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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K/A
Amendment No. 1
to
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 21, 1997 (Date of Earliest
Event Reported: December 11, 1996)
EL PASO ENERGY CREDIT CORPORATION
(Formerly Tenneco Credit Corporation)
(Exact Name of Registrant as Specified in the Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-15095 76-0010368
(Commission File Number) (I.R.S. Employer Identification No.)
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
(713) 757-2131
(Registrant's Telephone Number, Including Area Code)
Tenneco Credit Corporation
1275 King Street
Greenwich, Connecticut 06831
(Former name or former address,
if changed since last report)
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Items 1 and 2. Changes in Control of Registrant; Acquisition or
Disposition of Assets
On December 12, 1996, Tenneco Credit Corporation (the "Company"), an
indirect wholly owned subsidiary of Tenneco Inc. ("Parent Company"), became an
indirect subsidiary of El Paso Natural Gas Company ("El Paso") as a result of
the Merger described below involving Parent Company and an indirect subsidiary
of El Paso. References herein to "Old Tenneco" refer to Parent Company prior to
the Distributions and Merger described below and references to "El Paso
Tennessee" refer to Parent Company following the Distributions and Merger. In
the Merger, Old Tenneco (i.e., Tenneco Inc.) changed its name to "El Paso
Tennessee Pipeline Co." The Company remains an indirect wholly owned subsidiary
of El Paso Tennessee and, as a result of the Merger, became an indirect
subsidiary of El Paso. On December 16, 1996, the Company changed its name to "El
Paso Energy Credit Corporation."
On December 12, 1996, El Paso Merger Company, an indirect subsidiary of
El Paso ("El Paso Merger Sub"), merged with and into Old Tenneco (the "Merger"),
which became an indirect subsidiary of El Paso. The Merger was effected in
accordance with the Amended and Restated Agreement and Plan of Merger, dated as
of June 19, 1996 (the "Merger Agreement"), among El Paso Merger Sub, El Paso and
Old Tenneco, which Merger Agreement is filed as an exhibit to this Current
Report on Form 8-K and incorporated herein by reference. In addition, El Paso
and New Tenneco Inc. ("New Tenneco") entered into a Letter Agreement, dated
December 11, 1996, relating to the Merger, which Letter Agreement is filed as an
exhibit to this Current Report on Form 8-K and incorporated herein by reference.
Prior to the Merger, Old Tenneco and its subsidiaries (including the Company)
effected various intercompany transfers and distributions which restructured,
divided and separated their businesses, assets and liabilities so that all the
assets, liabilities and operations related to their automotive parts, packaging
and administrative services businesses (collectively, the "Industrial Business")
and their shipbuilding business (the "Shipbuilding Business") were spun-off to
Old Tenneco's then existing common stockholders (the "Distributions"). The
Distributions were effected on December 11, 1996 pursuant to the Distribution
Agreement dated as of November 1, 1996 (as amended, the "Distribution
Agreement"), among Old Tenneco, New Tenneco and Newport News Shipbuilding Inc.
("Newport News"), which Distribution Agreement is filed as an exhibit to this
Current Report on Form 8-K and incorporated herein by reference. Following the
Distributions, the remaining operations of Old Tenneco consisted primarily of
those operations related to the transmission and marketing of natural gas.
The consideration paid by El Paso in the Merger consisted of:
o the retention after the Merger of approximately $2.6 billion of
debt and preferred stock obligations of Old Tenneco, subject to
certain adjustments (which obligations consisted, in part, of
(1) approximately $200 million of public debt of Old Tenneco
outstanding at the effective time of the Merger, (2) $2.1 billion
of debt of Old Tenneco outstanding at the effective time of the
Merger under a $3 billion Revolving Credit and Competitive Advance
Facility Agreement, dated as of November 4, 1996 (the "Credit
Agreement"), among Old Tenneco, the banks and other financial
institutions party thereto and The Chase Manhattan Bank, as agent,
and (3) $300 million of Old Tenneco preferred stock);
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o the issuance of 18.8 million shares of common stock of El Paso
valued at approximately $914 million, based on a closing price
per share of common stock on the New York Stock Exchange of
$48.625 on December 9, 1996, to the holders of Old Tenneco's
common stock and two series of its preferred stock; and
o the retention of liabilities related to certain discontinued
businesses of Old Tenneco which El Paso estimated to be
approximately $600 million.
The number of shares of El Paso's common stock issued in the Merger to
stockholders of Old Tenneco was determined pursuant to formulas set forth in
the Merger Agreement. In the Merger, (i) a holder of Old Tenneco's common stock
received .093 of a share of El Paso's common stock for each share of Old Tenneco
common stock, (ii) a holder of Old Tenneco's $7.40 Cumulative Preferred Stock
received 2.365 shares of El Paso's common stock for each such share of $7.40
Cumulative Preferred Stock, and (iii) a holder of Old Tenneco's $4.50
Cumulative Preferred Stock received 2.365 shares of El Paso's common stock for
each such share of $4.50 Cumulative Preferred Stock.
As a result of the Merger, El Paso indirectly owns 100% of the common
equity and approximately 75% of the combined equity value of El Paso
Tennessee. Currently, approximately $300 million of preferred stock issued in
a public offering by Old Tenneco on November 18, 1996 remains outstanding. The
holders of such preferred stock have the right to elect one-sixth of the board
of directors of El Paso Tennessee.
The reorganization of Old Tenneco, including the Merger and the
Distributions, was approved by the stockholders of Old Tenneco at a special
meeting of stockholders on December 10, 1996. The issuance of common stock of
El Paso in the Merger was approved by the stockholders of El Paso at a special
meeting of stockholders on December 9, 1996.
El Paso currently is engaged in a comprehensive review of the business
and operations of El Paso Tennessee and its subsidiaries (collectively,
"Tenneco Energy"). Following the completion of such review, El Paso intends to
integrate, for the most part, the operations of Tenneco Energy with those of El
Paso to increase operating and administrative efficiency through consolidation
and reengineering of facilities, workforce reductions and coordination of
purchasing, sales and marketing activities. El Paso anticipates that the
complementary interstate and intrastate pipeline operations and gas marketing
activities of El Paso and Tenneco Energy should provide the combined company
with increased operating flexibility and access to additional customers and
markets. As previously disclosed, El Paso is in the process of monetizing
certain assets of Tenneco Energy through asset sales and non-recourse project
financings. In December 1996 El Paso received approximately $400 million in
proceeds from the sale of a 70% interest in Tenneco Energy's two Australian
pipelines and a related debt financing. It also has completed the sale of its
oil and gas exploration, production and financing unit, formerly known as
Tenneco Ventures, in a $105 million transaction. The net proceeds from these
monetization transactions were used to repay outstanding borrowings under the
Credit Agreement. El Paso is also pursuing the monetization of other assets.
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The directors and executive officers of the Company prior to the Merger
resigned as of the effective time of the Merger. The following persons are
presently serving as directors and executive officers of the Company in the
capacities indicated:
NAME POSITION
---- --------
William A. Wise . . . . . . . . . Chairman of the Board, President,
Chief Executive Officer and
Director
H. Brent Austin . . . . . . . . . Senior Vice President and Director
Joel Richards III . . . . . . . . Senior Vice President and Director
Britton White, Jr. . . . . . . . Senior Vice President and Director
Wayne B. Allred . . . . . . . . . Vice President and Treasurer
Jeffrey I. Beason . . . . . . . . Vice President and Controller
Stacy J. James. . . . . . . . . . Secretary
As part of the Corporate Restructuring Transactions (as defined in the
Distribution Agreement), the Company (i) liquidated certain retail farm and
construction equipment receivables held by it for proceeds equal to the net
book value of the receivables and subsequently distributed such proceeds to Old
Tenneco, and (ii) transferred certain trade accounts receivable of other
Old Tenneco subsidiaries, and certain other assets and liabilities, held by
the Company. These transactions are described in greater detail in Item 7(b) of
this Current Report on Form 8-K to which reference is made and such Item 7(b) is
incorporated by reference herein.
As described above, Old Tenneco entered into the Credit Agreement under
which a syndicate of banks and other financial institutions (the "Lenders")
committed to provide up to $3 billion of financing to Old Tenneco on an
unsecured basis. Chase Securities Inc. arranged the Credit Agreement and The
Chase Manhattan Bank is acting as agent for the Lenders. A list of the Lenders
is set forth on Exhibit 99 which is incorporated herein by reference. The
Credit Agreement consists of a 364-day revolving credit facility, with a
two-year term thereafter, the proceeds of which were used to effect the Debt
Realignment (as defined and as described in the Merger Agreement) and for other
general corporate purposes, and is guaranteed by El Paso. The borrowings under
the Credit Agreement will mature in November 1999. Borrowings under the Credit
Agreement bear interest at a rate per annum equal to, at the borrowers' option,
either
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(a) the highest of (i) the rate from time to time publicly
announced by The Chase Manhattan Bank in New York City as its prime
rate, and (ii) the federal funds effective rate from time to time plus
1/2 of 1%, or
(b) the average of the rates at which eurodollar deposits for
one, two, three or six months or, subject to availability to each
Lender, nine or 12 months (as selected by the borrowers) are offered
in the interbank eurodollar market in the approximate amount of the
relevant loan, plus the Applicable Margin.
The "Applicable Margin" will be based on El Paso's senior long-term debt
rating, as determined from time to time, or if El Paso's debt is not rated,
each rating agency will be assumed to have assigned its lowest rating. At
December 26, 1996, the outstanding loans under the Credit Agreement bore a
weighted average interest rate of 5.94% per annum.
The Credit Agreement requires that El Paso's ratio of total
indebtedness to total indebtedness plus net worth not exceed 70%. Failure to
satisfy the foregoing minimum requirement will be a default under the Credit
Agreement that will enable the Lenders to refuse to loan funds to El Paso
Tennessee and to accelerate the indebtedness thereunder. The Credit Agreement
also imposes prohibitions or limitations on liens (other than agreed permitted
liens), subsidiary indebtedness and guarantee obligations, and asset
dispositions (with certain permitted exceptions), among others. The Credit
Agreement contains certain default provisions, including, among other things,
(i) nonpayment of any amount due to the lenders under the Credit Agreement,
(ii) material breach of representations and warranties, (iii) default in the
performance of covenants, (iv) bankruptcy or insolvency, (v) cross-default with
respect to indebtedness for borrowed money and related guaranty obligations in
excess of $100 million, and (vi) a judgment suffered by El Paso in excess of
$50 million not covered by insurance and which judgment shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information:
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EL PASO ENERGY CREDIT CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Balance Sheet of the
Company as of September 30, 1996 and the Unaudited Pro Forma Consolidated
Statements of Income for the nine months ended September 30, 1996 and the year
ended December 31, 1995, have been prepared to reflect: (i) the effect on the
Company of the Debt Realignment; (ii) the liquidation of retail farm and
construction equipment receivables held by the Company for proceeds equal to the
net book value of the receivables and the subsequent distribution of such
proceeds to Old Tenneco; and (iii) the transfer of certain trade accounts
receivable of other Old Tenneco subsidiaries, and certain other assets and
liabilities, held by the Company as part of the Corporate Restructuring
Transactions. Subsequent to the transactions assumed in the Unaudited Pro Forma
Consolidated Financial Statements, the Company's operations, assets and
liabilities will be significantly reduced from historical levels, and its
assets, revenues and income will principally relate to certain interest-bearing
notes and advances receivable from affiliated El Paso Tennessee subsidiaries.
Certain pro forma adjustments represent the transfer of assets and
liabilities pursuant to the Corporate Restructuring Transactions from the
Company to other entities that were also subsidiaries of Old Tenneco. The
accounting for the transfer of assets and liabilities pursuant to the Corporate
Restructuring Transactions represents a reorganization of companies under
common control and, accordingly, all transfers of assets and liabilities are
reflected at historical cost.
The Unaudited Pro Forma Consolidated Balance Sheet has been prepared as
if such transactions occurred on September 30, 1996; the Unaudited Pro Forma
Consolidated Statements of Income have been prepared as if such transactions
occurred as of January 1, 1995. The Unaudited Pro Forma Consolidated Financial
Statements set forth on the following pages are unaudited and are not
necessarily indicative of the results that would have actually occurred if the
transactions had been consummated as of September 30, 1996, or January 1, 1995,
or results which may be attained in the future.
The pro forma adjustments, as described in the Notes to the Unaudited
Pro Forma Consolidated Financial Statements, are based upon available
information and upon certain assumptions that management believes are
reasonable. The Unaudited Pro Forma Consolidated Financial Statements should be
read in conjunction with the Company's consolidated financial statements, and
notes thereto. Unless otherwise defined herein, the capitalized terms herein
have the meanings assigned to such terms in the Merger Agreement.
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EL PASO ENERGY CREDIT CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(MILLIONS)
<TABLE>
<CAPTION>
CONSOLIDATED PRO FORMA CONSOLIDATED
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
Notes and accounts receivable purchased from affiliates, net . . $ 540 $(165)(a) $106
(269)(c)
Equipment under operating leases (at cost), net. . . . . . . . . 48 (48)(b) --
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . -- 269 (c) --
(269)(d)
Notes and advances receivable from affiliates, net . . . . . . . 412 163 (a) 821
(23)(e)
269 (d)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6 (b) 6
(2)(e)
------ ----- ----
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,002 $ (69) $933
====== ===== ====
LIABILITIES
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . $ 615 $(560)(e) $ 27
(28)(b)
Subordinated notes . . . . . . . . . . . . . . . . . . . . . . . 92 (85)(e) 7
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 16 (15)(e) 1
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 14 (14)(b) ----
Other current liabilities . . . . . . . . . . . . . . . . . . . 6 (2)(a) 4
------ ----- ----
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 743 (704) 39
------ ----- ----
STOCKHOLDER'S EQUITY
Common stock and other capital surplus . . . . . . . . . . . . . 188 635 (e) 823
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 71 71
------ ----- ----
259 635 894
------ ----- ----
Total liabilities and stockholder's equity . . . . . . . . . . . $1,002 $ (69) $933
====== ===== ====
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
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EL PASO ENERGY CREDIT CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(MILLIONS)
<TABLE>
<CAPTION>
Consolidated Pro Forma Consolidated
Historical Adjustments Pro Forma
------------ ----------- ------------
<S> <C> <C> <C>
Revenues and interest income ......................... $65 $(28)(f) $13
(20)(g)
(4)(h)
Interest income on notes and advances
from affiliates .................................... 9 18 (j) 27
Less:
Interest expense ................................... 54 (50)(i) 4
Depreciation and amortization ...................... 1 (1)(h) --
Operating and administrative ....................... 6 (6)(g) --
--- ---- ---
13 23 36
Other income--Gain on sale of receivables ............ 2 (1)(f) 1
--- ---- ---
Income before income taxes ........................... 15 22 37
Income taxes ......................................... 6 8 (k) 14
--- ---- ---
Net income ........................................... $ 9 $ 14 $23
=== ==== ===
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
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EL PASO ENERGY CREDIT CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(MILLIONS)
<TABLE>
<CAPTION>
CONSOLIDATED PRO FORMA CONSOLIDATED
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ------------
<S> <C> <C> <C>
Revenues and interest income . . . . . . . . . . . . . . $128 $(30)(f) $33
(59)(g)
(6)(h)
Interest income on notes and advances from affiliates . . 6 28 (j) 34
Less:
Interest expense . . . . . . . . . . . . . . . . . . . 86 (79)(i) 7
Depreciation and amortization . . . . . . . . . . . . . 2 (2)(h) --
Operating and administrative . . . . . . . . . . . . . 13 (12)(g) 1
---- ---- ---
33 26 59
Other income -- Gain (loss) on sale of receivables . . . (1) 2 (f) 1
---- ---- ---
Income before income taxes . . . . . . . . . . . . . . . 32 28 60
Income taxes . . . . . . . . . . . . . . . . . . . . . . 11 11 (k) 22
---- ---- ---
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 21 $ 17 $38
==== ==== ===
</TABLE>
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Note: The Company's historical and pro forma results of operations for the year
ended December 31, 1995 include $13 million (on a pre-tax basis) of
interest income earned on a note receivable held by the Company which was
sold in December 1995.
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
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EL PASO ENERGY CREDIT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) To reflect the transfer to Old Tenneco, and ultimately to New Tenneco,
of automotive parts and packaging trade accounts receivable previously
sold to the Company by other Old Tenneco subsidiaries in exchange for a
note receivable from Old Tenneco.
(b) To reflect the transfer to New Tenneco of the Company's ownership
interest, and the associated assets and liabilities, in Counce Limited
Partnership and Counce Finance Corporation (which were both direct or
indirect wholly-owned subsidiaries of the Company) in exchange for a
preferred stock ownership interest in a separate Tenneco subsidiary,
pursuant to the Corporate Restructuring Transactions.
(c) To reflect the liquidation of the retail farm and construction
equipment receivables held by the Company for proceeds assumed to equal
the net book value of such receivables.
(d) To reflect a cash distribution to Old Tenneco of the proceeds received
from the liquidation of the retail farm and construction equipment
receivables in exchange for a note receivable from Old Tenneco.
(e) To reflect the restructuring of the Company's debt pursuant to the Debt
Realignment, and the payment of accrued interest on the Company's debt
redeemed, defeased or tendered as part of the Debt Realignment.
Approximately $23 million of the Company's debt was defeased with
proceeds from an intercompany advance from Old Tenneco. The remainder of
the Company's debt was redeemed or tendered through a capital
contribution from Old Tenneco.
(f) To reflect the reversal of earned finance charges (interest income) and
gains or losses on the sales of receivables related to automotive parts
and packaging trade receivables transferred as part of the Corporate
Restructuring Transactions.
(g) To reflect the reversal of earned finance charges (interest income) and
certain operating costs related to retail farm and construction
equipment receivables which were liquidated by the Company.
(h) To reflect the reversal of rental revenues and depreciation and
amortization related to certain property owned by the Company which was
transferred to New Tenneco as part of the Corporate Restructuring
Transactions.
(i) To reflect the effect on interest expense of the reductions in the
Company's debt attributable to the Debt Realignment and the transfer of
certain other debt to New Tenneco pursuant to the Corporate
Restructuring Transactions.
(j) To reflect the additional interest income which would be earned by the
Company from the notes receivable from Old Tenneco received as part of
the Corporate Restructuring Transactions. See footnotes (a), (d) and (e)
above.
(k) To reflect the income tax expense effects of the pro forma adjustments
at an assumed effective tax rate of 39%.
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(c) Exhibits:
The following exhibits are incorporated herein by reference to
a prior filing as indicated.
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
June 19, 1996, among El Paso, El Paso Merger Company and Old Tenneco
(Exhibit 2.1 to El Paso Natural Gas Company's Form 8-K dated December
26, 1996, File No. 1-2700).
2.2 Distribution Agreement, dated as of November 1, 1996, among Old
Tenneco, New Tenneco Inc. and Newport News Shipbuilding Inc. (Exhibit
2.2 to El Paso Natural Gas Company's Form 8-K dated December 26, 1996,
File No. 1-2700).
2.3 Amendment No. 1 to Distribution Agreement, entered into as of
December 11, 1996, among Old Tenneco, New Tenneco and Newport News
(Exhibit 2.3 to El Paso Natural Gas Company's Form 8-K/A dated January
21, 1997, File No. 1-2700).
2.4 Letter Agreement, dated December 11, 1996, between El Paso and New
Tenneco Inc. (Exhibit 2.4 to El Paso Natural Gas Company's Form 8-K/A
dated January 21, 1997, File No. 1-2700).
99 List of Lenders under the Credit Agreement (Exhibit 99.1 to El Paso
Natural Gas Company's Form 8-K dated December 26, 1996, File No.
1-2700).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EL PASO ENERGY CREDIT CORPORATION
By /s/ H. BRENT AUSTIN
--------------------------
H. Brent Austin
Senior Vice President
Date: January 21, 1997
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