<PAGE> 1
PROSPECTUS SUPPLEMENT File No. 33-67556
(To Prospectus dated September 16, 1993) Rule 424(b)(2)
$25,000,000
(LOGO)
DIAMOND SHAMROCK, INC.
7 1/4% DEBENTURES DUE JUNE 15, 2010
---------------------
INTEREST PAYABLE JUNE 15 AND DECEMBER 15
---------------------
Interest on the 7 1/4% Debentures due June 15, 2010 (the "Debentures") will
be payable semiannually on June 15 and December 15 of each year, commencing
December 15, 1995. The Debentures may not be redeemed prior to maturity and are
not subject to any sinking fund. The Debentures will be represented by one or
more Global Securities (collectively the "Global Securities") registered in the
name of the nominee of The Depository Trust Company (the "Depositary").
Beneficial interests in the Global Securities will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary (in
respect of its participants) and by its participants. Except as described in the
Prospectus, Debentures will not be issued in definitive form. See "Description
of Debt Securities -- Global Securities" in the Prospectus.
The Debentures will constitute unsecured and unsubordinated indebtedness of
the Company and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture..................... 100% .70% 99.30%
- -------------------------------------------------------------------------------------------------
Total ............................ $25,000,000 $175,000 $24,825,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from June 8, 1995, to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended (the "Act").
(3) Before deducting expenses payable by the Company estimated at $75,000.
---------------------
The Debentures offered by this Prospectus Supplement are offered by the
Underwriter subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriter and
to certain further conditions. It is expected that delivery of the Debentures
will be made through the facilities of The Depository Trust Company on or about
June 8, 1995.
---------------------
NATWEST MARKETS
June 1, 1995
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is one of the leading independent refiners and marketers of
petroleum products in the southwestern United States. Its principal activities
consist of crude oil refining, wholesale marketing of petroleum products, and
retail marketing of petroleum products and other merchandise through branded
outlets. The Company's allied businesses include petrochemical processing and
marketing, distribution, and storage of natural gas liquids.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the three-month periods ended March 31, 1995 and 1994 and for
each of the years in the five-year period ended December 31, 1994. For purposes
of computing the ratio of earnings to fixed charges, earnings consist of income
before income taxes and fixed charges. Fixed charges consist of interest on
outstanding debt, amortization of debt issuance expense, and one-third of rental
payments on operating leases (such amount having been deemed by the Company to
represent the interest portion of such payments).
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
- --------------- ------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.5 2.4 3.2 2.0 1.7 2.1 3.5
</TABLE>
USE OF PROCEEDS
The aggregate net proceeds from the sale of the Debentures, estimated to be
approximately $24.8 million, will be added to the Company's funds and used for
general corporate purposes, which may include amounts necessary to fund
anticipated capital spending in 1995. Pending such use, it is anticipated that
the net proceeds will be used to repay outstanding borrowings under bank money
market facilities which bore a weighted average interest rate of 6.22% per annum
as of May 31, 1995. The Company's borrowings under such bank money market
facilities were $63.6 million as of such date. The proceeds of such borrowings
are presently used to finance crude oil and refined product inventory and for
other general working capital purposes.
S-2
<PAGE> 3
CERTAIN TERMS OF THE DEBENTURES
The following description of the particular terms of the 7 1/4% Debentures
due June 15, 2010 offered hereby (referred to herein as the "Debentures" and in
the Prospectus as the "Offered Debt Securities") supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Debt Securities set forth in the Prospectus, to which
description reference is hereby made.
GENERAL
The Debentures offered hereby will be issued under an Indenture (the
"Indenture") between the Company and The First National Bank of Chicago, as
trustee (the "Trustee"). Provisions of the Indenture are more fully described
under "Description of Debt Securities" in the Prospectus to which reference is
hereby made.
The Debentures will mature on June 15, 2010. Interest on the Debentures
will accrue from June 8, 1995 and will be payable semi-annually, on each June 15
and December 15, beginning December 15, 1995, and at maturity, to the persons in
whose names the Debentures are registered at the close of business on the June 1
or December 1 prior to the payment date at the annual rate set forth on the
cover page of this Prospectus Supplement.
The Debentures will be issued only in book-entry form through the
facilities of the Depositary, and will be in denominations of $1,000 and
integral multiples thereof. Transfers or exchanges of beneficial interests in
Debentures in book-entry form may be effected only through a participating
member of the Depositary. As described in the Prospectus, under certain limited
circumstances Debentures may be issued in certificated form in exchange for the
Global Securities. See "Description of Debt Securities -- Global Securities" in
the Prospectus. In the event that Debentures are issued in certificated form,
such Debentures may be transferred or exchanged at the offices described in the
immediately following paragraph.
Payments on Debentures issued in book-entry form will be made to the
Depositary. In the event Debentures are issued in certificated form, principal
and interest will be payable, the transfer of the Debentures will be registrable
and Debentures will be exchangeable for Debentures bearing identical terms and
provisions at the office of the Trustee in The City of New York designated for
such purpose, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the person entitled thereto as shown
on the Securities Register.
The Debentures will not be listed on any securities exchange. The
Debentures will be a new issue of securities with no established trading
markets. No assurance can be given as to whether any market will develop, or as
to the liquidity of any trading market of the Debentures. If such markets were
to exist, the Debentures could trade at prices that may be higher or lower than
the initial issuance price depending on a number of factors, including
prevailing interest rates and the markets for similar securities.
Neither the Indenture nor the Debentures contain provisions permitting the
holders of the Debentures to require prepayment in the event of a change in the
management or control of the Company, or in the event the Company enters into
one or more highly leveraged transactions, nor are any such events deemed to be
events of default under the terms of the Indenture or the Debentures. The terms
of the Company's existing revolving credit facilities designate certain changes
in management or control of the Company as events of default. No amounts were
outstanding under such credit facilities as of March 31, 1995.
The defeasance provisions described under "Description of the Debt
Securities -- Defeasance" in the Prospectus will apply to the Debentures.
GLOBAL SECURITIES
The Debentures will be issued in whole or in part in the form of one or
more Global Securities deposited with, or on behalf of, the Depositary and
registered in the name of a nominee of the Depositary. Except under the limited
circumstances described in the Prospectus under "Description of Debt
Securities -- Global Securities", owners of beneficial interests in Global
Securities will not be entitled to physical delivery of
S-3
<PAGE> 4
Debentures in certificated form. Global Securities may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any nominee to a successor of the Depositary or a nominee of such
successor. A further description of the Depositary's procedures with respect to
Global Securities representing the Debentures is set forth in the Prospectus
under "Description of Debt Securities -- Global Securities." The Depositary has
confirmed to the Company, the Underwriters and the Trustee that it intends to
follow such procedures.
The Depositary has advised as follows: It is a limited-purpose trust
company which was created to hold securities for its participating organizations
(the "Participants") and to facilitate the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("Indirect Participants"). Persons who are not
Participants may beneficially own securities held by the Depositary only through
Participants or Indirect Participants.
Principal and interest payments on the Debentures registered in the name of
the Depositary's nominee will be made by the Trustee to the Depositary's nominee
as the registered owner of the appropriate Global Security. Under the terms of
the Indenture, the Company and the Trustee will treat the persons in whose names
the Debentures are registered as the owners of such Debentures for the purpose
of receiving payment of principal and interest on the Debentures and for all
other purposes whatsoever. Therefore, neither the Company, the Trustee nor any
Paying Agent has any direct responsibility or liability for the payment of
principal or interest on the Debentures to owners of beneficial interests in the
Global Securities. The Depositary has advised the Company and the Trustee that
its present practice is, upon receipt of any payment of principal or interest,
to immediately credit the accounts of the Participants with such payment in
amounts proportionate to their respective holdings in principal amount of
beneficial interests in the Global Securities as shown on the records of the
Depositary.
UNSECURED NATURE OF THE DEBENTURES
The Debentures will constitute unsecured and unsubordinated indebtedness of
the Company and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness. At March 31, 1995, the Company's total debt
outstanding was approximately $536.0 million. The Company is primarily a holding
company and the Debentures will not be guaranteed by any of the Company's
subsidiaries. The Company's principal operating subsidiaries have guaranteed
certain of the Company's outstanding debt. The Indenture contains certain
limitations on the creation of additional secured indebtedness by the Company.
See "Description of Debt Securities -- Limitations on the Company and Certain
Subsidiaries" in the Prospectus.
S-4
<PAGE> 5
UNDERWRITING
NatWest Capital Markets Limited (the "Underwriter") has, under the terms of
and subject to the conditions contained in an Underwriting Agreement dated as of
June 1, 1995, agreed to purchase, and the Company has agreed to sell, the
Debentures. The Underwriting Agreement provides that the obligations of the
Underwriter are subject to certain conditions precedent and that the Underwriter
will be obligated to purchase all of the Debentures if any are purchased.
The Underwriter proposes initially to offer the Debentures directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement, and to certain dealers at such price less a concession
not in excess of .40% of the principal amount of the Debentures. The Underwriter
may allow, and dealers may reallow, a discount not in excess of .25% of the
principal amount of the Debentures to certain other dealers. After the initial
public offering, the public offering prices and concessions may be changed.
The Underwriter, a United Kingdom broker-dealer, has agreed that, as part
of the distribution of the Debentures and subject to certain exceptions, it will
not offer or sell any Debentures within the United States, its territories or
possessions, or to persons who are citizens thereof or residents therein,
provided that NatWest Securities Corporation, an affiliate of the Underwriter
and a United States broker-dealer, will be a selling broker with respect to the
Debentures, acting as agent for purchasers within the United States.
The Debentures are a new issue of securities with no established trading
market. No assurance can be given as to the liquidity of the trading market for
the Debentures.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including liabilities under the Act, or
contribute to payments the Underwriter may be required to make in respect
thereof.
S-5
<PAGE> 6
PROSPECTUS
$100,000,000
(LOGO)
DIAMOND SHAMROCK, INC.
DEBT SECURITIES
Diamond Shamrock, Inc. (the "Company") may, from time to time, offer or
solicit offers to purchase its debt securities (the "Debt Securities"), in one
or more series, in an aggregate principal amount not to exceed $100,000,000 on
terms to be determined at the time of sale.
With respect to each series of Debt Securities, a supplement to this
Prospectus (a "Prospectus Supplement") will be delivered together with this
Prospectus setting forth the terms of such Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, denominations,
maturity, interest rate (which may be fixed or variable) and time of payment of
interest, if any, coin or currency in which principal, premium, if any, and
interest, if any, will be payable, any terms for redemption, any terms for
sinking fund payments, the initial public offering price, the names of, the
principal amounts to be purchased by, and the compensation of, underwriters,
dealers, or agents, if any, any listing of the Debt Securities on a securities
exchange, and the other terms in connection with the offering and sale of such
Debt Securities. See "Description of Debt Securities."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------------
The Debt Securities may be sold directly to purchasers or through
underwriters, dealers, or agents. If any underwriters, dealers, or agents are
involved in the sale of any Debt Securities, their names and any applicable fee,
commission, or discount arrangements will be set forth in the Prospectus
Supplement. The net proceeds to the Company from sales of Debt Securities will
be set forth in the Prospectus Supplement and will be the purchase price of such
Debt Securities less attributable issuance expenses, including underwriters',
dealers', or agents' compensation arrangements. See "Plan of Distribution" for
indemnification arrangements for underwriters, dealers, and agents.
---------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
DEBT SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
---------------------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 16, 1993
<PAGE> 7
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information filed by the Company can be inspected and
copied at the Public Reference Room of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the public reference
facilities maintained by the Commission at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Documents filed by the
Company can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, on which exchange certain of the
Company's securities are listed.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities offered hereby. This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates into this Prospectus by reference the
Company's (i) Annual Report on Form 10-K for the year ended December 31, 1992
(the "1992 Form 10-K"), filed pursuant to the Exchange Act, which contains the
consolidated financial statements of the Company and the report thereon of Price
Waterhouse, (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1993 and June 30, 1993, and (iii) Current Report on Form 8-K, dated March 22,
1993.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act, prior to the termination of the
offering made hereby, shall be deemed incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of the filing of
such reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain, without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (other than the
exhibits expressly incorporated in such documents by reference). Requests should
be directed to: Investor Relations, Diamond Shamrock, Inc., P.O. Box 696000, San
Antonio, Texas 78269-6000 (telephone 210-641-6800).
2
<PAGE> 8
THE COMPANY
Diamond Shamrock, Inc. (the "Company") is one of the leading independent
refiners and marketers of petroleum products in the southwestern United States.
Its principal activities consist of crude oil refining, wholesale marketing of
petroleum products, and retail marketing of petroleum products and other
merchandise through Company-operated gasoline/convenience outlets. In addition,
the Company processes petrochemicals and is engaged in the marketing,
distribution, and storage of natural gas liquids.
The Company's principal executive offices are located at 9830 Colonnade
Boulevard, San Antonio, Texas 78230 (in person); P.O. Box 696000, San Antonio,
Texas 78269-6000 (by mail). Its telephone number is 210-641-6800.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the six-month periods ended June 30, 1993 and 1992 and for each
of the years in the five-year period ended December 31, 1992. For purposes of
computing the ratio of earnings to fixed charges, earnings consist of income
before income taxes and fixed charges. Fixed charges consist of interest on
outstanding debt, amortization of debt issuance expense, and one-third of rental
payments on operating leases (such amount having been deemed by the Company to
represent the interest portion of such payments).
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
- --------------- ------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
2.0 1.7 1.7 2.1 3.5 3.7 3.3
</TABLE>
USE OF PROCEEDS
The Debt Securities may be offered by the Company from time to time when
market conditions are determined by the Company to be favorable. Unless
otherwise indicated in the applicable Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the Company's funds and
used for general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement (the "Offered Debt Securities") and the extent, if any, to
which such general provisions do not apply to the Offered Debt Securities will
be described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities to which this Prospectus relates will be issued under
an Indenture dated as of December 15, 1989 (the "Indenture"), between the
Company and The First National Bank of Chicago, as trustee (the "Trustee"),
which is filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
Numerical references in parentheses below are to sections in the Indenture.
Whenever particular sections or defined terms of the Indenture are referred to,
such sections or defined terms are incorporated herein by reference.
GENERAL
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series up to
3
<PAGE> 9
the aggregate principal amount which may be authorized from time to time by the
Company. All Debt Securities will be unsecured and will rank pari passu with all
other unsecured, unsubordinated indebtedness of the Company. The Company is
primarily a holding company and the Debt Securities will not be guaranteed by
any of the Company's Subsidiaries. As a result, the right of creditors of the
Company upon its liquidation, reorganization, or otherwise is necessarily
subject to the claims of creditors of the Company's Subsidiaries, except to the
extent that claims of the Company itself as a creditor of any of its
Subsidiaries may be recognized. Except as described below, the Indenture does
not limit the amount of other indebtedness or securities which may be issued by
the Company.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of
such series of Offered Debt Securities: (i) the designation, aggregate principal
amount, and authorized denominations of such Offered Debt Securities; (ii) the
purchase price of such Offered Debt Securities (expressed as a percentage of the
principal amount thereof); (iii) the date or dates on which such Offered Debt
Securities will mature; (iv) the rate or rates per annum, if any (which may be
fixed or variable), at which such Offered Debt Securities will bear interest or
the method by which such rate or rates will be determined; (v) the dates on
which such interest will be payable and the record dates for payment of
interest, if any; (vi) the coin or currency in which payment of the principal of
(and premium, if any) or interest, if any, on such Offered Debt Securities will
be payable; (vii) the terms of any mandatory or optional redemption (including
any sinking fund) or any obligation of the Company to repurchase Offered Debt
Securities; (viii) whether such Offered Debt Securities are to be issued in
whole or in part in the form of one or more temporary or permanent global Debt
Securities ("Global Securities") and, if so, the identity of the depositary, if
any, for such Global Security or Securities; and (ix) any other additional
provisions or specific terms which may be applicable to that series of Offered
Debt Securities.
Principal, premium, if any, and interest, if any, will be payable, and the
Debt Securities will be transferable or exchangeable, at the office or agency of
the Company maintained for such purposes in the Borough of Manhattan, The City
of New York, provided that payment of interest on any Debt Securities may, at
the option of the Company, be made by check mailed to the registered holders.
Interest, if any, will be payable on any Interest Payment Date to the persons in
whose names the Debt Securities are registered at the close of business on the
record date with respect to such Interest Payment Date (Sections 305, 307 and
1202).
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. No service
charge will be made for any registration of transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith (Sections 302
and 305).
Some or all of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf
of a depositary located in the United States (a "Depositary") identified in the
Prospectus Supplement relating to such series.
The specific terms of the depositary arrangements with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
4
<PAGE> 10
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such depositary or its nominee. Upon the issuance of a Global
Security in registered form, the Depositary for such Global Security will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Securities will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
by participants in such Global Securities will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in Global Securities by persons that hold through participants will be
shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture governing such Debt Securities. Except as set forth below, owners
of beneficial interests in such Global Security will not be entitled to have
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form, and will not be considered
the owners or holders thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the holder of the Global Security representing such Debt Securities.
None of the Company, the Trustee, any Paying Agent, or the Security Registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a Global Security for such Debt Securities or for
maintaining, supervising, or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium, or interest in respect of a
permanent Global Security, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of the
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants. However,
the Company has no control over the practices of the Depositary and/or the
participants and there can be no assurance that these practices will not be
changed.
A Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor (Section 304). If a Depositary for
Debt Securities of a series is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Debt Securities in definitive registered form in
exchange for the Global Security or Securities representing such Debt
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have any Debt Securities in
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<PAGE> 11
registered form represented by one or more Global Securities and, in such event,
will issue Debt Securities in definitive form in exchange for the Global
Security or Securities representing such Debt Securities. In any such instance,
an owner of a beneficial interest in a Global Security will be entitled to
physical delivery in definitive form of Debt Securities of the series
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name.
LIMITATIONS ON THE COMPANY AND CERTAIN SUBSIDIARIES
Limitations on Mortgages. The Indenture provides that neither the Company
nor any Subsidiary of the Company will issue, assume, or guarantee any notes,
bonds, debentures, or other similar evidences of indebtedness for money borrowed
("Debt") secured by any mortgages, liens, pledges, or other encumbrances
("Mortgages") upon any asset or any interest it may have therein or of or upon
any stock or indebtedness of any Subsidiary, whether now owned or hereafter
acquired, without effectively providing that all Debt Securities issued under
the Indenture (together with, if the Company so determines, any other
indebtedness or obligation then existing or thereafter created ranking equally
with the Debt Securities) will be secured equally and ratably with (or prior to)
such Debt so long as such Debt will be so secured, except that this restriction
will not apply to: (i) Mortgages securing the purchase price or cost of
construction of property (or additions, substantial repairs, alterations, or
substantial improvements thereto if the amount of such Debt does not exceed the
cost thereof), provided such Debt and the Mortgages are incurred within 18
months of the acquisition or completion of construction and full operation, or
the completion of such repairs, alterations, or improvements, as the case may
be; (ii) Mortgages existing on property at the time of its acquisition by the
Company or a Subsidiary or on the property of a corporation at the time of the
acquisition of such corporation by the Company or a Subsidiary (including
acquisitions through merger or consolidation); (iii) Mortgages to secure Debt on
which the interest payments are exempt from federal income tax under Section 103
of the Internal Revenue Code of 1986, as amended (the "Code"); (iv) in the case
of a Subsidiary, Mortgages in favor of the Company or a Subsidiary; (v)
Mortgages existing on the date of the Indenture; (vi) certain Mortgages incurred
in the ordinary course of business and Mortgages to governmental entities; (vii)
Mortgages incurred in connection with the borrowing of funds if within 120 days
such funds are used to repay Debt in the same principal amount secured by other
Mortgages on assets or receivables having a fair market value (as determined by
the chief financial officer of the Company) at least equal to the fair market
value of the assets or receivables which secure the new Mortgage; (viii)
Mortgages incurred within 90 days (or any longer period, not in excess of one
year, as permitted by law) after acquisition of the property or equipment
subject to such Mortgage arising solely in connection with the transfer of tax
benefits in accordance with Section 168(f)(8) of the Code (or any similar
provision adopted hereafter); (ix) Mortgages on accounts receivable of the
Company or its Subsidiaries which secure obligations not exceeding at any time
the lesser of 90% of Consolidated Receivables (as defined below) or
$100,000,000, provided that the dollar limitation of $100,000,000 will increase
at a compounded rate of 10% each April 1, with the first such increase effective
on April 1, 1990 and subsequent increases to be effective on and as of each
succeeding April 1, provided further, however, that in no event will such dollar
limitation exceed $300,000,000; and (x) any extension, renewal, or replacement
of any Mortgage referred to in the foregoing clauses (i) through (ix), provided
the dollar amount secured is not increased (Section 1205).
Limitations on Sale and Lease-Back Transactions. The Indenture provides
that neither the Company nor any Subsidiary will enter into any Sale and
Lease-Back Transaction with respect to any asset owned by it with any person
(other than the Company or a Subsidiary) unless either (i) the Company or such
Subsidiary would be entitled, pursuant to the provisions described in clauses
(i) through (x) under "Limitations on Mortgages" above, to incur Debt secured by
a Mortgage on the asset to be leased without equally and ratably securing the
Debt Securities, or (ii) the Company during or immediately after the expiration
of 120 days after the effective date of such transaction applies to the
voluntary retirement of its Funded Debt an amount equal to the greater of the
net proceeds of the sale of the property leased in such transaction or the fair
market value (as determined by the chief financial
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<PAGE> 12
officer of the Company) of the leased property at the time such transaction was
entered into, in each case net of the principal amount of all Debt Securities
delivered under the Indenture (Section 1206).
Exempted Transactions. Notwithstanding the foregoing, the Company and any
one or more Subsidiaries may, without securing the Notes or any other Debt
Securities, issue, assume, or guarantee Debt secured by Mortgages and enter into
Sale and Lease-Back Transactions which would otherwise be subject to the
foregoing restrictions in an aggregate principal amount which, together with all
other such Debt of the Company and its Subsidiaries secured by Mortgages (not
including Debt permitted to be secured pursuant to clauses (i) through (x) under
"Limitations on Mortgages" above) and the aggregate Attributable Debt (as
defined below) in respect of Sale and Lease-Back Transactions (not including
those permitted as described under "Limitations on Sale and Lease-Back
Transactions" above), does not exceed 15% of Consolidated Net Tangible Assets
(as defined below) of the Company and its consolidated Subsidiaries (Section
1207).
Certain Definitions. The term "Consolidated Net Tangible Assets" at any
date means the total assets shown on a consolidated balance sheet of the Company
and its Subsidiaries, prepared in accordance with generally accepted accounting
principles, less (i) all current liabilities, and (ii) goodwill and like
intangibles included on such balance sheet. The term "Attributable Debt" means
(a) as to any capitalized lease obligations, the Debt carried on the balance
sheet in accordance with generally accepted accounting principles, and (b) as to
any operating leases, the total net amount of rent required to be paid under
such leases during the remaining term thereof discounted at the rate of 1% per
annum over the weighted average yield to maturity of all Debt Securities issued
and outstanding under the Indenture, including any outstanding Debt Securities,
compounded semi-annually. The term "Consolidated Receivables" at any date means
the aggregate amount of all accounts receivable of the Company and its
Subsidiaries at the end of the most recent fiscal quarter, as shown on the
consolidated balance sheet of the Company and its Subsidiaries in respect of
such quarter, or in respect of the fiscal year in the case of the fourth quarter
(Section 101).
EVENTS OF DEFAULT
The following are "Events of Default" under the Indenture with respect to
Debt Securities of any series: (i) failure to pay principal of or any premium on
any Debt Security of that series when due; (ii) failure to pay any interest on
any Debt Security of that series when due, and the continuation of such failure
for 30 days; (iii) failure to deposit any sinking fund payment in respect of any
Debt Security of that series when due; (iv) failure to perform any other
covenant of the Company in the Indenture (other than a covenant included in the
Indenture solely for the benefit of a series of Debt Securities other than the
series), continued for 60 days after written notice as provided in the
Indenture; (v) certain events in bankruptcy, insolvency, or reorganization; (vi)
indebtedness for borrowed money of the Company or any Subsidiary in excess of
$10,000,000 (whether such indebtedness now exists or is hereafter created) is
not paid at final maturity or becomes or is declared due and payable prior to
the date or dates on which such indebtedness would otherwise have become due and
payable as a result of the occurrence of one or more events of default as
defined in any mortgages, indentures, or instruments under which such
indebtedness may have been issued or by which such indebtedness may have been
secured, and such failure to pay shall not be cured or such acceleration or
accelerations, as the case may be, shall not be rescinded, annulled, or cured,
in any case prior to the expiration of 30 days after the date such failure to
pay or acceleration or accelerations occurred; and (vii) any other Event of
Default provided with respect to Debt Securities of that series (Section 501).
If any Event of Default with respect to Debt Securities of any series at any
time outstanding occurs and is continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of that
series are Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all the Debt Securities of that series
to be due and payable immediately. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on acceleration has been obtained, the Holders
of a majority in
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<PAGE> 13
aggregate principal amount of outstanding Debt Securities of that series may,
under certain circumstances, rescind and annul such accelerations (Section 502).
The Indenture provides that, subject to the duty of the Trustee during the
continuance of an Event of Default to act with the required standard of care,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders have offered to the Trustee reasonable indemnity (Section 603).
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in 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 Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of that series (Section 512).
The Company is required to furnish the Trustee annually with a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1208).
MODIFICATION AND WAIVER
Modifications of and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than two-thirds in
aggregate principal amount of the outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Debt Security affected thereby, (i) change the Stated Maturity of
the principal of, or any installment of interest, if any, on, any Debt Security,
(ii) reduce the principal amount of, or any premium or interest on, any Debt
Security, (iii) reduce the amount of principal of Discount Securities payable
upon acceleration of the stated maturity thereof, (iv) change the currency of
payment of principal of, or any premium or interest on, any Debt Security, (v)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security, or (vi) reduce the percentage in principal amount
of outstanding Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults (Section 1102).
The Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series, waive any past default under the Indenture with respect to Debt
Securities of that series, except a default in the payment of principal or any
premium or interest or a covenant or provision that cannot be modified or
amended without the consent of the Holders of each outstanding Debt Security
affected thereby (Section 513).
CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS
The Company, without the consent of the Holders of any of the outstanding
Debt Securities under the Indenture, may consolidate with or merge into, or
transfer or lease its assets substantially as an entirety to, any corporation
organized under laws of any domestic jurisdiction, provided that the successor
corporation assumes the Company's obligations on the Debt Securities and under
the Indenture, after giving effect to the transactions no Event of Default, and
no event which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing, and certain other conditions are met
(Section 1001).
DEFEASANCE
The Indenture provides that the Company, at its option, (i) will be
discharged from any and all obligations in respect of any series of Debt
Securities (except for certain obligations to register the transfer or exchange
of the Debt Securities; replace stolen, lost, or mutilated Debt Securities;
maintain paying agencies; and hold money for payment in trust), or (ii) will not
be subject to provisions of the Indenture concerning limitations upon Mortgages;
Sale and Lease-Back Transactions; and consolida-
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<PAGE> 14
tion, merger, and sale of assets, in each case if the Company deposits with the
Trustee, in trust, money, or U.S. Government Obligations which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay all principal, premium, if
any, and interest on the Debt Securities of such series on the dates such
payments are due in accordance with the terms of such Debt Securities. To
exercise any such option, the Company is required, among other things, to
deliver an opinion of counsel to the Trustee to the effect that (a) the Company
has received from or there has been published by the Internal Revenue Service a
ruling to the effect that the deposit and related defeasance would not cause the
Holders of such series of Debt Securities to recognize income, gain, or loss for
United States federal income tax purposes and (b) if such series of Debt
Securities are then listed on any national securities exchange, such Debt
Securities would not be delisted from such exchange as a result of the exercise
of such option (Article Fifteen).
NOTICES
Notices to Holders will be given by mail to the addresses of such Holders
as they appear in the Security Register (Sections 101, 105).
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York (Section 111).
CONCERNING THE TRUSTEE
The Trustee has normal banking relationships with the Company.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to which this Prospectus relates
to or for resale to the public through one or more underwriters, acting alone or
in underwriting syndicates led by one or more managing underwriters, and also
may sell such Debt Securities directly to other purchasers or dealers or through
agents.
The distribution of Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed from
time to time, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Offered Debt
Securities.
In connection with the sale of Debt Securities, such underwriters, dealers,
and agents may receive compensation from the Company, or from purchasers of Debt
Securities for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters, dealers, and agents that participate
in the distribution of Debt Securities and, in certain cases, direct purchasers
from the Company, may be deemed to be "underwriters" and any discounts or
commissions received by them and any profit on the resale of Debt Securities by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriters, dealers, or agents will be identified and
any such compensation will be described in the applicable Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of Debt Securities may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. The place and time of delivery
for Offered Debt Securities in respect of which this Prospectus is delivered are
set forth in the accompanying Prospectus Supplement.
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<PAGE> 15
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for the Company by
Timothy J. Fretthold, Esq., Senior Vice President/Group Executive and General
Counsel of the Company, and for the underwriters, dealers, or other agents by
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. As of August 11, 1993, Mr. Fretthold
beneficially owned 40,750 shares of Common Stock of the Company including 12,597
shares which he had the right to acquire within 60 days through the exercise of
employee stock options.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended December 31, 1992
have been so incorporated in reliance on the report of Price Waterhouse,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
With respect to the unaudited consolidated financial information of the
Company for the three-month periods ended March 31, 1993 and 1992, and for the
six-month periods ended June 30, 1993 and 1992, incorporated by reference in
this Prospectus, Price Waterhouse reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports dated May 10, 1993, and August 12,
1993 incorporated by reference herein, state that they did not audit and they do
not express an opinion on that unaudited consolidated financial information.
Price Waterhouse has not carried out any significant or additional audit tests
beyond those which would have been necessary if their reports had not been
included. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Price Waterhouse is not subject to the liability provisions
of section 11 of the Securities Act for their reports on the unaudited
consolidated financial information because those reports are not "reports" or a
"part of the registration statement" prepared or certified by Price Waterhouse
within the meaning of sections 7 and 11 of the Securities Act.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company............................. S-2
Ratio of Earnings to Fixed Charges...... S-2
Use of Proceeds......................... S-2
Certain Terms of the Debentures......... S-3
Underwriting............................ S-5
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents
by Reference.......................... 2
The Company............................. 3
Ratio of Earnings to Fixed Charges...... 3
Use of Proceeds......................... 3
Description of Debt Securities.......... 3
Plan of Distribution.................... 9
Legal Matters........................... 10
Experts................................. 10
</TABLE>
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$25,000,000
(LOGO)
DIAMOND
SHAMROCK, INC.
7 1/4% DEBENTURES
DUE JUNE 15, 2010
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PROSPECTUS SUPPLEMENT
June 1, 1995
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NATWEST MARKETS
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