------
* Estimated solely for the purposes of this Item. Actual expenses may be more
or less, depending on the nature of the offering and the type of security
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with Section 102(b)(7) of the Delaware General Corporation Law
("DGCL"), registrant's Certificate of Incorporation includes a provision that,
to the fullest extent permitted by law, limits the personal liability of members
of its Board of Directors to registrant or its stockholders for monetary damages
for breach of fiduciary duty as a director to a total of $25,000. Such provision
does not eliminate or limit the liability of a director for (1) any breach of a
director's duty of loyalty to registrant or its stockholders, (2) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of a law, (3) paying an unlawful dividend or approving an illegal
stock repurchase (as provided in Section 174 of the DGCL) or (4) any transaction
from which the director derived an improper personal benefit.
Under Section 145 of the DGCL, the registrant has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. Depending on the character of the proceeding, a corporation
may indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful.
In the case of an action by or in the right of the registrant, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the registrant unless
and only to the extent that the court of chancery or the court in which such
action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 of the DGCL further
provides that to the extent a director or officer of the registrant has been
successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue
II-1
<PAGE>
or matter therein, that person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred in connection therewith.
The registrant also has the power to purchase and maintain insurance on
behalf of any person covering any liability incurred in that person's capacity
as a director, officer, employee or agent of the corporation, or arising out of
that person's status as such, whether or not the corporation would have the
power to indemnify against the liability.
The certificate of incorporation and bylaws provide that the registrant will
indemnify its officers and directors and former officers and directors against
any expenses, liability or loss reasonably incurred or suffered by such persons
as a result of having acted as an officer or director of the registrant, or, at
the request of the Registrant, as an officer, director, agent or employee of
another business entity. The certificate of incorporation and bylaws further
provide that the registrant may, by action of its Board of Directors, provide
indemnification to employees and agents of the registrant with the same scope
and effect as the indemnification of directors and officers.
ITEM 16. EXHIBITS.
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this registration statement.
ITEM 17. UNDERTAKINGS.
(A) RULE 415 OFFERING
Each undersigned registrant does hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which has been registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to the information in the registration
statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities
II-2
<PAGE>
offered therein and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
(B) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
Each undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's Annual Report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(H) REQUEST FOR ACCELERATION OF EFFECTIVE DATE.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 15 above,
or otherwise, each registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
(I) REGISTRATION STATEMENT PERMITTED BY RULE 430A.
Each undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as
amended, shall be deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
(J) QUALIFICATION OF TRUST INDENTURES UNDER THE TRUST INDENTURE ACT OF 1939
FOR DELAYED OFFERINGS.
The registrant hereby undertakes to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the Trust
Indenture Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on October 20, 2000.
<TABLE>
<S> <C> <C>
LONE STAR TECHNOLOGIES, INC.
(REGISTRANT)
By: /s/ RHYS J. BEST
-----------------------------------------
Rhys J. Best
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
Chairman of the Board, Chief
/s/ RHYS J. BEST Executive Officer and
------------------------------------------- President (principal October 20, 2000
Rhys J. Best executive officer) and
Director
Vice President-Finance and
/s/ CHARLES J. KESZLER Treasurer (principal
------------------------------------------- financial and accounting October 20, 2000
Charles J. Keszler officer)
/s/ CHARLES L. BLACKBURN*
------------------------------------------- Director October 20, 2000
Charles L. Blackburn
/s/ FREDERICK B. HEGI, JR.*
------------------------------------------- Director October 20, 2000
Frederick B. Hegi, Jr.
/s/ JAMES E. MCCORMICK*
------------------------------------------- Director October 20, 2000
James E. McCormick
/s/ M. JOSEPH MCHUGH*
------------------------------------------- Director October 20, 2000
M. Joseph McHugh
/s/ THOMAS M. MERCER, JR.*
------------------------------------------- Director October 20, 2000
Thomas M. Mercer, Jr.
/s/ ALFRED M. MICALLEF*
------------------------------------------- Director October 20, 2000
Alfred M. Micallef
/s/ JERRY E. RYAN*
------------------------------------------- Director October 20, 2000
Jerry E. Ryan
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ RHYS J. BEST
--------------------------------------
Rhys J. Best
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on October 20, 2000.
<TABLE>
<S> <C> <C>
FINTUBE TECHNOLOGIES, INC.
(REGISTRANT)
By: /s/ LARRY J. SIMS
-----------------------------------------
Larry J. Sims
CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Rhys J.
Best and Larry J. Sims, and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign on his behalf individually and in each capacity
stated below any amendment, including post-effective amendments, to this
registration statement under the Securities Act of 1933, as amended, and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on October 20, 2000.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ RHYS J. BEST
------------------------------------------- Chairman of the Board and October 20, 2000
Rhys J. Best Director
/s/ LARRY J. SIMS Chief Executive Officer and
------------------------------------------- President (principal October 20, 2000
Larry J. Sims executive officer)
Vice President-Finance and
/s/ PARKER STRICKLAND Treasurer (principal
------------------------------------------- financial and accounting October 20, 2000
Parker Strickland officer)
/s/ CHARLES J. KESZLER
------------------------------------------- Director October 20, 2000
Charles J. Keszler
/s/ ROBERT F. SPEARS
------------------------------------------- Director October 20, 2000
Robert F. Spears
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on October 20, 2000.
<TABLE>
<S> <C> <C>
LONE STAR STEEL COMPANY
(REGISTRANT)
By: /s/ W. BYRON DUNN
-----------------------------------------
W. Byron Dunn
CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Rhys J.
Best and W. Byron Dunn, and each of them (with full power to each of them to act
alone), his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign on his behalf individually and in each capacity
stated below any amendment, including post-effective amendments, to this
registration statement under the Securities Act of 1933, as amended, and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas, on October 20, 2000.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ RHYS J. BEST
------------------------------------------- Chairman of the Board and October 20, 2000
Rhys J. Best Director
Chief Executive Officer and
/s/ W. BYRON DUNN President (principal
------------------------------------------- executive officer) and October 20, 2000
W. Byron Dunn Director
/s/ CHARLES J. KESZLER Vice President and Treasurer
------------------------------------------- (principal financial and October 20, 2000
Charles J. Keszler accounting officer)
/s/ W.S. FOWLER
------------------------------------------- Director October 20, 2000
W.S. Fowler
/s/ JOHN G. SHIVERS
------------------------------------------- Director October 20, 2000
John G. Shivers
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
--------------------- ------------------------------------------------------------
<C> <S>
**1.1 Form of Underwriting Agreement (Debt Securities).
**1.2 Form of Underwriting Agreement (Preferred Stock).
**1.3 Form of Underwriting Agreement (Common Stock).
**1.4 Form of Underwriting Agreement (Warrants).
2.1 Agreement and Plan of Merger dated March 6, 1986, among Lone
Star Steel Company, a Texas corporation, Lone Star
Technologies, Inc., a Delaware corporation, and Lone Star
Steel Company Merging Corporation, a Delaware corporation
(incorporated by reference to Exhibit II to Form S-4
Registration Statement of Lone Star as filed on April 4,
1986, File No. 33-4581).
4.1 Certificate of Incorporation of Registrant (incorporated by
reference to Exhibit 3(a) to Form S-4 Registration Statement
of Lone Star as filed on April 4, 1986, File No. 33-4581).
4.2 Certificate of Amendment to Certificate of Incorporation
dated September 30, 1986 (incorporated by reference to
Exhibit 3.2 to Form S-3 Registration Statement of Lone Star
as filed on February 4, 2000, File No. 333-96207).
4.3 Certificate of Amendment to Certificate of Incorporation
dated May 20, 1998 (incorporated by reference to
Exhibit 3.3 to Form 10-Q of Lone Star for the quarter ended
June 30, 1998).
4.4 By-Laws as adopted March 6, 1986, as amended by amendments
effective September 30, 1986 and March 15, 1990
(incorporated by reference to Exhibit 3.5 to Form S-3
Registration Statement of Lone Star as filed on February 4,
2000, File No. 333-96207).
4.5 Stock Registration Agreement dated January 1, 2000 among
Lone Star Technologies, Inc., Fintube Limited Partnership,
Yorktown Energy Partners, Brown University Third Century
Fund, Warburg, Dillon, Reed, L.L.C. and Ticonderoga Partners
and the stockholders named therein (incorporated by
reference to Exhibit 4.1 to Form S-3 Registration Statement
of Lone Star as filed on February 4, 2000, File
No. 333-96207).
*4.6 Letter Agreement dated October 19, 2000 by Alpine
Capital, L.P., Keystone, Inc. and The Anne T. and Robert M.
Bass Foundation to Lone Star Technologies, Inc.
**4.7 Form of Senior Indenture.
**4.8 Form of Subordinated Indenture.
**4.9 Form of Warrant Agreement.
**4.10 Form of Depositary Agreement.
**4.11 Form of Depositary Receipt.
**5.1 Opinion of Fulbright & Jaworski L.L.P.
*12.1 Statement Regarding Computation of Ratios.
**23.1 Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Arthur Andersen LLP.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
--------------------- ------------------------------------------------------------
<C> <S>
*23.4 Consent of Harper & Pearson Company.
***24.1 Power of Attorney (a power of attorney pursuant to which
amendments to this registration statement may be filed is
included on the signature pages hereof).
*24.2 Powers of Attorney (powers of attorney pursuant to which
amendments to this registration statement may be filed are
included on the signature pages hereof).
**25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of the trustee under the
Senior Indenture.
**25.2 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of the trustee under the
Subordinated Indenture.
</TABLE>
------------------------
* Filed herewith
** To be filed by amendment or in a Current Report filed on Form 8-K.
*** Previously filed on July 11, 2000.
