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As filed with the Securities and Exchange Commission on May 7, 1996
Registration No. 333-00903
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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WESTERN GAS RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1127613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 North Pecos Street
Denver, Colorado 80234-3439
(303) 452-5603
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
John C. Walter, Esq.
Executive Vice President
Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234-3439
(303) 452-5603
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert M. Chilstrom, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Tel: (212) 735-3000
Fax: (212) 735-2001
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be 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 Rule 415 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 Rule 462(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 Rule 462(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 Rule 434,
please check the following box. [_]
------------------------
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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Pursuant to Rule 429, the Prospectus included herein also relates to
(i) $62,000,000 of Securities registered as Debt Securities and Preferred Stock
and 4,000,000 shares of Common Stock registered under registration statement
No. 33-66516 and (ii) $138,000,000 of Securities registered as Debt Securities
and Preferred Stock under registration statement No. 33-54741. In the event any
such previously registered Debt Securities, Preferred Stock or Common Stock are
offered prior to the effective date of this registration statement, the amount
of such Debt Securities, Preferred Stock or Common Stock will not be included in
any Prospectus hereunder. The amount of Securities being registered, together
with the remaining Securities registered under registration statement No. 33-
66516 and registration statement No. 33-54741, represents the maximum amount of
Securities which are expected to be offered for sale.
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SUBJECT TO COMPLETION - May 7, 1996
PROSPECTUS
WESTERN GAS RESOURCES, INC.
Debt Securities, Preferred Stock and Common Stock
Western Gas Resources, Inc. (the "Company"), directly, through agents
designated from time to time, or through dealers or underwriters also to be
designated, may offer and issue from time to time debt securities (the "Debt
Securities") in one or more series, on terms to be determined at the time of
sale. The Company may also offer and issue from time to time in one or more
series its Preferred Stock, par value $.10 per share (the "Preferred Stock"),
and its Common Stock, par value $.10 per share (the "Common Stock"), on terms to
be determined at the time of sale. The Debt Securities and Preferred Stock will
be limited to an aggregate initial public offering price of up to $300,000,000
or the equivalent thereof in one or more foreign currencies or composite
currencies and the Common Stock will be limited to an aggregate initial public
offering price of $100,000,000 plus up to an additional 4,000,000 shares. The
Common Stock is listed on the New York Stock Exchange under the symbol "WGR."
The Debt Securities, the Preferred Stock and the Common Stock are hereafter
collectively referred to as the "Securities." The aggregate initial public
offering price of all the Securities that may be offered pursuant to this
Prospectus, exclusive of the 4,000,000 shares of Common Stock, will not exceed
$300,000,000 or the equivalent thereof.
The accompanying Prospectus Supplement will set forth specific terms of the
Securities, including (i) in the case of Debt Securities, specific designation,
ranking as senior or subordinated Debt Securities, aggregate principal amount,
maturity, rate and time of payment of interest, purchase price, any terms for
redemption, whether and on what terms the Debt Securities may be converted into
the Company's Common Stock, and any other specific terms of the Debt Securities,
(ii) in the case of a particular series of Preferred Stock, specific
designation, aggregate number of shares offered, dividend rate (or manner of
calculation thereof), dividend periods (or manner of calculation thereof),
liquidation preference, voting rights, any terms for redemption, whether and on
what terms the shares of such series may be converted into the Company's Common
Stock at the option of the holder, whether depositary shares representing shares
of such series of Preferred Stock will be offered and, if so, the fraction of a
share of Preferred Stock represented by each depositary share, listing, if any,
on a securities exchange and any other specific terms of such series of
Preferred Stock and (iii) in the case of Common Stock, the number of shares
offered and the purchase price thereof. The accompanying Prospectus Supplement
will also set forth the name of and compensation to each dealer, underwriter or
agent, if any, involved in the sale of the Securities being offered and the
managing underwriters with respect to each series of Securities sold to or
through underwriters. The Company reserves the sole right to accept and,
together with its agents from time to time, to reject, in whole or in part, any
proposed purchase of Securities to be made directly or through agents.
SEE "RISK FACTORS" ON PAGE 5 OF THIS PROSPECTUS FOR DISCUSSION OF
MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF 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.
If an agent of the Company or a dealer or underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission, dealer's purchase price or underwriter's discount is set
forth in, or may be calculated from, the accompanying Prospectus Supplement and
the net proceeds to the Company from such sale will be the purchase price of
such Securities less such commission in the case of an agent, the purchase price
of such Securities in the case of a dealer or the public offering price less
such discount in the case of an underwriter, and less, in each case, the other
attributable issuance expenses. See "Plan of Distribution" for possible
indemnification arrangements for any agents, dealers or underwriters.
May __, 1996
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NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR AGENT. THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF AND THEREOF.
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 and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661 and 7 World Trade Center, 13th Floor, New York, NY 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company has filed a registration statement (the "Registration
Statement") on Form S-3 with respect to the Securities offered hereby with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, which constitutes a part of the Registration Statement, relates
only to the Securities offered by the Company and does not contain all the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any agreement, instrument or other document
referred to are not necessarily complete. With respect to each such agreement,
instrument or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended December
31, 1995; (ii) Proxy Statement for the Annual Meeting of Stockholders to be held
on May 15, 1996; (iii) Registration Statement on Form 8-A with respect to the
Company's $2.28 Cumulative Convertible Preferred Stock, declared effective on
November 12, 1992; (iv) Registration Statement on Form 8-A with respect to the
Company's $2.625 Cumulative Convertible Preferred Stock, declared effective by
the Commission on February 17, 1994; and (v) Current Report on Form 8-K dated
January 11, 1996, all of which have previously been filed by the Company with
the Commission, are incorporated by reference in this Prospectus.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
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 that 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.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to John C. Walter,
Executive Vice President, Western Gas Resources, Inc., 12200 North Pecos Street,
Denver, Colorado 80234-3439 (telephone (303) 452-5603).
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WESTERN GAS RESOURCES, INC.
Western Gas Resources, Inc., a Delaware corporation, is an independent gas
gatherer, processor and marketer with operations located in major gas-producing
basins in the Rocky Mountain, Gulf Coast and Southwestern regions of the United
States. The Company owns and operates natural gas gathering, processing and
storage facilities and markets and transports natural gas and natural gas
liquids ("NGLs"). The Company provides necessary services to the producers of
natural gas and NGLs by connecting producers' wells to the Company's gathering
system for delivery to its processing plants, processing the gas to remove NGLs
and by-products and providing access for the gas and NGLs to multiple markets.
The Company also owns certain producing properties, primarily in Louisiana and
Texas. The Company was incorporated in Delaware in 1989. The Company's principal
offices are located at 12200 North Pecos Street, Denver, Colorado 80234-3439,
and its telephone number is (303) 452-5603.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND
EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the unaudited consolidated ratios of
earnings to fixed charges and earnings to fixed charges and preferred stock
dividends of the Company for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges...................... .76 1.29 3.73 5.30 3.19
Ratio of earnings to fixed
charges and preferred stock
dividends.................... .50 .83 2.52 3.87 2.10
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. For the
purpose of computing the ratio of earnings to fixed charges and preferred stock
dividends, earnings consist of income before income taxes and fixed charges and
preferred stock dividends. For purposes of calculating both ratios, fixed
charges consist of interest (including capitalized interest, but excluding
amortization of amounts previously capitalized) on all indebtedness,
amortization of debt discount and expense and that portion (one-third) of rental
expense which the Company believes to be representative of interest. For the
year ended December 31, 1995, the Company's earnings before fixed charges were
insufficient to cover its fixed charges by approximately $9.7 million. In
addition, for the years ended December 31, 1995 and 1994, the Company's earnings
before fixed charges and preferred stock dividends were insufficient to cover
its fixed charges and preferred stock dividends by approximately $30.6 million
and $9.1 million, respectively. Excluding the effect of the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which resulted in a non-cash expense of $17.6 million, the Company's ratio of
earnings to fixed charges and ratio of earnings to fixed charges and preferred
stock dividends would have been 1.19 and .76, respectively, for the year ended
December 31, 1995. See further discussion in "Risk Factors." Statements setting
forth the unaudited computations of the consolidated ratio of earnings to fixed
charges and consolidated ratio of earnings to fixed charges and preferred stock
dividends are filed as exhibits to the Registration Statement of which this
Prospectus is a part.
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USE OF PROCEEDS
Unless otherwise set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities by the Company will be used for
general corporate purposes, which may include repayment of debt, acquisitions,
working capital and capital expenditures. Pending application for specific
purposes, the net proceeds will be invested in short-term marketable securities.
RISK FACTORS
Prospective investors should carefully review the following factors
together with the other information contained in this Prospectus and any
accompanying Prospectus Supplement prior to making an investment decision.
EFFECT OF VOLATILE PRODUCT PRICES; HEDGING TRANSACTIONS
The Company's future financial condition and results of operations will
depend significantly upon the prices received for the Company's natural gas and
NGLs. Prices for natural gas and NGLs are subject to fluctuations in response to
changes in supply, market uncertainty and a variety of additional factors that
are beyond the control of the Company. These factors include the level of
domestic production, the availability of imported oil and gas, actions taken by
foreign oil and gas producing nations, the availability of transportation
systems with adequate capacity, the availability of competitive fuels,
fluctuating and seasonal demand for oil, gas and NGLs, conservation and the
extent of governmental regulation of production and the overall economic
environment. A substantial or extended decline in gas and/or NGL prices would
have a material adverse effect on the Company's financial position, results of
operations and access to capital.
The Company's risk management policy is to enter into futures, swaps and
option contracts primarily to reduce risk and lock-in profit margins on its
marketing and storage activities. Over-the-counter derivatives, with
creditworthy counterparties, also permit the Company to offer its gas customers
alternate pricing and delivery mechanisms meeting their specific needs. To
ensure a known price for future equity production and a fixed margin between gas
injected into storage and gas withdrawn from storage, the Company typically will
sell a futures contract and related basis swap and thereafter, either (i) make
physical delivery of its product to comply with such futures contract and
settle its basis swap or (ii) buy matching futures and basis position contracts
to unwind its position and sell its production to a customer in the cash market.
The Company also may contract to sell future production to a customer at a fixed
price and then purchase futures contracts to lock-in a margin. These same
techniques also may be utilized to manage price risk for product purchased from
marketing customers. Such contracts may expose the Company to the risk of
financial loss in certain circumstances, including instances where production is
less than expected, the Company's customers fail to purchase or deliver the
contracted quantities of natural gas or NGLs or credit risk with derivatives
counterparties. Furthermore, to the extent that the Company engages in hedging
activities, it may be prevented from realizing the benefits of price increases
above the levels of such hedges.
GAS SUPPLY
The Company must continually connect new wells to its gathering systems in
order to maintain or increase throughput levels to offset natural declines in
dedicated volumes. Historically, while certain individual plants have
experienced declines in dedicated reserves, the Company has been successful in
connecting additional reserves to more than offset the natural declines and
reserves dedicated to existing facilities. Drilling activity generally has
continued to be significantly reduced from levels that existed in prior years.
Significant increases in the amount of drilling will depend upon, among other
factors, the prices for gas and oil, the energy policy of the federal government
and the
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availability of foreign oil and gas, none of which is within the Company's
control. There is no assurance that the Company will continue to be successful
in replacing the dedicated reserves processed at its facilities.
ABILITY TO PAY FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For the year ended December 31, 1995, the Company's earnings before fixed
charges were insufficient to cover its fixed charges by approximately $9.7
million. In addition, for the years ended December 31, 1995 and 1994, the
Company's earnings before fixed charges and preferred stock dividends were
insufficient to cover its fixed charges and preferred stock dividends by
approximately $30.6 million and $9.1 million, respectively. Excluding the effect
of the adoption of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of," which resulted in a non-cash expense of $17.6 million, the
Company's ratio of earnings to fixed charges and ratio of earnings to fixed
charges and preferred stock dividends would have been 1.19 and .76,
respectively, for the year ended December 31, 1995. The Company has historically
met its fixed charges, including interest, and preferred stock dividends through
cash flow from operations. There can be no assurance that the Company will have
sufficient cash flow from operations to satisfy anticipated cash requirements
for these items and its planned capital expenditures. See "Ratio of Earnings to
Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends."
EXPANSION OPPORTUNITIES AND AVAILABILITY OF FINANCING
In order for the Company to expand its business through either the purchase
or construction of new gathering and processing facilities, the Company will be
required to identify expansion opportunities and to finance such activities,
using cash flow, equity or debt financing or a combination therof. No assurance
can be given that appropriate opportunities for expansion at levels of
profitability which satisfy the Company's target rates can be obtained or that
financing on terms acceptable to the Company can be obtained. Natural gas and
NGL price volatility make it difficult to estimate the value of acquisitions and
to budget and forecast the return on the Company's projects. In addition,
unusually volatile prices often disrupt the market for gas and NGL properties,
as buyers and sellers have more difficulty agreeing on the purchase price of
properties.
COMPETITION
The Company competes with other companies in the gathering, processing and
marketing business both for supplies of natural gas and for customers for its
natural gas and NGLs. Competition for natural gas supplies is primarily based on
efficiency, reliability, availability of transportation and ability to obtain a
satisfactory price for the producers' natural gas. Competition for customers is
primarily based upon reliability and price of deliverable natural gas and NGLs.
For customers that have the capability of using alternative fuels, such as oil
and coal, the Company also competes based primarily on price against companies
capable of providing such alternative fuels. The Company's competitors for
obtaining additional gas supplies, for gathering and processing gas and for
marketing gas and NGLs include national and local gas gatherers, brokers,
marketers and distributors of various size, financial resources and experience.
Historically, the Company has also experienced narrowing margins due to the
increasing availability of pricing information to the participants in the
natural gas industry.
ENVIRONMENTAL MATTERS
The construction and operation of the Company's gathering lines, plants and
other facilities used for the gathering, transporting, processing, treating or
storing of natural gas and NGLs are subject to federal, state and local
environmental laws and regulations, including those that can impose obligations
to clean-up hazardous substances at the Company's facilities or at facilities to
which the Company sends wastes for disposal. In most instances, the applicable
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regulatory requirements relate to water and air pollution control or waste
management. The Company believes that it is in substantial compliance with
applicable material environmental laws and regulations. Environmental regulation
can increase the cost of planning, designing, constructing and operating the
Company's facilities. The Company believes that the costs for compliance with
current environmental laws and regulations have not had and will not have a
material effect on the Company's financial position or results of operation.
In 1990, the Congress enacted the Clean Air Act Amendments of 1990 (the
"Clean Air Amendments") which impose more stringent standards on emissions of
certain pollutants and establish an operating permit program for certain new and
existing air emissions sources. Under the Clean Air Amendments, individual
states are required to adopt regulations to implement the operating permit
program. In several of the states in which the Company operates, these
implementing regulations have not yet been promulgated and until such
promulgation, the Company cannot make a final assessment of the impact of the
Clean Air Amendments. However, based upon its review of final regulations of
certain of the states in which it operates and its preliminary review of
proposed regulations in the other states in which it operates, the Company does
not believe that compliance with the Clean Air Amendments will require any
material capital expenditures, although it will increase permitting costs in
1996 and will increase certain operating costs, such as emissions fees, on an
on-going basis. The Company does not believe that such cost increases will have
a material effect on the Company's financial position or results of operations.
The Company believes that it is reasonably likely that the trend in
environmental legislation and regulation will continue to be towards stricter
standards. The Company is unaware of future environmental standards that are
reasonably likely to be adopted that will have a material effect on the
Company's financial position or results of operations, but cannot rule out that
possibility.
REGULATION
Many aspects of the gathering, processing, marketing and transportation of
natural gas and NGLs by the Company are subject to federal, state and local laws
and regulations which can have a significant impact upon the Company's overall
operations. However, the gathering, processing and marketing activities of the
Company have generally not been subject to regulation, and therefore, except as
constrained by competitive factors, the Company has considerable pricing
flexibility.
As a processor and marketer of natural gas, the Company depends on the
transportation and storage services offered by various interstate and intrastate
pipeline companies for the delivery and sale of its own gas supplies as well as
those it processes and/or markets for others. Both the performance of
transportation and storage services by interstate pipelines and the rates
charged for such services are subject to the jurisdiction of the Federal Energy
Regulatory Commission or state regulatory agencies. An inability to obtain
transportation and/or storage services at competitive rates can hinder the
Company's processing and marketing operations and/or affect its sales margins.
INSURANCE AND OPERATIONAL RISKS
The Company is subject to various hazards which are inherent in the
industry in which it operates such as explosions, product spills, leaks and
fires, each of which could cause personal injury and loss of life, severe damage
to and destruction of property and equipment, and pollution or other
environmental damage, and may result in curtailment or suspension of operations
at the affected facility. The Company maintains physical damage, comprehensive
general liability, workers' compensation and business interruption insurance.
Such insurance is subject to deductibles that the Company considers reasonable.
The Company is not fully insured against all risks in its business, however, the
Company believes that the coverage it maintains is adequate and consistent with
other companies in the industry. Consistent with
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insurance coverage typically available to the natural gas industry, the
Company's insurance policies do not provide coverage for losses or liabilities
relating to pollution, except for sudden and accidental occurrences.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an indenture (the "Indenture")
between the Company and Texas Commerce Bank National Association, as trustee
(the "Trustee"). The Debt Securities may constitute either senior or
subordinated debt of the Company as set forth in any accompanying Prospectus
Supplement for a specific series of Debt Securities. The following statements
are subject to the detailed provisions of the Indenture, a copy of the form of
which is filed as an exhibit to the Registration Statement. Wherever references
are made to particular provisions of the Indenture, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference. Capitalized terms are defined
in the Indenture unless otherwise defined herein.
GENERAL
The Indenture does not limit the amount of the Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued in one or more
series thereunder up to the aggregate principal amount that may be authorized
from time to time by the Company's Board of Directors or an authorized committee
thereof. The Debt Securities will be either unsecured senior obligations of the
Company, ranking equally and ratably with all other unsecured and unsubordinated
indebtedness of the Company or subordinated in right of payment to the prior
payment in full of all Senior Indebtedness of the Company as described below
under "Subordinated Debt" and in the Prospectus Supplement applicable to an
offering of subordinated Debt Securities ("Subordinated Debt Securities").
Reference is made to the Prospectus Supplement relating to the particular Debt
Securities offered thereby for the following terms, where applicable, of the
Debt Securities: (1) the designation of such Debt Securities; (2) classification
as senior or subordinated Debt Securities; (3) the aggregate principal amount of
such Debt Securities; (4) the percentage of their principal amount at which such
Debt Securities will be issued; (5) the date or dates on which such Debt
Securities will mature; (6) the rate or rates (which may be fixed or variable),
if any, per annum, at which such Debt Securities will bear interest, or the
method of determination of such rate or rates; (7) the dates at which such
interest, if any, will be payable; (8) the places where principal of, premium,
if any, and interest will be payable; (9) provisions for sinking, purchase or
other analogous fund, if any; (10) the date or dates, if any, after which such
Debt Securities may be redeemed at the option of the Company or of the holder
and the redemption price or prices; (11) the terms and conditions, if any,
pursuant to which the Debt Securities are convertible or exchangeable into
Common Stock or Preferred Stock or other debt or exchange provisions; (12) any
index or formula used to determine the amount of payments of principal of and
premium, if any, and interest on, such Debt Securities; (13) if other than the
principal amount thereof, the portion of the principal amount of such Debt
Securities that will be payable upon declaration of the acceleration of the
maturity thereof or the method by which such portion shall be determined; (14)
the person to whom any interest on any such Debt Security shall be payable if
other than the person in whose name such Debt Security is registered on the
applicable record date; (15) any addition to, or modification or deletion of,
any event of Default or any covenant of the Company specified in the Indenture
with respect to such Debt Securities; (16) the application, if any, of such
means of defeasance or covenant defeasance as may be specified for such Debt
Securities; (17) whether such Debt Securities are to be issued in whole or in
part in the form of one or more temporary or permanent global securities and, if
so, the identity of the depositary for such global security or securities; and
(18) any other specific terms of the Debt Securities. Principal, premium, if
any, and interest, if any, will be payable and the Debt Securities offered
hereby will be transferable, at the corporate trust office of the Trustee's
agent in the borough of Manhattan, the City of New York, provided that payment
of interest, if any, may be made at the option of the Company by check mailed to
the address of the person entitled thereto as it appears in the Security
Register.
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Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will not be listed on any securities exchange.
If the accompanying Prospectus Supplement specifies that a series of Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Debt Securities will be issued and the coin or currency in which
the principal, premium, if any, and interest, if any, on such Debt Securities
will be payable, which may be United States dollars based upon the exchange rate
for such other currency or currency unit existing on or about the time a payment
is due. Special material United States federal income tax considerations
applicable to any Debt Securities so denominated shall also be described in the
applicable Prospectus Supplement.
The Debt Securities offered hereby will be issued only in fully registered
form without coupons and, unless otherwise specified in the Prospectus
Supplement, in denominations of $1,000 and multiples of $1,000. Debt Securities
may be issued in book-entry form, without certificates. Any such issue will be
described in the Prospectus Supplement relating to such Debt Securities. No
service charge will be made for any transfer or exchange of the Debt Securities,
but the Company or the Trustee may require payment of a sum sufficient to cover
any tax or other government charge payable in connection therewith.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be sold at a substantial discount from their stated
principal amount. Material federal income tax consequences and other
considerations applicable thereto will be described in the applicable Prospectus
Supplement.
The Indenture contains no covenants or other provisions affording
protection to holders of the Debt Securities in the event of a highly leveraged
transaction, other transactions that may adversely affect the Holders or a
change in control of the Company, except to the limited extent described under
"Limitations on Mergers and Sales of Assets."
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 (the "Global Depositary"), or its nominee, identified in the
Prospectus Supplement relating to such series. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Global Depositary
for such Global Security to a nominee for such Global Depositary and except in
the circumstances described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
and a description of the Global Depositary will be provided in the applicable
Prospectus Supplement.
SENIOR DEBT
The Debt Securities that will be designated and will constitute part of the
Senior Indebtedness (hereafter defined) of the Company, will rank pari passu
with all other unsecured and unsubordinated debt of the Company.
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SUBORDINATED DEBT
The Debt Securities that will constitute part of the subordinated debt of
the Company (the "Subordinated Debt Securities"), will be subordinated in right
of payment, as set forth in the Indenture, to the prior payment in full of all
existing and future Senior Indebtedness of the Company. "Senior Indebtedness"
means the principal of (and premium, if any) and interest on (including interest
accrued after the filing of a petition initiating any proceeding pursuant to any
Bankruptcy Law, but only to the extent allowed or permitted to the holder of
such Indebtedness against the bankruptcy or any other insolvency estate of the
Company in such proceeding) or accrued Original Issue Discount on and other
amounts due on or in connection with any Indebtedness incurred, assumed or
guaranteed by the Company, whether outstanding on the date of the Indenture or
thereafter incurred, assumed or guaranteed, and all renewals, extensions and
refunding of any such Indebtedness; provided, however, that the following will
not constitute Senior Indebtedness: (a) any Indebtedness which expressly
provides (i) that such Indebtedness shall not be senior in right of payment to
the Subordinated Debt Securities or (ii) that such Indebtedness shall be
subordinated to any other Indebtedness of the Company, unless such Indebtedness
expressly provides that such Indebtedness shall be senior in right of payment to
the Subordinated Debt Securities; (b) any Indebtedness or liability for
compensation to employees, for goods or materials purchased in the ordinary
course of business or for services; (c) any Indebtedness of the Company to any
Subsidiary for money borrowed or advanced from such Subsidiary; and (d) any
liability for federal, state, local or other taxes owed or owing by the Company.
"Indebtedness" means any and all obligations of a corporation for money borrowed
which in accordance with generally accepted accounting principles would be
reflected on the balance sheet of such corporation as a liability on the date as
of which Indebtedness is to be determined.
By reason of the subordination described herein, in the event of
insolvency, upon any distribution of the assets of the Company, (i) the Holders
of the Subordinated Debt Securities are required to pay over their share of such
distribution to the trustee in bankruptcy, receiver or other person distributing
the assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all holders of
Senior Indebtedness in full and (ii) unsecured creditors of the Company who are
not Holders of Subordinated Debt Securities or Holders of Senior Indebtedness of
the Company may recover less, ratably, than Holders of Senior Indebtedness of
the Company and may recover more, ratably, than the Holders of Subordinated Debt
Securities.
In the event that the Subordinated Debt Securities are declared due and
payable prior to their Stated Maturity by reason of the occurrence of an Event
of Default, then the Company is obligated to notify promptly holders of Senior
Indebtedness of such acceleration. The Company may not pay the Subordinated Debt
Securities until 120 days have passed after such acceleration occurs and may
thereafter pay the Subordinated Debt Securities if the terms of the Indenture
otherwise permit payment at that time.
No payment of the principal amount at maturity, Issue Price plus accrued
Original Issue Discount, in the case of Original Issue Discount Securities, any
redemption price, or interest, if any, in respect of the Subordinated Debt
Securities may be made, nor may the Company otherwise acquire any Subordinated
Debt Securities except as set forth in the Indenture, if any default with
respect to Senior Indebtedness occurs and is continuing that permits the
acceleration of the maturity thereof and the Company has actual knowledge of the
default, unless (a) 120 days pass after notice of the default is given to the
Trustee and such default is not then the subject of judicial proceedings or the
default with respect to the Senior Indebtedness is cured (including, without
limitation, by the payment of such Senior Indebtedness in full) or waived and
(b) the terms of the Indenture otherwise permit the payment or acquisition of
the Subordinated Debt Securities at that time. The Company is required to give
the Trustee notice of a default with respect to Senior Indebtedness within five
Business Days after the Company has actual knowledge of the default.
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If this Prospectus is being delivered in connection with a series of
Subordinated Debt Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Indebtedness outstanding as of the end of the most recent
fiscal quarter for which the Company has filed an Annual Report on Form 10-K or
a Quarterly Report on Form 10-Q.
CONVERSION OR EXCHANGE OF DEBT SECURITIES
No series of Debt Securities will be convertible into, or exchangeable for,
other securities or properties except as set forth in the applicable Prospectus
Supplement.
CERTAIN COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES
Unless otherwise set forth in the applicable Prospectus Supplement, the
following covenants will be applicable to Debt Securities that constitute Senior
Indebtedness.
Limitations on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, incur, issue, assume or guarantee any Indebtedness
secured by a Lien on any Restricted Property, or on any shares of stock or
Indebtedness of a Restricted Subsidiary, without providing that the Debt
Securities shall be secured equally and ratably with (or prior to) such secured
Indebtedness, unless after giving effect thereto the aggregate amount of all
such Indebtedness so secured (other than Indebtedness secured by excepted Liens
referred to in the following sentence), together with all Attributable Debt of
the Company and its Restricted Subsidiaries in respect of Sale-Leaseback
Transactions except Sale-Leaseback Transactions the proceeds of which are
applied to the retirement of Funded Debt, would not exceed 10% of Consolidated
Adjusted Net Assets as shown on the Company's latest audited consolidated
financial statements. This restriction will not apply to (a) Liens on property
of, or on any shares of stock or Indebtedness of, any corporation existing at
the time such corporation becomes a Subsidiary, (b) Liens on property existing
at the time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase price
or construction cost thereof or to secure any Indebtedness incurred prior to, at
the time of, or within six months after such acquisition or completion of such
property for the purpose of financing all or any part of the purchase price or
construction cost thereof, (c) Liens on substantially unimproved property to
secure the cost of exploration, drilling or development of, or improvements to,
such property, (d) Liens in favor of the Company or a Restricted Subsidiary, and
(e) any extension, renewal or replacement of any Lien referred to in the
foregoing clauses (a) through (d) inclusive, provided that such extension,
renewal or replacement Liens shall be limited to all or part of the same
property that secured the Liens extended, renewed or replaced (plus improvements
on such property). The following types of transactions are not deemed to create
Indebtedness secured by a Lien: (i) a sale or transfer of crude oil, natural gas
or NGLs in place for a period of time until, or in an amount such that, the
purchaser will realize therefrom a specified amount of money or of such oil,
natural gas or NGLs, or any other interest in property commonly referred to as a
"production payment," or (ii) the Lien on any property of the Company or any
Subsidiary in favor of governmental bodies to secure partial, progress, advance
or other payments to the Company or any Subsidiary pursuant to any contract or
statute, or the Lien of any property to secured Indebtedness of the pollution
control or industrial revenue bond type.
Limitation on Sale-Leaseback Transactions. The Indenture provides that the
Company shall not, and it shall not permit any Restricted Subsidiary to, enter
into a Sale-Leaseback Transaction unless: (1) the lease has a term of three
years or less; (2) the lease is between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries; (3) the Company or a Restricted Subsidiary
could create a Lien under the terms of the Indenture on the Restricted Property
to secure Funded Debt at least equal in amount to the Attributable Debt for the
lease; or (4) the Company or a Restricted Subsidiary could create a Lien on
Restricted Property under the terms of the Indenture to secure Funded Debt at
least equal in amount to the Attributable Debt for the lease without having to
secure equally and ratably any Debt Securities that constitute Senior
Indebtedness or (5) the Company or a Restricted Subsidiary within 120 days
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of the effective date of the Sale-Leaseback Transaction (i) retires Funded Debt
of the Company or of a Restricted Subsidiary at least equal in amount to the
fair value (as determined by the Company's Board of Directors) of the Restricted
Property at the time of the Sale-Leaseback Transaction or (ii) if the net
proceeds of the Sale-Leaseback Transaction equal or exceed the fair value of the
Restricted Property (as determined by the Company's Board of Directors), applies
the net proceeds to fund investment in other Restricted Properties which
investments were made within 12 months prior to or subsequent to the Sale-
Leaseback Transaction.
LIMITATION ON MERGERS AND SALES OF ASSETS
The Company shall not consolidate with, merge with, or merge into any
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person unless the successor entity shall be a corporation
organized under the laws of the United States or any state or the District of
Columbia and shall expressly assume the obligations of the Company under the
Indenture. If, with respect to Debt Securities that constitute Senior
Indebtedness, upon any such consolidation, merger, conveyance or transfer of the
Company with or into any Person or of any such Subsidiary with or to any other
Subsidiary, any Property of the Company or of any Restricted Subsidiary or any
shares of stock or indebtedness of any Restricted Subsidiary would thereupon
become subject to any Lien (other than a Lien permitted under "Limitation on
Liens" without the Company's having to secure such Debt Securities equally and
ratably), the Company will secure such Debt Securities (together with, if the
Company shall so determine, other securities ranking on a parity with such Debt
Securities) prior to all Liens other than any theretofore existing.
Although the amount of the Company's property that will constitute a sale
of such property "substantially as an entirety" is not readily quantifiable, a
determination whether such a sale has occurred will depend on the percentage of
operating and total assets transferred, among other measurements, and other
facts and circumstances of the transaction. In any particular transaction, this
determination will be made by the Company and, if such a transaction occurs, the
person to which such amount of the Company's property is transferred shall enter
into a supplemental Indenture satisfactory in form to the Trustee.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Attributable Debt" means the total net amount of rent (discounted at the
rate per annum indicated in the Indenture) required to be paid during the
remaining term of any lease.
"Consolidated Adjusted Net Assets" means the total amount of assets after
deducting therefrom (a) all current liabilities (excluding any thereof which are
by their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed), and (b) total prepaid expenses and deferred charges.
"Funded Debt" means, with respect to any Person, all Indebtedness having a
maturity of more than 12 months from the date as of which the amount thereof is
to be determined or having a maturity of less than 12 months but by its terms
being renewable or extendible beyond 12 months from such date at the option of
such Person.
"Restricted Property" means (a) any interest in property located in the
United States, Puerto Rico or Canada (including any interest in property located
off the coast of the United States operated pursuant to leases from any
governmental body) which is producing crude oil, natural gas or NGLs in paying
quantities, or (b) any manufacturing
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plant or transportation or storage facility located in the United States, Puerto
Rico or Canada, in each case now owned or hereafter acquired by the Company or a
Restricted Subsidiary except any such plant or facility or portion thereof which
has a book value equal to not more than 2% of the Consolidated Adjusted Net
Assets of the Company as shown on the Company's latest audited consolidated
balance sheet.
"Restricted Subsidiary" means a corporation (a) organized under the laws of
the United States, Puerto Rico or Canada or a jurisdiction thereof, (b) that
conducts substantially all of its business and has substantially all of its
Property within the United States, Puerto Rico and Canada, and (c) at least 80%
(by number of votes) of each class of Voting Stock of which and 100% of all
other Capital Stock and all other securities convertible into, exchangeable for,
or representing the right to purchase, Voting Stock, of which are legally and
beneficially owned by the Company and its wholly owned Restricted Subsidiaries.
"Sale and Leaseback Transaction" means an arrangement (other than an
arrangement made for the purposes of Section 168(f)(8) of the Internal Revenue
Code) with any bank, insurance company or other lender or investor (collectively
"lenders") or to which the lender is a party where the Company or a Restricted
Subsidiary now owns or hereafter acquires a Restricted Property, transfers it to
a lender, or to any person to whom funds have been or are to be advanced by a
lender on the security of such Restricted Property on the rental payments under
the lease, and leases it back from the lender or other person.
"Subsidiary" means, at any time, a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series at its Maturity (in the case of any
Subordinated Debt Securities, whether or not payment is prohibited by the
provisions described under "Subordinated Debt"); (b) failure to pay any interest
on any Debt Security of that series when due, continued for 30 days (in the case
of any Subordinated Debt Securities, whether or not payment is prohibited by the
provisions described under "Subordinated Debt"); (c) failure to deposit any
sinking fund payment, when due, in respect of any Debt Security of that series
(in the case of any Subordinated Debt Securities, whether or not payment is
prohibited by the provisions described under "Subordinated Debt"); (d) any other
defaults in the performance, or breach, of any covenant of the Company in the
Indenture, continued for 90 days after notice of such default or breach from the
Trustee or the Holders of at least 25% in principal amount of the Outstanding
Debt Securities of that series (other than a covenant included in the Indenture
solely for the benefit of any series of Debt Securities other than that series);
(e) certain events of bankruptcy, insolvency or reorganization; and (f) any
other Event of Default provided with respect to Debt Securities of that series.
If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that series
may declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all Debt Securities of that series
to be due and payable immediately. However, 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 such acceleration has been obtained, the
Holders of a majority in principal amount of Outstanding Debt Securities of that
series may, under certain circumstances, rescind and annul such acceleration.
Notwithstanding the foregoing, if any Subordinated Debt Securities are declared
due and payable prior to their Stated Maturity by reason of the occurrence of an
Event of Default, the Company may not pay the Subordinated Debt Securities until
120 days have passed after such acceleration occurs and
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may thereafter pay the Subordinated Debt Securities if the terms of the
Indenture otherwise permit payment at the time. See "Subordinated Debt." For
information as to waiver of defaults, see "Modification and Waiver."
The Indenture provides that, subject to the provisions of the Trust
Indenture Act of 1939, as amended, 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 shall have offered to the
Trustee reasonable indemnity. Subject to such provisions for indemnification of
the Trustee, the Holders of a majority in principal amount of the Outstanding
Debt Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of that series.
The Company will be required to furnish annually to the Trustee 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.
MODIFICATION AND WAIVER
Modifications and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the Debt Securities of each series affected thereby; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Debt Security, (b) reduce the principal amount of, or the premium, if any,
or interest, if any, on, any Debt Security, (c) reduce the amount of principal
of any Original Issue Discount Security payable upon acceleration of
the Maturity thereof, (d) change the coin or currency in which any Debt
Securities or premium, if any, or interest, if any, thereon is payable, (e) in
the case of convertible Debt Securities, adversely affect the right to convert
any Debt Security, or (f) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of the Holders of which
is required for (i) modification or amendment of the Indenture, (ii) in the case
of any Subordinated Debt Securities, modification of the subordination
provisions in a manner adverse to the Holders of the Subordinated Debt
Securities, (iii) waiver of compliance with certain provisions of the Indenture,
or (iv) waiver of certain defaults.
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to, modify or delete any of the Company's covenants or Events of
Default, to permit or facilitate Debt Securities to be issued by book entry or
in bearer form or relating to the place of payment thereof, to provide for a
successor trustee, to establish forms or terms of Debt Securities, to change or
eliminate any provision not adversely affecting any interests of Holders of
Outstanding Debt Securities in any material respect or to cure any ambiguity or
inconsistency.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture. The Holders of a
majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all Debt Securities of that series waive any
past default under the Indenture with respect to Debt Securities of that series,
except a default in the payment of the principal of, or premium, if any, or
interest, if any, on, any Debt Security of that series or in respect to any
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of that series affected.
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DEFEASANCE
The following provisions of the Indenture are applicable to the Debt
Securities. The Company (a) shall be discharged from its obligations in respect
of the Debt Securities of such series ("defeasance and discharge"), or (b) may
cease to comply with certain restrictive covenants ("covenant defeasance")
including those described under "Certain Covenants" and "Limitations on Mergers
and Sales of Assets" and, in the case of any Subordinated Debt Securities, the
provisions described under "Subordinated Debt," and any such omission shall not
be an Event of Default with respect to the Debt Securities of such series, in
each case at any time prior to the Stated Maturity or redemption thereof, when
the Company has irrevocably deposited with the Trustee, in trust, (i) sufficient
funds in the currency or currency unit in which the Debt Securities are
denominated to pay the principal of (and premium, if any), and interest to
Stated Maturity (or redemption) on, the Debt Securities of such series, or (ii)
such amount of direct obligations of, or obligations the principal of and
interest on which are fully guaranteed by, the government which issued the
currency in which the Debt Securities are denominated, and which are not subject
to prepayment, redemption or call, as will, together with the predetermined and
certain income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay when due the principal of (and premium, if any),
and interest to Stated Maturity (or redemption) on, the Debt Securities of such
series. Such defeasance and discharge and covenant defeasance are conditioned
upon, among other things, the Company's delivery of (i) an opinion of counsel
that the Holders of the Debt Securities will not recognize income, gain or loss
for United States federal income tax purposes as a result of such defeasance,
and will be taxed in the same manner as if no defeasance and discharge or
covenant defeasance, as the case may be, had occurred and (ii) an opinion of
counsel that such defeasance would not cause the Debt Securities to be delisted
from any national securities exchange on which such Debt Securities may then be
listed. Upon such defeasance and discharge, the Holders of the Debt Securities
of such series shall no longer be entitled to the benefits of the Indenture,
except for the purposes of registration of transfer and exchange of the Debt
Securities of such series and replacement of lost, stolen or mutilated Debt
Securities and shall look only to such deposited funds or obligations for
payment.
GOVERNING LAW
The Indenture and Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
THE TRUSTEE
The Company may have customary banking relationships with the Trustee in
the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 100,000,000 shares of Common
Stock, par value $.10 per share, and up to 10,000,000 shares of Preferred Stock,
par value $.10 per share. As of December 31, 1995, there were 26,769,712 shares
of Common Stock outstanding. The Company also had outstanding on such date
1,400,000 shares of $2.28 Cumulative Preferred Stock with a liquidation
preference of $25 per share (the "$2.28 Preferred Stock") and 2,760,000 shares
of $2.625 Cumulative Convertible Preferred Stock with a liquidation preference
of $50 per share (the "$2.625 Convertible Preferred Stock"). Unless otherwise
provided in any Prospectus Supplement for a series of Preferred Stock offered
hereby (the "Offered Preferred Stock"), the $2.28 Preferred Stock and the $2.625
Preferred Stock (collectively, the "Existing Preferred Stock") will rank on a
parity with the Offered Preferred Stock.
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The Board of Directors of the Company has the power, without further action
by the stockholders unless action is required by applicable laws or regulations
or by the terms of any outstanding Preferred Stock, to issue Preferred Stock in
one or more series and to fix the designations, preferences and voting rights,
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions applicable thereto. The rights of
holders of any Offered Preferred Stock will be subject to, and may be adversely
affected by, the rights of holders of any Preferred Stock which may be issued in
the future. The Board of Directors may cause Preferred Stock to be issued to
obtain additional financing, in connection with acquisitions and for other
proper corporate purposes. Issuance of shares of Preferred Stock by the Company
may have the effect, under certain circumstances, alone or in combination with
certain of the provisions of the Company's Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), described below, of rendering more
difficult or discouraging an acquisition of the Company deemed undesirable by
the Board of Directors.
The following summary does not purport to be complete and is, subject to,
and qualified in its entirety by, the Company's Certificate of Incorporation,
including the Certificate of Designation relating to a specific series of the
Offered Preferred Stock (the "Certificate of Designation"), which will be in the
form filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of issuance
of such series of Offered Preferred Stock, the Certificate of Designation of the
$2.28 Preferred Stock and the Certificate of Designation of the $2.625
Convertible Preferred Stock.
OFFERED PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Offered Preferred Stock. The particular terms of any series of Offered
Preferred Stock will be described in the applicable Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The summary of terms of the Company's Offered
Preferred Stock contained in this Prospectus does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
Company's Certificate of Incorporation and the Certificate of Designation.
The Board of Directors is authorized to determine for each series of
Offered Preferred Stock, and the Prospectus Supplement shall set forth with
respect to such series: (i) the number of shares that constitute such series,
(ii) the dividend rate (or the method of calculation thereof) on the shares of
such series, (iii) the dividend periods (or the method of calculation thereof),
(iv) the voting rights of the shares, (v) the liquidation preference and any
other rights of the shares of such series upon any liquidation or winding-up of
the Company, (vi) whether or not and on what terms the shares of such series
will be subject to redemption at the option of the Company, (vii) whether and on
what terms the shares of such series will be convertible into shares of Common
Stock of the Company, (viii) whether depositary shares representing shares of
such series of Preferred Stock will be offered and, if so, the fraction of a
share of such series of Offered Preferred Stock represented by each depositary
share (see "Depositary Shares" below), (ix) whether the shares of such series of
Offered Preferred Stock will be listed on a securities exchange and (x) the
other rights and privileges and any qualifications, limitations or restrictions
of such rights or privileges of such series.
DIVIDENDS
Holders of shares of Offered Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds of the Company
legally available therefor, an annual cash dividend payable at such dates and at
such rates per share per annum as set forth in the applicable Prospectus
Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Offered Preferred Stock will be junior as to dividends to any
Preferred Stock that may be issued in the future that is expressly senior as to
dividends to the Offered Preferred Stock. If at any time the Company has failed
to pay accrued dividends upon any such
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senior shares at the time such dividends are payable, the Company may not pay
any dividend on the Offered Preferred Stock or redeem or otherwise repurchase
shares of Offered Preferred Stock until such accumulated but unpaid dividends on
such senior shares have been paid or set aside for payment in full by the
Company.
No dividends may be declared or paid or set apart for payment on any
Preferred Stock, including the Existing Preferred Stock, ranking on parity as to
dividends with the Offered Preferred Stock unless there shall also be or have
been declared and paid or set apart for payment on the outstanding shares of
Offered Preferred Stock dividends for all dividend payment periods of the
Offered Preferred Stock ending on or before the dividend payment date of such
parity Preferred Stock, ratably in proportion to the respective amounts of
dividends, (i) accumulated and unpaid or payable on such parity Preferred Stock,
on the one hand, and (ii) accumulated and unpaid or payable through the dividend
payment period of the Offered Preferred Stock next preceding such dividend
payment date, on the other hand. Except as set forth above, dividends (other
than in Common Stock) may not be paid or declared and set aside for payment and
other distributions may not be made upon the Common Stock or on any other
Preferred Stock of the Company ranking junior to or on parity as to dividends
with the Offered Preferred Stock, including the Existing Preferred Stock, nor
may any Common Stock or such other Preferred Stock of the Company be redeemed,
purchased or otherwise acquired by the Company for any consideration or any
payment be made to or available for a sinking fund for the redemption of any
shares of such stock; provided, however, that any monies theretofore deposited
in any sinking fund with respect to any Preferred Stock in compliance with the
provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such Preferred Stock in accordance with the terms of such sinking
fund, regardless of whether at the time of such applications full cumulative
dividends upon shares of the Offered Preferred Stock outstanding on the last
dividend payment date shall have been paid or declared and set apart for
payment; and provided, further, that any such junior or parity Preferred Stock
or Common Stock may be converted into or exchanged for stock of the Company
ranking junior to the Offered Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Offered Preferred Stock will be convertible into, or
exchangeable for, other securities or property except as set forth in the
applicable Prospectus Supplement.
REDEMPTION AND SINKING FUND
No series of Offered Preferred Stock will be redeemable or receive the
benefit of a sinking fund except as set forth in the applicable Prospectus
Supplement.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of each series of Offered Preferred Stock are entitled to
receive out of assets of the Company available for distribution to stockholders,
before any distribution of assets is made to holders of: (i) any other shares of
Preferred Stock ranking junior to such series of Offered Preferred Stock as to
rights upon liquidation, dissolution or winding up and (ii) Common Stock,
liquidating distributions per share in the amount of the liquidation preference
specified in the applicable Prospectus Supplement for such series of Offered
Preferred Stock plus dividends accrued and accumulated but unpaid to the date of
final distribution; but the holders of each series of Offered Preferred Stock
will not be entitled to receive the liquidating distribution of, plus such
dividends on, such shares until the liquidation preference of any shares of the
Company's capital
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stock ranking senior to such series of the Offered Preferred Stock as to the
rights upon liquidation, dissolution or winding up shall have been paid (or a
sum set aside therefor sufficient to provide for payment) in full. If upon any
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Offered Preferred Stock, the Existing Preferred Stock and any
other Preferred Stock ranking as to any such distribution on a parity with the
Offered Preferred Stock are not paid in full, the holders of the Offered
Preferred Stock, the Existing Preferred Stock and such other parity Preferred
Stock will share ratably in any such distribution of assets in proportion to the
full respective preferential amount to which they are entitled. Unless otherwise
specified in a Prospectus Supplement for a series of Offered Preferred Stock,
after payment of the full amount of the liquidating distribution to which they
are entitled, the holders of shares of Offered Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Company. Neither a consolidation or merger of the Company with another
corporation nor a sale of securities shall be considered a liquidation,
dissolution or winding up the Company.
VOTING RIGHTS
Holders of Offered Preferred Stock will not have any voting rights except
as set forth below or in the applicable Prospectus Supplement or as otherwise
from time to time required by law. Whenever dividends on any applicable series
of Offered Preferred Stock or any other class or series of stock ranking on a
parity with the applicable series of Offered Preferred Stock with respect to the
payment of dividends shall be in arrears for dividend periods, whether or not
consecutive containing in the aggregate a number of days equivalent to six
calendar quarters, the holders of shares of such series of Offered Preferred
Stock (voting separately as a class with all other series of Preferred Stock,
upon which like voting rights have been conferred and are exercisable) will be
entitled to vote for the election of two of the authorized number of directors
of the Company at the next annual meeting of stockholders and at each subsequent
meeting until all dividends accumulated on such series of Offered Preferred
Stock shall have been fully paid or set apart for payment. The term of office of
all directors elected by the holders of such Offered Preferred Stock shall
terminate immediately upon the termination of the rights of the holders of such
Offered Preferred Stock to vote for directors. Unless otherwise set forth in the
applicable Prospectus Supplement, holders of shares of Offered Preferred Stock
will have one vote for each share held.
So long as any shares of any series of Offered Preferred Stock remain
outstanding, the Company shall not, without the consent of holders of at least
two-thirds of the shares of such series of Offered Preferred Stock outstanding
at the time, voting separately as a class with all other series of Preferred
Stock upon which like voting rights have been conferred and are exercisable (i)
issue or increase the authorized amount of any class or series of stock ranking
prior to the outstanding Offered Preferred Stock as to dividends or upon
liquidation or (ii) amend, alter or repeal the provisions of the Company's
Certificate of Incorporation or of the resolutions contained in the Certificate
of Designation relating to such series of Offered Preferred Stock, whether by
merger, consolidation or otherwise, so as to materially adversely affect any
power, preference or special right of such series of Offered Preferred Stock or
the holders thereof; provided, however, that any increase in the amount of the
authorized Common Stock or authorized Preferred Stock or any increase or
decrease in the number of shares of any series of Preferred Stock or the
creation and issuance of other series of Common Stock or Preferred Stock ranking
on a parity with or junior to Preferred Stock as to dividends and upon
liquidation, dissolution or winding up shall not be deemed to materially
adversely affect such powers, preferences or special rights.
MISCELLANEOUS
The holders of Offered Preferred Stock will have no preemptive rights.
Offered Preferred Stock, upon issuance against full payment of the purchase
price therefor, will be fully paid and nonassessable. Shares of Offered
Preferred Stock redeemed or otherwise reacquired by the Company shall resume the
status of authorized and unissued shares of Offered Preferred Stock undesignated
as to series, and shall be available for subsequent issuance. There are
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no restrictions on repurchase or redemption of the Offered Preferred Stock while
there is any arrearage on sinking fund installments except as may be set forth
in an applicable Prospectus Supplement. Neither the par value nor the
liquidation preference is indicative of the price at which the Offered Preferred
Stock will actually trade on or after the date of issuance. Payment of dividends
on any series of Offered Preferred Stock may be restricted by loan agreements,
indentures and other transactions entered into by the Company. The accompanying
Prospectus Supplement or information incorporated by reference will describe any
material contractual restrictions on dividend payments.
NO OTHER RIGHTS
The shares of a series of Offered Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other special
rights except as set forth above or in the applicable Prospectus Supplement, the
Certificate of Incorporation or Certificate of Designation or as otherwise
required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Offered Preferred Stock
will be designated in the applicable Prospectus Supplement.
DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional shares of the
Offered Preferred Stock, rather than full shares of the Offered Preferred Stock.
In the event such option is exercised, the Company will issue receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Offered Preferred
Stock) of a share of a particular series of Preferred Stock as described below.
The shares of any series of Offered Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") among the Company, a depositary to be named in the applicable
Prospectus Supplement (the "Preferred Stock Depositary"), and the holders from
time to time of depositary receipts issued thereunder. Subject to the terms of
the Deposit Agreement, each holder of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Offered Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Offered Preferred Stock represented thereby (including dividend, voting,
redemption, subscription and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of the
related series of Offered Preferred Stock. Copies of the forms of Deposit
Agreement and Depositary Receipt are filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the following summary is
qualified in its entirety by reference to such exhibit. Immediately following
the issuance of shares of a series of Offered Preferred Stock by the Company,
the Company will deposit such shares with the Preferred Stock Depositary, which
will then issue and deliver the Depositary Receipts to the purchasers thereof.
Depositary Receipts will only be issued evidencing whole Depositary Shares. A
Depositary Receipt may evidence any number of whole Depositary Shares.
Pending the preparation of definitive Depositary Receipts, the Preferred
Stock Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary
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Receipts will be prepared thereafter without unreasonable delay, and such
temporary Depositary Receipts will be exchangeable for definitive Depositary
Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related series of Offered
Preferred Stock to the record holders of Depositary Shares relating to such
series of Offered Preferred Stock in proportion to the number of such Depositary
Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto in proportion to the number of Depositary
Shares owned by such holders, unless the Preferred Stock Depositary determines
that such distribution cannot be made proportionately among such holders or that
it is not feasible to make such distributions, in which case the Preferred Stock
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the Securities or property
thus received, or any part thereof, at such place or places and upon such terms
as it may deem proper.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by the Company or the Preferred Stock Depositary
on account of taxes or other governmental charges.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Offered Preferred Stock underlying the Depositary Shares
is subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Preferred Stock Depositary resulting from any
redemption, in whole or in part, of such series of the Preferred Stock held by
the Preferred Stock Depositary. The redemption price per Depositary Share will
be equal to the applicable fraction of the redemption price per share payable
with respect to such series of the Offered Preferred Stock. If the Company
redeems shares of a series of Offered Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If less than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or
substantially equivalent method determined by the Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares where entitled upon such redemption, upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares. Any funds deposited by the Company with the
Preferred Stock Depositary for any Depositary Shares that the holders thereof
fail to redeem will be returned to the Company after a period of two years from
the date such funds are so deposited.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
the Offered Preferred Stock are entitled to vote, the Preferred Stock Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such series of Offered Preferred
Stock. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for the related series of Offered
Preferred Stock) will be entitled to instruct the Preferred Stock Depositary as
to the exercise of the voting rights pertaining to the number of shares of the
series of Offered Preferred Stock represented by such holder's Depositary
Shares. The
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Preferred Stock Depositary will endeavor, insofar as practicable, to
vote or cause to be voted the number of shares of the Preferred Stock
represented by such Depositary Shares in accordance with such instructions,
provided the Offered Preferred Stock Depositary receives such instructions
sufficiently in advance of such meeting to enable it to so vote or cause to be
voted the shares of Offered Preferred Stock, and the Company will agree to take
all reasonable action that may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting shares of the Offered
Preferred Stock to the extent it does not receive specific instructions from the
holders of Depositary Shares representing such Offered Preferred Stock.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary and upon payment of the taxes, charges and fees
provided for in the Deposit Agreement and subject to the terms thereof, the
holder of the Depositary Shares evidenced thereby will be entitled to delivery
at such office, to or upon his or her order, of the number of whole shares of
the related series of Offered Preferred Stock and any money or other property,
if any, represented by such Depositary Shares. Holders of Depositary Shares will
be entitled to receive whole shares of the related series of Offered Preferred
Stock, but holders of such whole shares of Offered Preferred Stock will not
thereafter be entitled to deposit such shares of Offered Preferred Stock with
the Preferred Stock Depositary or to receive Depositary Shares thereof. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of the related series of Offered Preferred Stock to be withdrawn,
the Preferred Stock Depositary will deliver to such holder or upon his or her
order at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provisions of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Preferred Stock Depositary.
However, any amendment that materially adversely alters the rights of the
holders of Depositary Shares will not be effective unless such amendment has
been approved by the holders of at least a majority of the Depositary Shares
then outstanding. Every holder of a Depositary Receipt at the time such
amendment becomes effective will be deemed, by continuing to hold such
Depositary Receipt, to be bound by the Deposit Agreement as so amended.
Notwithstanding the foregoing, in no event may any amendment impair the right of
any holder of any Depositary Shares, upon surrender of the Depositary Receipts
evidencing such Depositary Shares and subject to any conditions specified in the
Deposit Agreement, to receive shares of the related series of Offered Preferred
Stock and any money or other property represented thereby, except in order to
comply with mandatory provisions of applicable law. The Deposit Agreement may be
terminated by the Company at any time upon not less than 60 days prior written
notice to the Preferred Stock Depositary, in which case, on a date that is not
later than 30 days after the date of such notice, the Preferred Stock Depositary
shall deliver or make available for delivery to holders of Depositary Shares,
upon surrender of the Depositary Receipts evidencing such Depositary Shares,
such number of whole or fractional shares of the related series of Offered
Preferred Stock as are represented by such Depositary Shares. The Deposit
Agreement shall automatically terminate after all outstanding Depositary Shares
have been redeemed or there has been a final distribution in respect of the
related series of Offered Preferred Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution has been
distributed to the holders of Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and the governmental
charges arising solely from the existence of the depositary arrangements. The
Company will pay the charges of the Preferred Stock Depositary, including
charges in connection with the initial deposit of the related series of Offered
Preferred Stock and the initial
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issuance of the Depositary Shares and all withdrawals of shares of the related
series of Offered Preferred Stock, except that holders of Depositary Shares will
pay other transfer and other taxes and governmental charges and such other
charges as are expressly provided in the Deposit Agreement to be for their
accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company written notice of its election to do so, and the Company may at any time
remove the Depositary, any such resignation or removal to take effect upon the
appointment of a successor Preferred Stock Depositary, which successor Preferred
Stock Depositary must be appointed within 60 days after delivery of the notice
of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Company that are delivered to the
Preferred Stock Depositary and which the Company is required to furnish to the
holders of the Offered Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performance with best judgment and in the good faith of their duties
thereunder, except that they are liable for gross negligence and willful
misconduct in the performance of their duties thereunder, and they will not be
obligated to appear in, prosecute or defend any legal proceeding in respect of
any Depositary Receipts, Depositary Shares or series of Preferred Stock unless
satisfactory indemnity is furnished. The Preferred Stock Depositary and the
Company may rely on advice of legal counsel or accountants of their choice, or
information provided by persons presenting Preferred Stock for deposit, holders
of Depositary Shares or other persons believed in good faith to be competent and
on documents believed to be genuine.
The Preferred Stock Depositary's corporate trust office will be identified
in the applicable Prospectus Supplement. Unless otherwise set forth in the
applicable Prospectus Supplement, the Preferred Stock Depositary will act as
transfer agent and registrar for Depositary Receipts and if shares of a series
of Offered Preferred Stock are redeemable, the Preferred Stock Depositary will
act as redemption agent for the corresponding Depositary Receipts.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders except as otherwise
provided by law. There are no cumulative voting rights with respect to the
election of directors. Holders of Common Stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of legally
available funds. In the event of dissolution of the Company, they will be
entitled to share ratably in all assets remaining after payment of liabilities
and amounts owed in respect of outstanding Preferred Stock, including any
Offered Preferred Stock and the Existing Preferred Stock. Holders of Common
Stock have no preemptive rights and have no right to convert their Common Stock
into any other securities.
The transfer agent and registrar for the Common Stock is Chemical Mellon
Shareholder Services.
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$2.625 CONVERTIBLE PREFERRED STOCK
On February 25, 1994, the Company issued 2,760,000 shares of Preferred
Stock designated the "$2.625 Cumulative Convertible Preferred Stock." Holders of
the $2.625 Convertible Preferred Stock are entitled to receive dividends
quarterly at an annual rate of $2.625 per share, when and as declared by the
Board of Directors out of funds legally available therefor. Such dividends are
cumulative.
The $2.625 Convertible Preferred Stock has a Liquidation Preference of $50
per share. Holders of $2.625 Convertible Preferred Stock are entitled, in the
event of the Company's liquidation, to share ratably in all of the Company's
assets remaining after payment of all its debts and liabilities up to the amount
of the Liquidation Preference set forth above, plus all accrued and unpaid
dividends. The rights of holders of $2.625 Convertible Preferred Stock rank upon
liquidation of the Company on a parity with the $2.28 Preferred Stock and prior
to the holders of the Common Stock and of any other series of Preferred Stock
which is not specifically on a parity with or senior to the $2.625 Convertible
Preferred Stock.
The $2.625 Convertible Preferred Stock is redeemable on or after February
16, 1997 at a price per share ranging from 103.675% of the Liquidation
Preference on February 16, 1997 to 100% thereof on or after February 16, 2004,
plus in all instances all accrued and unpaid dividends.
Each share of $2.625 Convertible Preferred Stock is convertible into such
number of shares of Common Stock as is equal to the Liquidation Preference of
such share divided by the Conversion Price. As of the date hereof, the
Conversion Price is $39.750, subject to adjustment for stock dividends, stock
splits and other dilutive events.
Holders of $2.625 Preferred Stock have no voting rights except as set forth
below or as otherwise from time to time required by law. Whenever dividends on
the $2.625 Preferred Stock or any other class or series of stock ranking on a
parity with the $2.625 Preferred Stock with respect to the payment of dividends
shall be in arrears for dividend periods, whether or not consecutive, containing
in the aggregate a number of days equivalent to six calendar quarters, the
holders of shares of $2.625 Preferred Stock (voting separately as a class with
all other series of Preferred Stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
of the authorized number of directors of the Company at the next annual meeting
of stockholders and at each subsequent meeting until all dividends accumulated
on the $2.625 Preferred Stock and all other series of Preferred Stock ranking on
a parity as to dividends with the $2.625 Preferred Stock shall have been fully
paid or set apart for payment. The term of office of all directors elected by
the holders of such Preferred Stock shall terminate immediately upon the
termination of the right of the holders of such Preferred Stock to vote for
directors. Holders of shares of $2.625 Preferred Stock have one vote for each
share held.
So long as any shares of the $2.625 Preferred Stock remain outstanding, the
Company shall not, without the consent of holders of at least two-thirds of the
shares of $2.625 Preferred Stock outstanding at the time, voting separately as a
class with all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable, (i) issue or increase the authorized
amount of any class or series of stock ranking prior to the outstanding $2.625
Preferred Stock as to dividends or upon liquidation or (ii) amend, alter or
repeal the provisions of the Company's Certificate of Incorporation or of the
resolutions contained in the Certificate of Designation relating to the $2.625
Preferred Stock, whether by merger, consolidation or otherwise, so as to
materially adversely affect any power, preference or special right of the
outstanding $2.625 Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized Common Stock or authorized
Preferred Stock or any increase or decrease in the number of shares of any
series of Preferred Stock or the creation and issuance of other series of Common
Stock or Preferred Stock ranking on a parity with or junior to the $2.625
Preferred Stock as to dividends and upon liquidation, dissolution or winding up
shall not be deemed to materially adversely affect such powers, preferences or
special rights.
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$2.28 PREFERRED STOCK
On November 19, 1992, the Company authorized and issued 1,400,000 shares of
Preferred Stock designated "$2.28 Cumulative Preferred Stock." Holders of $2.28
Preferred Stock are entitled to receive dividends quarterly at an annual rate of
$2.28125 per share, when and as declared by the Board of Directors out of funds
legally available therefor. Such dividends are cumulative.
The $2.28 Preferred Stock has a liquidation preference of $25.00 per share.
Holders of $2.28 Preferred Stock are entitled, in the event of the Company's
liquidation, to share ratably in all of the Company's assets remaining after
payment of all of its debts and liabilities up to the amount of the liquidation
preference set forth above, plus all accrued and unpaid dividends. The rights of
holders of $2.28 Preferred Stock rank upon liquidation of the Company on a
parity with the $2.625 Preferred Stock and prior to those of the holders of the
Common Stock and of any other series of Preferred Stock which is not
specifically on a parity with or senior to the $2.28 Preferred Stock.
The $2.28 Preferred Stock is redeemable on or after November 15, 1997 at a
redemption price equal to $25.00 per share plus in all instances all accrued and
unpaid dividends.
Holders of $2.28 Preferred Stock have no voting rights except as set forth
below or as otherwise from time to time required by law. Whenever dividends on
the $2.28 Preferred Stock or any other class or series of stock ranking on a
parity with the $2.28 Preferred Stock with respect to the payment of dividends
shall be in arrears for dividend periods, whether or not consecutive, containing
in the aggregate a number of days equivalent to six calendar quarters, the
holders of shares of $2.28 Preferred Stock (voting separately as a class with
all other series of Preferred Stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of
two of the authorized number of directors of the Company at the next annual
meeting of stockholders and at each subsequent meeting until all dividends
accumulated on the $2.28 Preferred Stock and all other series of Preferred Stock
ranking on a parity as to dividends with the $2.625 Preferred Stock shall have
been fully paid or set apart for payment. The term of office of all directors
elected by the holders of such Preferred Stock shall terminate immediately upon
the termination of the right of the holders of such Preferred Stock to vote for
directors. Holders of shares of $2.28 Preferred Stock have one vote for each
share held.
So long as any shares of the $2.28 Preferred Stock remain outstanding, the
Company shall not, without the consent of holders of at least two-thirds of the
shares of $2.28 Preferred Stock outstanding at the time, voting separately as a
class with all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable, (i) issue or increase the authorized
amount of any class or series of stock ranking prior to the outstanding $2.28
Preferred Stock as to dividends or upon liquidation or (ii) amend, alter or
repeal the provisions of the Company's Certificate of Incorporation or of the
resolutions contained in the Certificate of Designation relating to the $2.28
Preferred Stock, whether by merger, consolidation or otherwise, so as to
materially adversely affect any power, preference or special right of the
outstanding $2.28 Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized Common Stock or authorized
Preferred Stock or any increase or decrease in the number of shares of any
series of Preferred Stock or the creation and issuance of other series of Common
Stock or Preferred Stock ranking on a parity with or junior to the $2.28
Preferred Stock as to dividends and upon liquidation, dissolution or winding up
shall not be deemed to materially adversely affect such powers, preferences or
special rights.
REGISTRATION RIGHTS
The Company has a registration rights agreement with certain principal
stockholders granting them the right to require the Company to effect one
registration of any or all of their Common Stock at their expense. In
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addition, they have the right to have any or all of such Common Stock included,
at their pro rata expense, in any registration statement relating to the Common
Stock filed by the Company, subject to the right of the underwriter of that
offering to limit the number of shares of such Common Stock to be included in
that registration.
CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND DELAWARE LAW
The Company's Certificate of Incorporation contains certain provisions that
may have an effect of delaying, deferring or preventing a change of control of
the Company. First, the Certificate of Incorporation provides that the Board
shall consist of three classes of Directors, each serving a three-year term
ending in a successive year. This provision may make it more difficult to effect
a takeover of the Company because it would generally take two annual meetings of
stockholders for an acquiring party to elect a majority of the Board. As a
result, the classified Board may discourage proxy contests for the election of
Directors or purchases of a substantial block of stock because it could operate
to prevent obtaining control of the Board in a relatively short period of time.
In addition, the Certificate of Incorporation provides that the holders of
a minimum of 60% of the Company's capital stock entitled to vote on a manner (or
such higher percentage as may otherwise be required) may take action thereon
without a meeting by executing a written consent or consents. This increases the
percentage that would otherwise be required under Delaware law to take certain
actions by written consent, and thus may make it more difficult to effect a
takeover of the Company involving certain transactions, such as a merger or sale
of assets, by requiring a potential acquiror to obtain a higher percentage of
the Company's voting securities or hold a stockholders' meeting before such a
transaction could be consummated.
The Company is subject to Section 203 of the Delaware General Corporation
Law, which provides for restrictions on business combinations (as defined
therein) with interested persons (any person who acquires 15% or more
of the Company's outstanding voting stock). In general, the Company is
prohibited from engaging in business combinations with an interested person for
a period of three years from the date a person becomes an interested person,
subject to certain exceptions. By restricting the ability of the Company to
engage in business combinations with an interested person, the application of
Section 203 to the Company may provide a barrier to hostile or unwanted
takeovers.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby directly to
purchasers, through agents, through underwriters and/or through dealers.
Offers to purchase Securities may be solicited directly by the Company or
by agents designated by the Company from time to time. Any such agent, who may
be deemed to be an underwriter as that term is defined in the Securities Act of
1933, involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the accompanying Prospectus
Supplement. Unless otherwise indicated in the accompanying Prospectus
Supplement, any such agent will be acting on a best-efforts basis for the period
of its appointment (ordinarily five business days or less).
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction
will be set forth in the accompanying 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.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at
25
<PAGE>
varying prices to be determined by such dealer at the time of resale. The
name of the dealer and the terms of the transaction will be set forth in the
accompanying Prospectus Supplement.
Agents, underwriters and dealers may be entitled under the relevant
agreements to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. Agents, dealers and underwriters
may be customers of, engage in transactions with, or perform services for the
Company in the ordinary course of business.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus Supplement.
LEGAL OPINIONS
The validity of all the Securities in respect of which this Prospectus is
being delivered will be passed on for the Company by Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of the Company for the year ended December 31,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:
SEC registration fee.................................. $ 34,483
Printing costs........................................ 35,000
Legal fees and expenses............................... 100,000
Accounting fees and expenses.......................... 30,000
Blue sky fees and expenses............................ 20,000
Trustee's fees........................................ 15,000
Fees of rating agencies............................... 30,000
Miscellaneous......................................... 35,517
--------
Total $300,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws incorporate substantially the provisions of the
General Corporation Law of the State of Delaware providing for indemnification
of directors, officers, employees and agents of the Company against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that such person
is or was an officer, director, employee or agent of the Company. In addition,
the Company is authorized to enter into indemnification agreements with its
directors and officers providing mandatory indemnification to them to the
maximum extent permissible under Delaware law.
As permitted under Delaware law, the Company's Certificate of Incorporation
provides for the elimination of the personal liability of a director to the
corporation and its stockholders for monetary damages arising from a breach of
the director's fiduciary duty of care. The provision is limited to monetary
damages, applies only to a director's actions while acting within such
person's capacity as a director, and does not entitle the Company to limit
director liability for any judgment resulting from (a) any breach of the
director's duty of loyalty to the Company or its stockholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (c) paying an illegal dividend or approving an illegal
stock repurchase; or (d) any transaction from which the director derived an
improper benefit. In addition, Section 145 of the General Corporation Law of the
State of Delaware provides generally that a person sued as a director, officer,
employee or agent of a corporation may be indemnified by the corporation for
reasonable expenses, including counsel fees, if in the case of other than
derivative suits, such person has acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation (and in the case of a criminal proceeding, and no reasonable cause
to believe that such person's conduct was unlawful). In the case of a derivative
suit, an officer, employee or agent of the corporation who is not protected by
such provisions in the Certificate of Incorporation, may be indemnified by the
corporation for reasonable expenses, including attorneys' fees, if such person
has acted in good faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification shall be made in the case of a derivative suit in respect of any
claim as to which an officer, employee or agent has been adjudged to be liable
to the
II-1
<PAGE>
corporation unless the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine that such person is fairly and
reasonably entitled to indemnity for proper expenses. Indemnification is
mandatory in the case of a director, officer, employee or agent who is
successful on the merits in defense of a suit against such person.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
- ------ -----------
1.1 Form of Underwriting Agreement for Debt Securities; incorporate by
reference to Exhibit 1.1 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
1.2 Form of Underwriting Agreement for Preferred Stock; incorporated by
reference to Exhibit 1.2 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
1.3 Form of Underwriting Agreement for Common Stock; incorporated by
reference to Exhibit 1.3 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
4.1 Form of Indenture between the Registrant and Texas Commerce Bank
National Association; incorporated by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-3 (No. 33-66516).
4.2 Form of Certificate of Designation for Preferred Stock; incorporated
by reference to Exhibit 4.1 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
4.3 Form of Deposit Agreement; incorporated by reference to Exhibit 4.3 to
Registrant's Registration Statement on Form S-3 (No. 33-66516).
4.4 Form of Depositary Receipt (included in Exhibit 4.3).
4.7 Certificate of Designation for $2.625 Cumulative Convertible Preferred
Stock; incorporated by reference to Item 5 to Registrant's Current
Report on Form 8-K dated February 24, 1994.
5.1* Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to
certain securities that may be offered by the Registrant.
7.1* Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to the
liquidation preference of Preferred Stock that may be offered by the
Registrant (included in Exhibit 5.1).
12.1 Computation of Consolidated Ratio of Earnings to Fixed Charges.
12.2 Computation of Consolidated Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends.
23.1* Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit
5.1).
23.2 Consent of Price Waterhouse LLP.
II-2
<PAGE>
24.1* Powers of Attorney.
25.1* Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Texas Commerce Bank National Association as
Trustee; incorporated by reference to Exhibit 25.1 to Registrant's
Registration Statement on Form S-3 (No. 33-66516).
* Previously filed as exhibits on February 13, 1996.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(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;
(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 such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(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 such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
II-3
<PAGE>
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company 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 Company 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 Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Amendment to the
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on May 7, 1996.
WESTERN GAS RESOURCES, INC.
By: /S/ BRION G. WISE
-------------------------------------
Brion G. Wise, Chairman of the Board
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES STATED BELOW ON THE 7TH DAY OF MAY, 1996.
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/BRION G. WISE Director, Chairman of the Board May 7, 1996
- -------------------------- and Chief Executive Officer
Brion G. Wise (Principal Executive Officer)
* Director and Vice Chairman of the May 7, 1996
- -------------------------- Board
Walter L. Stonehocker
* Director May 7, 1996
- --------------------------
Bill M. Sanderson
* Director May 7, 1996
- --------------------------
Dean Phillips
* Director May 7, 1996
- --------------------------
Ward Sauvage
* Director May 7, 1996
- --------------------------
Richard B. Robinson
* Director May 7, 1996
- --------------------------
James A. Senty
* Director May 7, 1996
- --------------------------
Joseph E. Reid
/S/WILLIAM J. KRYSIAK Vice President - Finance (Principal May 7, 1996
- -------------------------- Financial and Accounting Officer)
William J. Krysiak
*By: /s/ JOHN C. WALTER
----------------------
John C. Walter Attorney-in-Fact May 7, 1996
</TABLE>
II-6
<PAGE>
Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES
($000s, except for ratios)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income $(6,108) $ 7,364 $38,102 $39,688 $20,850
Income taxes (2,158) 4,160 17,529 18,757 11,933
------- ------- ------- ------- -------
Pre-tax income (8,266) 11,524 55,631 58,445 32,783
------- ------- ------- ------- -------
Add:
Interest expense on indebtedness 37,160 31,434 12,456 10,449 13,022
Amortization of debt expense 1,585 1,251 - - -
Portion of rents representative of
the interest factor 590 354 1,218 558 85
------- ------- ------- ------- -------
Total fixed charges 39,335 33,039 13,674 11,007 13,107
------- ------- ------- ------- -------
Income as adjusted $31,069 $44,563 $69,305 $69,452 $45,890
======= ======= ======= ======= =======
Total fixed charges per above $39,335 $44,563 $13,674 $11,007 $13,107
Interest capitalized 1,460 1,480 4,905 2,100 1,300
------- ------- ------- ------- -------
Total fixed charges $40,795 $34,519 $18,579 $13,107 $14,407
======= ======= ======= ======= =======
Ratio of earnings to fixed charges .76 1.29 3.73 5.30 3.19
======= ======= ======= ======= =======
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed charges
consist of (i) interest (including capitalized interest, but excluding
amortization of amounts previously capitalized) on all indebtedness; (ii)
amortization of debt discount and expense; and (iii) that portion (one-third) of
rental expense which the Company believes to be representative of interest.
<PAGE>
Exhibit 12.2
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
($000s, except for ratios)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income $ (6,108) $ 7,364 $38,102 $39,688 $20,850
Income taxes (2,158) 4,160 17,529 18,757 11,933
------- ------- ------- ------- -------
Pre-tax income (8,266) 11,524 55,631 58,445 32,783
------- ------- ------- ------- -------
Add:
Interest expense on indebtedness 37,160 31,434 12,456 10,449 13,022
Amortization of debt expense 1,585 1,251 - - -
Portion of rents representative of
the interest factor 590 354 1,218 558 85
------- ------- ------- ------- -------
Total fixed charges 39,335 33,039 13,674 11,007 13,107
------- ------- ------- ------- -------
Income as adjusted $31,069 $44,563 $69,305 $69,452 $45,890
======= ======= ======= ======= =======
Preferred dividend requirements $15,431 $12,212 $ 6,092 $ 3,272 $ 4,758
Ratio of pre-tax income to net income 1.35 1.56 1.46 1.47 1.57
------- ------- ------- ------- -------
20,883 19,111 8,895 4,818 7,481
Total fixed charges per above 39,335 33,039 13,674 11,007 13,107
Interest capitalized 1,460 1,480 4,905 2,100 1,300
------- ------- ------- ------- -------
Total fixed charges and preferred
dividends $61,678 $53,630 $27,474 $17,925 $21,888
======= ======= ======= ======= =======
Ratio of earnings to combined fixed
charges and preferred dividends .50 .83 2.52 3.87 2.10
======= ======= ======= ======= =======
</TABLE>
For the purpose of computing the ratio of earnings to combined fixed
charges and preferred stock dividends, earnings consist of income before income
taxes and fixed charges and preferred stock dividends. Fixed charges consist of
(i) interest (including capitalized interest, but excluding amortization of
amounts previously capitalized) on all indebtedness; (ii) amortization of debt
discount and expense; (iii) that portion (one-third) of rental expense which the
Company believes to be representative of interest; and (iv) preferred dividends
as adjusted for taxes. The ratio for the year ended December 31, 1991
includes approximately $3 million related to the prepayment in the second
quarter of the remaining preference distributions of $1.75 per unit to minority
holders in the predecessor company. Preferred dividends for the years ended
December 31, 1991 through December 31, 1994 include quarterly dividends on the
7.25% Cumulative Senior Perpetual Convertible Preferred Stock. In May of 1995,
the Company redeemed the 7.25% Cumulative Senior Perpetual Convertible Preferred
Stock; thus, the ratio for the year ended December 31, 1995 includes dividends
paid of $1.2 million, a redemption premium of $2.0 million and up-front costs of
$1.8 million related to this redemption. The ratio also includes quarterly
dividends on the $2.28 Cumulative Convertible Preferred Stock since November
1992 and quarterly dividends on the $2.625 Cumulative Convertible Preferred
Stock since February 1994.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 23, 1996 appearing on page 27 of Western Gas Resources, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
May 3, 1996
