<PAGE> 1
Registration Statement No. 333-44049
Filed Pursuant to Rule 424(b)(3)
The information contained herein is subject to amendment and completion.
SUBJECT TO COMPLETION, DATED APRIL 7, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 22, 1998
$150,000,000
[WISC CENTRAL LOGO] WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
% NOTES DUE , 2008
---------------------
Interest on the Notes is payable on April and October
of each year, commencing on October , 1998. The Notes will be
redeemable, in whole or in part, at the option of the Company at any time at a
redemption price equal to the greater of (i) 100% of the principal amount of
such Notes or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate (as defined herein), plus, in each case, accrued and
unpaid interest thereon to the redemption date. The Notes will not be entitled
to any sinking fund. The Notes will be represented by one or more Global Debt
Securities registered in the name of the nominee of The Depository Trust Company
("DTC"). Beneficial interests in the Global Debt Securities will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. Except as described herein, Notes in definitive form will
not be issued. The Notes will be issued only in denominations of $1,000 and
integral multiples thereof. See "Description of Notes".
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note.................. % % %
Total..................... $ $ $
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from April , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
(3) Before deducting estimated expenses of $250,000 payable by the Company.
---------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of DTC
in New York, New York, on or about April , 1998 against payment therefor in
immediately available funds.
GOLDMAN, SACHS & CO. CHASE SECURITIES INC.
---------------------
The date of this Prospectus Supplement is April , 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE NOTES, AND
THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
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THE COMPANY
GENERAL
Wisconsin Central Transportation Corporation (the "Company") is a holding
company which conducts a transportation business in North America through
wholly-owned subsidiaries and in the United Kingdom, New Zealand and Australia
through minority-owned corporations. The Company's common stock is publicly
traded in the United States on the NASDAQ National Market under the symbol
"WCLX".
NORTH AMERICAN OPERATIONS
The Company was formed to acquire a rail system of approximately 2,000
route miles in Wisconsin, the Upper Peninsula of Michigan, northeastern Illinois
and eastern Minnesota. The Company began providing freight operations in 1987
with approximately 600 employees, 85 locomotives and 2,900 railcars. Total
operating revenues in 1988, the Company's first full year of operations, were
$93.7 million.
Since 1987 the Company has acquired additional rail lines in Wisconsin,
Michigan and Ontario, consolidated some of the acquired lines with its existing
rail system and increased its business from new and continuing customers. At
December 31, 1997 the Company's North American rail system comprised
approximately 2,925 route miles, and it had approximately 2,345 employees, 247
locomotives and 12,900 railcars. Total operating revenues from North American
operations in 1997 were $333.5 million.
INTERNATIONAL OPERATIONS
The Company's operations outside North America are referred to in this
Prospectus Supplement as its international operations. All amounts in this
Prospectus Supplement are stated in US dollars.
NEW ZEALAND. The Company owns approximately 23% of the New Zealand
company, Tranz Rail Holdings Limited ("Tranz Rail"), which operates a 2,400
route mile freight and passenger rail business, an interisland ferry business
and a trucking business with a total of approximately 4,600 employees, 530
locomotives and self-propelled passenger cars, 6,700 railcars, 300 trucks and 4
ferry vessels. The Company participates in the management of Tranz Rail by
furnishing executive talent and consulting services. In addition, six of the ten
directors of Tranz Rail are also directors of the Company, and the Company's
chairman is the chairman of Tranz Rail. Tranz Rail's total operating revenues
for 1997 were approximately $382 million. The Company has invested approximately
$22.2 million in Tranz Rail, and it has received from Tranz Rail approximately
$25.5 million in proceeds from a return of capital and dividends through March
31, 1998. Tranz Rail's shares and its American Depositary Shares have been
publicly traded in New Zealand and the United States, respectively, since an
initial public offering in June 1996. Tranz Rail's shares are traded on the New
Zealand Stock Exchange under the symbol "TRH", and its American Depositary
Shares are traded on the NASDAQ National Market under the symbol "TNZRY". The
total market capitalization of Tranz Rail at March 31, 1998 was approximately
$439.6 million (based on the closing price of its American Depositary Shares).
The Company's equity in the net income of Tranz Rail for 1997 was $8.7 million.
UNITED KINGDOM. The Company owns approximately 34% of English Welsh &
Scottish Railway Holdings Limited ("EWS") which provides most of the rail
freight services in Great Britain, operates freight trains through the English
Channel tunnel and carries mail for the Royal Mail. The EWS businesses were
acquired from the British government in privatization transactions in the period
from late 1995 to late 1997, with the acquisition of the principal rail freight
business occurring in February 1996. EWS has approximately 7,100 employees,
1,018 locomotives and 22,800 railcars. The Company participates in the
management of EWS by furnishing executive talent and consulting services. In
addition, four of the nine directors of EWS are also directors of the Company,
and the Company's chairman is the chief executive officer of EWS. EWS's total
operating revenues for 1997 were approximately $855 million. The Company has
invested approximately $53.4 million in EWS through March 31, 1998. The
Company's equity in the net income of EWS for 1997 was $29.9 million.
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AUSTRALIA. In November 1997 the Company led a consortium which acquired
the government-owned rail business in Tasmania, an island state of Australia,
for approximately $15.4 million in a privatization transaction. The Company owns
approximately 33% of the Australian company, Australian Transport Network
Limited ("ATN"), which provides all the commercial rail freight service in
Tasmania. ATN operates a 360 route mile rail system with approximately 180
employees, 28 locomotives and 560 railcars. The Company participates in the
management of ATN by furnishing consulting services. In addition, five of the
nine directors of ATN are also directors of the Company, and the Company's
chairman is the chairman of ATN. The Company invested approximately $5.1 million
in ATN. ATN is actively seeking to participate in the privatization of
additional government-owned railroad companies in Australia.
STRATEGY
The Company's strategic goals include profitable growth through superior
customer service and opportunistic acquisition. The Company's history has been
marked by a combination of growth within its existing territory and growth
through acquisition. The Company expects that growth from both sources will
continue.
SUPERIOR CUSTOMER SERVICE. The Company believes that superior customer
service is the cornerstone of its success and is continually seeking ways to
improve customer service in its North American and international operations. The
Company's ability to compete, especially with other modes of transportation, is
dependent on providing customers with superior transportation services at
competitive prices. The Company believes that the high quality of its services
has contributed to the growth of its business. From 1992 to 1997 the Company's
overall North American carloadings (counting as a carload each loaded intermodal
trailer or container) increased by a compound annual rate of approximately 22%.
In that period the compound annual rate of increase of business volume in the
Company's existing service territory (excluding acquired lines) was
approximately 10%.
The Company's customer service initiatives take many forms, including
improving the quality and dependability of infrastructure and equipment through
capital expenditures, training staff to be customer-focused, providing operating
schedules that fit the production cycles of customers and investing in
information technology to permit accurate tracking and billing of shipments. The
Company continually looks for opportunities to better serve customers and has
implemented a program to exchange technology and personnel among its North
American and international operations.
OPPORTUNISTIC ACQUISITION. The Company pursues a disciplined strategy of
acquisition throughout the world. Using a focused set of acquisition criteria,
the Company pursues the acquisition of railroads that it considers undervalued
and invests its capital opportunistically where it believes there is the ability
to leverage operating expertise and control risk. In 1997 the Company acquired
two properties in its North American service territory and led a consortium
which acquired a railroad in a privatization transaction in Australia.
The Company seeks properties where it can utilize its management and
operational expertise to improve the acquired railroad. Although the Company
only has a minority interest in each of its international operations, in each
case the Company has led the acquisition consortium, purchased the largest stake
in the acquired railroad and provided executives and consulting services under a
management services agreement. The Company intends to pursue additional
international acquisitions in a similar manner.
Before pursuing an acquisition opportunity outside North America, the
Company also considers the political and economic environment of the relevant
home country, including its labor environment, legal system and tax regime. The
Company analyzes the target company, including the physical condition of its
assets, its past and expected performance, its historical labor practices and
its potential for growth in light of the stability and level of competition in
the transportation markets served by the target company. The Company is
committed to addressing and understanding these considerations before it
initiates any acquisition. The Company also considers the expected level of
bidding competition and the probability
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that it can effect the acquisition at a reasonable price before participating in
a transaction that involves competitive bidding.
ADDITIONAL INFORMATION
For additional information regarding the Company, see "Management's Summary
Discussion and Analysis of Financial Condition and Results of Operations" below
and the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 ("1997 Form 10-K"), including the consolidated financial statements
included therein (the "1997 Consolidated Financial Statements").
USE OF PROCEEDS
The net proceeds from the sale of the Company's % Notes due April
, 2008 (the "Notes") will be used for payment of outstanding indebtedness
under the Company's revolving credit facility and for general corporate
purposes. The Company's revolving credit facility allows the Company to choose
various floating interest rate and maturity options. At December 31, 1997,
$259.5 million was outstanding under the revolving credit facility with an
average maturity of 52 days and an average interest rate of 6.31%.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1997 and as adjusted to give effect to the sale by
the Company of the Notes offered hereby and the application of the estimated net
proceeds therefrom, as described under "Use of Proceeds":
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt............................................. $ 1,387 $ 1,387
Long-term debt:
Notes due April , 2008............................... -- 150,000
Other long-term debt...................................... 279,383 129,383
-------- --------
Total long-term debt........................................ 279,383 279,383
Stockholders' equity........................................ 369,685 369,685
-------- --------
Total capitalization...................................... $650,455 $650,455
======== ========
</TABLE>
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated financial data presented below as of the end of
and for each of the years in the five-year period ended December 31, 1997 have
been derived from the audited consolidated financial statements of the Company.
These data should be read in conjunction with "Management's Summary Discussion
and Analysis of Financial Condition and Results of Operations" set forth herein
and the more detailed information and consolidated financial statements and
notes thereto incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997(1) 1996(2) 1995(3) 1994 1993(4)
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues............ $333,510 $265,119(5) $264,127 $211,839 $151,866
Operating expenses............ 255,831 226,388 199,968 156,514 116,843
-------- -------- -------- -------- --------
Income from operations........ 77,679 38,731 64,159 55,325 35,023
Other income, net............. 1,234 1,812 1,799 2,348 2,065
Interest expense.............. (14,663)(6) (11,808)(6) (9,811) (9,901) (7,798)
Provisions for income taxes... (25,442) (11,378) (22,170) (19,068) (11,944)
-------- -------- -------- -------- --------
Income before equity in net
income of affiliates,
extraordinary items and
effect of accounting
change...................... 38,808 17,357 33,977 28,704 17,346
Equity in net income of
affiliates.................. 38,618 32,677 10,655 9,578 1,490
Extraordinary items(7)........ -- (1,602) (2,123) (1,587) (1,398)
Effect of accounting
change(8)................... -- -- -- -- (2,067)
-------- -------- -------- -------- --------
Net income.................... $ 77,426 $ 48,432 $ 42,509 $ 36,695 $ 15,371
======== ======== ======== ======== ========
Diluted earnings per common
share outstanding:
Income before extraordinary
items and accounting
change................... $ 1.51 $ 0.98 $ 0.88 $ 0.76 $ 0.38
Net income.................. 1.51 0.95 0.84 0.73 0.31
BALANCE SHEET DATA:
Total assets.................. $911,596 $691,275 $550,530 $434,538 $390,367
Investment in affiliates...... 152,489 114,652 41,416 33,612 17,532
Total debt.................... 280,770 165,034 137,340 102,500 134,155
Stockholders' equity.......... 369,685 299,146 237,695 190,478 149,674
Debt to total
capitalization.............. 43.2% 35.6% 36.6% 35.0% 47.3%
</TABLE>
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(1) Includes partial year (11 months) results of the operation of the Duck Creek
North lines, acquired January 1997, as described in the 1997 Form 10-K.
(2) Includes partial year (10 months) results of EWS trainload freight
companies, acquired February 1996.
(3) Includes partial year (11 months) results of Algoma Central Railway Inc.,
acquired January 1995.
(4) Includes partial year (4 months) results of Fox Valley & Western Ltd.,
acquired August 1993, and partial year (6 months) results of Tranz Rail.
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(5) Amount shown is net of disputed switching charges of $13.3 million. See Note
17 to the 1997 Consolidated Financial Statements.
(6) Interest expense in 1997 and 1996 includes $0.9 million and $2.9 million,
respectively, resulting from the disputed switching charges discussed in
Note 17 to the 1997 Consolidated Financial Statements.
(7) Extraordinary items result from early extinguishment of debt obligations and
are stated net of related income tax benefits.
(8) The Company adopted the provisions of the Financial Accounting Standards
Board's Statement No. 109, "Accounting for Income Taxes", effective as of
January 1, 1993.
The operating data presented below have been derived from the records of
the Company with respect to its North American operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1997(1) 1996 1995(2) 1994 1993(3)
------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue ton miles of freight traffic
(millions)(4)....................... 10,338 9,786 9,478 7,210 5,166
Revenue per ton mile (cents)(5)....... 3.0 2.6 2.6 2.8 2.8
Operating ratio(6).................... 76.7% 81.3% 75.7% 73.9% 76.9%
Revenue ton miles per freight train
hour (thousands)(4)................. 38 44 39 40 37
Revenue ton miles per locomotive in
service (millions)(4)............... 46 47 45 45 42
Fuel consumption (thousand gallons)... 29,634 28,537 28,432 21,646 15,789
Fuel cost per gallon (average, in
cents).............................. 74 75 66 66 66
Revenue ton miles per gallon of
fuel(4)............................. 349 343 333 333 327
Total carloads (thousands)............ 566 464 436 359 257
Carloads from originating, terminating
and local traffic................... 84.9% 78.3% 76.5% 79.2% 79.1%
Gross revenues from originating,
terminating and local traffic....... 87.9% 84.2% 84.3% 85.1% 82.1%
</TABLE>
- ---------------
(1) Includes partial year (11 months) results of the operation of the Duck Creek
North lines, acquired January 1997.
(2) Includes partial year (11 months) results of Algoma Central Railway Inc.,
acquired January 1995.
(3) Includes partial year (4 months) results of Fox Valley & Western Ltd.,
acquired August 1993.
(4) A revenue ton mile equals the product of weight in tons of freight carried
for hire and the distance in miles between origin and destination.
(5) Revenue per ton mile equals net freight revenue divided by revenue ton miles
of freight volume.
(6) Operating ratio represents operating expenses as a percentage of operating
revenues. The 1996 percentage excludes the disputed switching charges of
$13.3 million discussed in Note 17 to the 1997 Consolidated Financial
Statements.
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<PAGE> 8
MANAGEMENT'S SUMMARY DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following summary discussion and analysis should be read in conjunction
with the more detailed "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in the 1997 Form 10-K.
RESULTS OF OPERATIONS
FISCAL 1997, 1996 AND 1995
The increase in net income from 1996 to 1997 was primarily due to increased
income from operations. The increase in net income from 1995 to 1996 was
primarily due to increased equity in net income of affiliates.
Operating revenues. The increase in operating revenues from 1995 to 1997
resulted primarily from increased traffic volumes both in the Company's
continuing business and from the business of acquired rail lines. Over the
two-year period the volume of carloads increased by approximately 30% from
436,286 to 565,625 while average revenue per carload decreased approximately 4%.
The greatest increases in volume were in intermodal and metallic ore shipments,
which traditionally generate a lower revenue per carload than the other
commodities handled by the Company. The increase in metallic ore traffic was
primarily attributable to the Duck Creek North line acquisition discussed in the
1997 Form 10-K. Operating revenues in 1996 were negatively impacted by the
disputed switching charges discussed in Note 17 to the 1997 Consolidated
Financial Statements.
Operating expenses. The increase in operating expenses from 1995 to 1997
reflects the costs of servicing the increased volume of business and general
inflationary increases in costs. Operating expenses increased slightly more than
operating revenues increased, as reflected in the change in the Company's
operating ratio from 75.7% for 1995 to 76.7% for 1997.
Interest expense and income taxes. Interest expense (excluding the
interest on the disputed switching charges discussed in Note 17 to the 1997
Consolidated Financial Statements) increased in 1997 as compared to 1996 and
1995 as a result of an approximately $92.5 million increased borrowing required
to finance the acquisition of certain rail properties in Wisconsin and the Upper
Peninsula of Michigan discussed in the 1997 Form 10-K. The provision for income
taxes increased in 1997, reflecting primarily the increase in income before
income taxes over 1996, and decreased in 1996, reflecting primarily the decrease
in income before income taxes from 1995.
Equity in net income of affiliates. The Company's equity in the net income
of affiliates increased from 1995 to 1997 primarily as a result of the EWS
acquisitions in late 1995 and early 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations is the Company's principal source of
liquidity and is used primarily for capital expenditures, debt service and
working capital requirements. The Company also generates cash from asset sales
and from financing activities.
From 1995 through 1997 the Company generated cash in the amounts of $199.7
million from operations, $15.3 million from the sale and salvage of assets,
$174.5 million from increased debt and $11.0 million from equity issuances. The
Company also received a dividend and a return of capital from Tranz Rail
totaling $24.4 million. These cash amounts were primarily used to fund $253.1
million of capital expenditures, $111.8 million of asset acquisitions and $61.5
million of investments in affiliates.
The Company had $280.8 million of total debt outstanding at December 31,
1997, which constituted 43.2% of its total capitalization. At December 31, 1997
the Company's aggregate unused borrowing and letter of credit availability under
its loan facilities was $42.0 million. In September 1997 the Company appealed
the ruling by the U.S. District Court in connection with the disputed switching
charges discussed in Note 17 to the 1997 Consolidated Financial Statements to
the U.S. Court of Appeals, as
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<PAGE> 9
discussed in the Company's 1997 Form 10-K. In connection with the appeal, the
Company posted a $23.5 million letter of credit to cover amounts which may be
payable if the appeal is unsuccessful.
The Company currently maintains an unsecured $325.0 million revolving
credit facility with a syndicate of banks. This facility allows the Company to
choose from various floating rate interest options. Upon the issuance of the
Notes described herein, the Company expects to replace this facility with a
similar facility with a smaller capacity. The new credit facility is expected to
result in at least $100 million of unused borrowing availability (after giving
effect to issuance of the Notes and application of the proceeds thereof).
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement, the accompanying Prospectus and the information
incorporated therein by reference contain certain statements that are
"forward-looking", within the meaning of Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act"), including statements regarding, among other
matters, the beliefs, expectations, plans and estimates of the Company with
respect to certain future events, the impact of governmental regulation, the
impact of litigation and regulatory proceedings, the actions to be taken by
others and similar expressions concerning matters that are not historical facts.
Such forward-looking statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors that could
cause actual events to differ materially from those expressed in those
statements.
The Company does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied therein will not be realized.
DESCRIPTION OF NOTES
The following information concerning the Notes offered hereby supplements
and should be read in conjunction with the statements in the accompanying
Prospectus under the caption "Description of Debt Securities". Capitalized terms
not otherwise defined herein shall have the meanings given to them in the
accompanying Prospectus.
GENERAL
The Notes will be issued as a series of Debt Securities under the Indenture
dated as of , 1998 (the "Indenture"), between the Company and The Bank
of New York, as Trustee, which is more fully described in the accompanying
Prospectus.
The Notes will be issued as unsecured obligations of the Company in an
aggregate principal amount of $150,000,000 and will mature on April , 2008.
The Notes will bear interest from April , 1998, payable semiannually
in arrears on each April and October , commencing on October ,
1998, at the rate set forth on the cover page of this Prospectus Supplement, to
the persons in whose names the Notes are registered on the preceding April
and October , respectively.
The principal of and interest and premium (if any) on the Notes will be
payable, the transfer of Notes will be registrable and the Notes may be
presented for exchange, at the principal corporate trust office of the Trustee,
101 Barclay Street, Floor 21 West, New York, New York 10286, Attention:
Corporate Trust Trustee Administration. So long as the Notes are represented by
Global Debt Securities, the interest payable on the Notes will be paid to Cede &
Co., the nominee of DTC, or its registered assigns as the registered owner of
the Global Debt Securities, by wire transfer of immediately available funds on
each of the applicable interest payment dates, not later than 2:30 p.m. New York
time. If the Notes are no longer represented by Global Debt Securities, payment
of interest may, at the option of the Company, be made by check mailed to the
address of the Person entitled thereto. No service charge will be made for any
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<PAGE> 10
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Notes will be subject to defeasance and covenant defeasance as
described in the accompanying Prospectus under the caption "Description of Debt
Securities -- Defeasance of Offered Debt Securities or Certain Covenants in
Certain Circumstances".
No sinking fund is provided for the Notes.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of
the principal amount of such Notes or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (determined on the third
Business Day preceding such redemption date), plus, in each case, accrued and
unpaid interest thereon to the redemption date.
"Adjusted Treasury Rate" means (i) the arithmetic mean of the yields under
the heading "Week Ending" published in the Statistical Release most recently
published prior to the date of determination under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the redemption date, of
the principal being redeemed plus (ii) 0.10%. If no maturity set forth under
such heading exactly corresponds to the maturity of such principal, yields for
the two published maturities most closely corresponding to the maturity of such
principal shall be calculated pursuant to the immediately preceding sentence,
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding in each of the relevant periods to the
nearest month.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively-traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the terms of the Notes,
then such other reasonably comparable index which shall be designated by the
Company.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be represented by Global Debt Securities that will be
deposited with, or on behalf of, DTC, as Depositary, and registered in the name
of Cede & Co., the nominee of DTC.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participating organizations ("participants") and to facilitate
the clearance and settlement of securities transactions, such as transfers and
pledges, among its participants in such securities through electronic
computerized book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
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<PAGE> 11
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by DTC only through
participants.
Unless and until they are exchanged in whole or in part for certificated
notes in definitive form, the Global Debt Securities may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any such nominee to a successor depositary
or a nominee of such successor depositary.
A further description of DTC's procedures with respect to the Notes is set
forth in the accompanying Prospectus under the heading "Description of Debt
Securities -- Global Debt Securities".
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase, the principal amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
AMOUNT OF
UNDERWRITER NOTES
----------- ---------
<S> <C>
Goldman, Sachs & Co......................................... $
Chase Securities Inc........................................
-------
Total..................................................... $
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Underwriters are committed to take and pay for all of the
Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
% of the principal amount of the Notes to certain brokers and dealers.
After the Notes are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created in
connection with the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline in the market
price of the Notes; and short positions involve the sale by the Underwriters of
a greater number of Notes than they are required to purchase from the Company in
the offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect of the Notes sold in the
offering for their account may be reclaimed by the Underwriters if such Notes
are repurchased by the Underwriters in stabilizing or covering transactions.
These activities may stabilize, maintain or otherwise affect the market price of
the Notes, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
In the ordinary course of business, Goldman, Sachs & Co. has in the past
performed, and may in the future perform, investment banking services for the
Company for which it has received, and may in the future receive, fees or other
compensation. An affiliate of Chase Securities Inc. has engaged, and may in
S-11
<PAGE> 12
the future engage, in general financing and banking transactions with the
Company for which it has received, and may in the future receive, compensation
in the ordinary course of business, and Chase Securities Inc. and its affiliates
may in the future perform investment banking and other services for which they
may receive fees or other compensation. In addition, an affiliate of Chase
Securities Inc. is a lender to the Company under its revolving credit facility
and will receive a portion of the amounts repaid under such revolving credit
facility with the proceeds of the offering. See "Use of Proceeds".
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.
VALIDITY OF NOTES
The validity of the Notes offered hereby and certain other legal matters
will be passed upon for the Company by Schiff Hardin & Waite, Chicago, Illinois
and McLachlan, Rissman & Doll, Chicago, Illinois and for the Underwriters by
Sullivan & Cromwell, New York, New York.
S-12
<PAGE> 13
PROSPECTUS
$250,000,000
WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
[WISC CENTRAL LOGO]
---------------------
DEBT SECURITIES
---------------------
Wisconsin Central Transportation Corporation (the "Company") from time to
time may offer its debt securities consisting of debentures, notes and/or other
unsecured evidences of indebtedness (the "Debt Securities") in one or more
series and in amounts, at prices and on terms to be determined at the time of
the offering. The principal amount of the Debt Securities offered hereby will
not exceed $250,000,000 (or the equivalent in foreign currency or currency
units, or if Debt Securities are issued at a discount, such greater principal
amount as will result in proceeds of $250,000,000).
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, which may include
securities denominated in U.S. dollars, in any other currency or in composite
currencies such as the European Currency Unit, date or dates on which principal
is payable, interest rate or rates (which may be fixed or variable) and time of
payment of interest, if any, terms for redemption at the option of the Company,
terms for any repayment of principal amount at the option of the holder (which
option may be conditional), terms for any sinking fund payments, the initial
public offering price, purchase price and net proceeds to the Company are set
forth in the accompanying Prospectus Supplement. This Prospectus may not be used
to consummate the sale of Debt Securities unless accompanied by a Prospectus
Supplement.
The Company may sell Debt Securities to or through one or more underwriters
for public offering and sale by them or may sell Debt Securities to investors
directly or through agents. The accompanying Prospectus Supplement sets forth
the names of any underwriters or agents involved in the sale of the Debt
Securities in respect of which this Prospectus is being delivered, the principal
amounts, if any, to be purchased by such underwriters and the compensation, if
any, of such underwriters or agents. See "Plan of Distribution."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------------
The date of this Prospectus is January 22, 1998.
<PAGE> 14
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 material and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
material and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C., as well as 500 West Madison Street, Suite 1400,
Chicago, Illinois, and 7 World Trade Center, Suite 1300, New York, New York, and
copies can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information that are filed through
the Commission's Electronic Data Gathering, Analysis and Retrieval System. This
Web site can be accessed at http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
and any Prospectus Supplement do not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission or
incorporated by reference herein are not necessarily complete, and, in each
instance, reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1997;
(c) The Company's Report on Form 8-K dated January 27, 1997 and filed February
5, 1997; and
(d) The Company's Amendment No. 1 on Form 10-K/A filed on September 30, 1997 as
an amendment to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in any
Prospectus Supplement or in a document incorporated or deemed to be incorporated
by reference herein or therein shall be deemed to be modified or superseded for
purposes of this Prospectus and any Prospectus Supplement to the extent that a
statement contained herein or in any other subsequently filed document which is
incorporated or deemed to be incorporated by reference herein or in any
Prospectus Supplement modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or any Prospectus
Supplement.
The Company hereby undertakes to 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 in this Prospectus by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in
2
<PAGE> 15
such documents). Requests for such copies should be directed to the Company at
P.O. Box 5062, Rosemont, Illinois 60017-5062, Attn: Investor Relations,
telephone (847) 318-4600.
THE COMPANY
The Company is a railroad holding company which operates a regional North
American rail system in Wisconsin, the Upper Peninsula of Michigan, northeastern
Illinois, eastern Minnesota and Ontario and also owns minority interests in, and
participates in the management of, rail operations in Great Britain and
Australia and rail and ferry operations in New Zealand.
The Company was incorporated under the laws of the State of Delaware in
1987. It conducts its business through its wholly-owned consolidated
subsidiaries, Wisconsin Central Ltd., Fox Valley & Western Ltd., WCL Railcars,
Inc., Sault Ste. Marie Bridge Company, Wisconsin Central International, Inc., WC
Canada Holdings, Inc. and Algoma Central Railway Inc. The principal offices of
the Company are located at One O'Hare Centre, Suite 9000, 6250 N. River Road,
Rosemont, Illinois 60018, telephone (847) 318-4600.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will
be used by the Company as set forth in a Prospectus Supplement relating to such
Debt Securities.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratio of earnings to fixed charges for the
nine-month periods ended September 30, 1996 and 1997 and for each of the years
ended December 31, 1992 through December 31, 1996 are as follows:
<TABLE>
<CAPTION>
FOR THE
NINE-MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
-------------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges(1).......... 3.4 1.8(2) 2.1(2) 3.3(3) 3.2 2.7 2.0
</TABLE>
- ---------------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before income taxes, equity in net income of affiliates,
extraordinary items and cumulative effect of accounting changes plus
interest expense, amortization of financing costs, the interest portion of
fixed rent expense and any income received (but not undistributed amounts)
from less-than-fifty-percent-owned persons. Fixed charges include interest
expense (whether expensed or capitalized), amortization of financing costs
and the interest portion of fixed rent expense.
(2) Includes the $15.8 million of disputed Baltimore and Ohio Chicago Terminal
Railroad Company ("BOCT") switching charges and related interest and the
$2.5 million of insurance deductibles for the Weyauwega derailment, which
are discussed in Note 15 to the Consolidated Financial Statements in the
1996 Annual Report on Form 10-K incorporated by reference herein (the "1996
Consolidated Financial Statements"). Without the effects of these items,
the 1996 ratio of earnings to fixed charges would have been 2.9 and the
ratio of earnings to fixed charges for the nine-months ended September 30,
1996 would have been 2.9.
(3) Includes the $3.0 million retroactive property tax assessment plus related
interest of $0.7 million discussed in Note 15 to the 1996 Consolidated
Financial Statements. Without the effect of these items, the 1995 ratio of
earnings to fixed charges would have been 3.5.
3
<PAGE> 16
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (as amended or
supplemented from time to time, the "Indenture") between the Company and The
Bank of New York, as Trustee (the "Trustee"), a copy of which is filed as an
exhibit to the Registration Statement. The statements herein relating to the
Debt Securities and the following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Indenture, including
the definitions therein of certain terms, and the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"). Wherever particular sections or defined
terms of the Indenture are referred to in this Prospectus or in a Prospectus
Supplement, such sections or defined terms are incorporated herein or therein by
reference.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") and the extent, if
any, to which such general terms and provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Offered Debt Securities (the "Applicable Prospectus Supplement").
GENERAL
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and Debt Securities may be issued thereunder from time to time
in one or more series. The Debt Securities will be unsecured and unsubordinated
obligations of the Company and will rank equally and ratably with other
unsecured and unsubordinated obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the office
or agency to be maintained by the Company in The City of New York and at any
other office or agency maintained by the Company for such purpose. (Sections
301, 305 and 1002) The Debt Securities will be issued only in fully registered
form without coupons and, unless otherwise indicated in the Applicable
Prospectus Supplement, in denominations of $1,000 or integral multiples thereof.
(Section 302) No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. (Section 305)
The Applicable Prospectus Supplement will describe the terms of the Offered
Debt Securities, including: (1) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the Person or entity to whom any interest on any Offered Debt Security shall be
payable, if other than the Person or entity in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest; (4) the date or dates on which the
principal of and premium, if any, on the Offered Debt Securities is payable or
the method of determination thereof; (5) the rate or rates at which the Offered
Debt Securities shall bear interest, if any, or the method of calculating such
rate or rates of interest, the date or dates from which any such interest shall
accrue or the method by which such date or dates shall be determined, the
Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for interest payable on any Interest Payment Date; (6) the
place or places where the principal of, premium, if any, and interest on the
Offered Debt Securities shall be payable; (7) the period or periods within
which, the price or prices at which, the currency or currencies (including
currency units) in which and the other terms and conditions upon which the
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
the Offered Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the other terms and conditions upon which the
Offered Debt Securities shall be redeemed or purchased, in whole or in part,
pursuant to such obligation; (9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the Offered Debt
Securities shall be issuable;
4
<PAGE> 17
(10) the currency, currencies or currency units in which payment of the
principal of and any premium and interest on any Offered Debt Securities shall
be payable if other than the currency of the United States of America and the
manner of determining the equivalent thereof in the currency of the United
States of America; (11) if the amount of payments of principal of or any premium
or interest on any Offered Debt Securities may be determined with reference to
an index, formula or other method, the index, formula or other method by which
such amounts shall be determined; (12) if the principal of or any premium or
interest on any Offered Debt Securities is to be payable, at the election of the
Company or a Holder thereof, in one or more currencies or currency units other
than that or those in which the Debt Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal of and
any premium and interest on the Offered Debt Securities as to which such
election is made shall be payable, and the periods within which and the other
terms and conditions upon which such election is to be made; (13) if other than
the principal amount thereof, the portion of the principal amount of the Offered
Debt Securities which shall be payable upon declaration of acceleration of the
maturity thereof or the method by which such portion may be determined; (14) the
applicability of the provisions described under " -- Defeasance of Offered Debt
Securities or Certain Covenants in Certain Circumstances"; (15) if the Offered
Debt Securities will be issuable only in the form of one or more Global Debt
Securities as described under " -- Global Debt Securities", the Depositary or
its nominee with respect to the Offered Debt Securities and the circumstances
under which the Global Debt Security may be registered for transfer or exchange
or authenticated and delivered in the name of a Person or entity other than the
Depositary or its nominee; and (16) any other terms of the Offered Debt
Securities. (Section 301)
Debt Securities may be issued under the Indenture as Original Issue
Discount Debt Securities to be offered and sold at a substantial discount below
their stated principal amount. Special federal income tax, accounting and other
considerations applicable thereto will be described in the Applicable Prospectus
Supplement. "Original Issue Discount Debt Security" means any Debt Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the maturity thereof upon the
occurrence and continuance of an Event of Default. (Section 101)
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units, if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, material U.S. federal income tax considerations and other information
with respect to such issue of Debt Securities and such foreign currency or
currency units will be set forth in the Applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest, if any, on any series of Debt Securities, material
U.S. federal income tax, accounting and other considerations applicable thereto
will be described in the Applicable Prospectus Supplement.
GLOBAL DEBT SECURITIES
The following description of Global Debt Securities will apply to any
series of Debt Securities except as otherwise provided in the Applicable
Prospectus Supplement.
The Debt Securities of a series may be issued in the form of one or more
Global Debt Securities that will be deposited with or on behalf of a Depositary,
which will be a clearing agent registered under the Exchange Act. Global Debt
Securities will be registered in the name of the Depositary or a nominee of the
Depositary, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof and any such other matters as may be provided
for pursuant to the Indenture. Unless and until it is exchanged in whole or in
part for Debt Securities in definitive certificated form, a Global Debt Security
may not be transferred or exchanged except as a whole by the Depositary for such
Global Debt Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary for such series or a
nominee of
5
<PAGE> 18
such successor Depositary, or except in the circumstances described in the
Applicable Prospectus Supplement. (Section 305)
Upon the issuance of any Global Debt Security, and the deposit of such
Global Debt Security with or on behalf of the Depositary for such Global Debt
Security, the Depositary will credit on its book-entry registration and transfer
system the respective principal amounts of the Debt Securities represented by
such Global Debt Security to the accounts of institutions ("participants") that
have accounts with the Depositary. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
Debt Securities or by the Company, if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Debt
Security will be limited to participants or Persons that may hold interests
through participants. Ownership of beneficial interests in a Global Debt
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary for such Global Debt Security
or by its nominee. Ownership of beneficial interests in such Global Debt
Security by Persons who hold such beneficial interests through participants will
be shown on, and the transfer of such beneficial interests within such
participants will be effected only through, records maintained by such
participants. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Debt Security.
So long as the Depositary for a Global Debt Security, or its nominee, is
the owner of such Global Debt Security, such Depositary or such nominee, as the
case may be, will be considered the sole owner or Holder of the Debt Security
represented by such Global Debt Security for all purposes under the Indenture.
Accordingly, each Person owning a beneficial interest in such Global Debt
Security must rely on the procedures of the Depositary and, if such Person is
not a participant, on the procedures of the participant through which such
Person owns its interest, to exercise any rights of a Holder under such
Indenture. The Company understands that under existing industry practices, if it
requests any action of Holders or if an owner of a beneficial interest in a
Global Debt Security desires to give or take any instruction or action which a
Holder is entitled to give or take under the Indenture, the Depositary would
authorize the participants holding the relevant beneficial interests to give or
take such instruction or action, and such participants would authorize
beneficial owners owning through such participants to give or take such
instruction or action or would otherwise act upon the instructions of beneficial
owners holding through them.
Unless otherwise specified in the Applicable Prospectus Supplement,
payments with respect to principal of, premium, if any, and interest, if any, on
the Debt Securities represented by a Global Debt Security registered in the name
of the Depositary or its nominee will be made to such Depositary or its nominee,
as the case may be, as the registered owner of such Global Debt Security. The
Company expects that the Depositary for any Debt Securities represented by a
Global Debt Security, upon receipt of any payment of principal or interest in
respect of such Global Debt Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the Global Debt Security as shown on the records of the Depositary.
The Company also expects that payments by participants to owners of beneficial
interests in such Global Debt Security held through such participants will be
governed by standing instructions and customary practices, as is the case with
securities in bearer form held for the accounts of customers or registered in
"street name", and will be the responsibility of such participants. None of the
Company, the Trustee or any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial interests in any Global Debt Security,
or for maintaining, supervising or reviewing any records relating to such
beneficial interests.
A Global Debt Security shall be exchangeable for Debt Securities in
certificated registered form, of like tenor and of an equal aggregate principal
amount, only if (a) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Debt Security or if at any time
the Depositary ceases to be a clearing agency registered under the Exchange Act,
(b) the Company in its sole discretion determines that such Global Debt Security
shall be exchangeable for Debt Securities in certificated registered form or (c)
there shall have occurred and be continuing an Event of Default with
6
<PAGE> 19
respect to the Debt Securities. Any Global Debt Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Debt Securities
registered in the name or names of such Person or Persons as the Depositary
shall instruct the Trustee. It is expected that such instructions may be based
upon directions received by the Depositary from its participants with respect to
ownership of beneficial interests in such Global Debt Security.
CERTAIN DEFINITIONS
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
"Consolidated Net Tangible Assets" means the total amount of assets of the
Company and its Subsidiaries (less applicable depreciation, amortization and
other valuation reserves) after deducting therefrom (i) all current liabilities
of the Company and its Subsidiaries (excluding current maturities of long-term
Indebtedness and any Indebtedness which by its terms is renewable or extendible
beyond 12 months at the option of the borrower) and (ii) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expenses and other
like intangibles, all as set forth on the most recent consolidated balance sheet
of the Company and its Subsidiaries and determined in accordance with "generally
accepted accounting principles" ("GAAP").
"Indebtedness" of any Person means, without duplication, any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures of similar instruments or letters of credit (or reimbursement
agreements with respect thereto) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to capital leases),
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared on a consolidated basis in
accordance with GAAP (but does not include contingent liabilities that appear
only in a footnote to a balance sheet), and shall also include, to the extent
not otherwise included, the guaranty of items which would be included within
this definition.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest).
"Subsidiary" of any specified Person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
COVENANTS
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its assets to, any other Person
unless (i) the resulting, surviving or transferee Person is organized under the
laws of a domestic jurisdiction and assumes by supplemental indenture all of the
obligations of the Company under the Debt Securities and the Indenture, (ii)
immediately after giving effect to the transaction, no Event of Default, and no
event that, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing, and (iii) the Company delivers
to the Trustee (A) an officers' certificate and (B) an opinion of counsel
attesting to compliance with Section 801 of the Indenture.
When a successor Person assumes all of the obligations of its predecessor
under the Debt Securities and the Indenture, the predecessor will be released
from those obligations.
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<PAGE> 20
LIMITATIONS ON LIENS
The Indenture will provide that, with respect to each series of Debt
Securities, the Company will not, nor will it permit any of its Subsidiaries to,
create, incur, or permit to exist, any Lien on any of their respective
properties or assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom, in order to secure any Indebtedness of the Company,
without effectively providing that such series of Debt Securities shall be
equally and ratably secured until such time as such Indebtedness is no longer
secured by such Lien, except: (i) Liens existing as of the closing date of the
offering (or if Debt Securities of such series are issued from time to time, the
first offering) with respect to such series (the "Closing Date"); (ii) Liens
granted after the Closing Date on any assets or properties of the Company or any
of its Subsidiaries securing Indebtedness of the Company created in favor of the
Holders of such series; (iii) Liens securing Indebtedness of the Company which
is incurred to extend, renew or refinance Indebtedness which is secured by Liens
permitted to be incurred under the Indenture; provided that such Liens do not
extend to or cover any property or assets of the Company or any of its
Subsidiaries other than the property or assets securing the Indebtedness being
refinanced and that the principal amount of such Indebtedness does not exceed
the principal amount of the Indebtedness being refinanced; (iv) Liens on
property, shares of stock or indebtedness of a corporation existing at the time
such corporation is merged into, consolidated with or acquired by the Company or
a Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or division thereof) as an entirety or
substantially as an entirety to the Company or a Subsidiary; (v) Liens on
property to secure all or part of the cost of acquisition, construction,
development or improvement of such property, or to secure Indebtedness incurred
to provide funds for any such purpose, provided that the commitment of the
creditor to extend the credit secured by any such Lien shall have been obtained
not later than 24 months after the later of (a) the completion of the
acquisition, construction, development or improvement of such property or (b)
the placing in operation of such property or of such property as so constructed,
developed or improved; and (vi) Liens created in substitution of or as
replacements for any Liens permitted by the preceding clauses (i) through (v),
provided that, based on a good faith determination of an officer of the Company,
the property or asset encumbered under any such substitute or replacement Lien
is substantially similar in nature and value to the property or asset encumbered
by the otherwise permitted Lien which is being replaced. (Section 1001)
Notwithstanding the foregoing, the Company and any Subsidiary of the
Company may, without securing any series of Debt Securities, create, incur or
permit to exist Liens which would otherwise be prohibited by the restrictions
described in the preceding paragraph, if after giving effect thereto, the
aggregate amount of all such Indebtedness secured by such a Lien of the Company
and any Subsidiary of the Company then outstanding, would not exceed 10% of
Consolidated Net Tangible Assets.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indenture with respect to Debt Securities of any series: (a) failure to pay
any interest on any Debt Security of that series when due, which failure
continues for a period of 30 days; (b) failure to pay principal of or any
premium on any Debt Security of that series when due; (c) failure to deposit any
sinking fund payment, when due, in respect of any Debt Security of that series;
(d) failure to perform, or breach of, any covenant or warranty of the Company in
the Indenture with respect to Debt Securities of that series continued for 90
days after written notice as provided in the Indenture; (e) a default under any
indebtedness for money borrowed by the Company or any Subsidiary if (A) such
default either (1) results from the failure to pay the principal of any such
indebtedness at its stated maturity or (2) relates to an obligation other than
the obligation to pay the principal of such indebtedness at its stated maturity
and results in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise become due and payable, (B) the
principal amount of such indebtedness, together with the principal amount of any
other such indebtedness in default for failure to pay principal at stated
maturity or the maturity of which has been so accelerated, aggregates $20
million or more at any one time outstanding and (C) such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within 10
business
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<PAGE> 21
days after written notice as provided in the Indenture; (f) certain events of
bankruptcy, insolvency or reorganization of the Company as provided in the
Indenture; or (g) any other Event of Default provided in the Indenture with
respect to Debt Securities of that series. (Section 501)
If an Event of Default (other than an Event of Default described in Clause
(f) of the preceding paragraph) with respect to the Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Outstanding
Debt Securities of that series may accelerate the maturity of all Debt
Securities of that series; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the nonpayment of accelerated principal, have been
cured or waived as provided in the Indenture. If an Event of Default described
in Clause (f) of the immediately preceding paragraph occurs, the Outstanding
Debt Securities will ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. (Section 502)
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Debt
Securities for the particular provisions relating to the amount payable in
respect of such series of Original Issue Discount Debt Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders of Debt Securities, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee and to certain
other conditions, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of that series. (Section 512)
No Holder of Debt Securities of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written notice of
a continuing Event of Default and unless the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of Debt
Securities for enforcement of payment of the principal of and premium, if any,
or interest on such Debt Securities on or after the respective due dates
expressed in such Debt Securities. (Section 508)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1005)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of the Holders of any of the Debt Securities
in order (i) to evidence the succession of another entity to the Company and the
assumption of the covenants and obligations of the Company under the Debt
Securities and the Indenture by such successor to the Company; (ii) to add to
the covenants of the Company for the benefit of the Holders of all or any series
of Debt Securities or to surrender any right or power conferred on the Company
by the Indenture; (iii) to add additional Events of Default with respect to any
series of Debt Securities; (iv) to add to or change any provisions to such
9
<PAGE> 22
extent as may be necessary to permit or facilitate the issuance of Debt
Securities in bearer form or to facilitate the issuance of Global Debt
Securities; (v) to add to, change or eliminate any provision affecting only Debt
Securities not yet issued; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to evidence
and provide for successor Trustees or to add or change any provisions to such
extent as may be necessary to provide for or facilitate the appointment of a
separate Trustee or Trustees for specific series of Debt Securities; (ix) to
permit payment in respect of Debt Securities in bearer form in the United States
to the extent allowed by law; (x) to cure any ambiguity, to correct or
supplement any mistaken or inconsistent provisions or to make any other
provisions with respect to matters or questions arising under the Indenture,
provided that any such action (other than in respect of a mistaken provision)
does not adversely affect in any material respect the interests of any Holder of
Debt Securities of any series then outstanding. (Section 901)
Modifications and amendments of the Indenture also may be made by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series issued under the Indenture and affected by the modification or
amendments; provided, however, that no such modification or amendment may,
without the consent of the Holders of all Debt Securities affected thereby, (i)
change the Stated Maturity of the principal of, or any installment of principal
of or interest on, any Debt Security; (ii) reduce the principal amount of, the
premium, if any, or the interest on any Debt Security (including in the case of
an Original Issue Discount Debt Security or Indexed Security the amount payable
upon acceleration of the maturity thereof ); (iii) change the place or currency
of payment of principal of, premium, if any, or interest on any Debt Security;
(iv) impair the right to institute suit for the enforcement of any payment on
any Debt Security on or after the Stated Maturity thereof (or in the case of
redemption, on or after the Redemption Date); or (v) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults. (Section 902)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of Debt
Securities of that series, waive compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1009) The Holders of not less
than a majority in aggregate principal amount of the Outstanding Debt Securities
of any series may, on behalf of all Holders of Debt Securities of that series,
waive any past default under the Indenture, except a default in the payment of
principal, premium or interest or in respect of a covenant or provision of the
Indenture that cannot be modified or amended without the consent of the Holder
of each Outstanding Debt Security of such series affected thereby. (Section 513)
DEFEASANCE OF OFFERED DEBT SECURITIES OR CERTAIN COVENANTS IN CERTAIN
CIRCUMSTANCES
DEFEASANCE AND DISCHARGE
The Indenture provides that the terms of any series of Debt Securities may
provide that the Company, at the Company's option, will be discharged from any
and all obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, to replace stolen, lost or mutilated Debt Securities of such
series, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which, through the payment of interest and principal thereof in
accordance with their terms, will provide money in an amount sufficient to pay
any installment of principal (and premium, if any) and interest on, and any
mandatory sinking fund payments in respect of, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. Such discharge may only occur if, among
other things, the Company has delivered to the Trustee an opinion of counsel to
the effect that the Company has received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a change
in tax law, in either case to the effect that such discharge will not be deemed,
or result in, a taxable event with respect to Holders of the Debt Securities of
such series. (Sections 1302 and 1304)
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<PAGE> 23
DEFEASANCE OF CERTAIN COVENANTS
The Indenture provides that the terms of any series of Debt Securities may
provide the Company with the option to omit to comply with the restrictive
covenants described in this Prospectus under "Covenants" and any other covenants
made applicable to any series of Debt Securities as described in the Applicable
Prospectus Supplement. The Company, in order to exercise such option, will be
required to deposit with the Trustee money and/or U.S. Government Obligations
which, through the payment of interest and principal thereof in accordance with
their terms, will provide money in an amount sufficient to pay principal (and
premium, if any) and interest on, and any mandatory sinking fund payments in
respect of, the Debt Securities of such series on the Stated Maturity of such
payments in accordance with the terms of the Indenture and such Debt Securities.
The Company will also be required to deliver to the Trustee an opinion of
counsel to the effect that the deposit and related covenant defeasance will not
cause the Holders of the Debt Securities of such series to recognize income,
gain or loss for federal income tax purposes. (Sections 1303 and 1304)
In the event the Company exercises this option and the Debt Securities of
such series are declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Debt Securities of such
series at the time of their Stated Maturity but may not be sufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
The Applicable Prospectus Supplement will state if any defeasance
provisions will apply to the Offered Debt Securities.
CONCERNING THE TRUSTEE
The Bank of New York, a New York banking corporation, is the Trustee under
the Indenture. The Trustee may resign at any time or may be removed by the
Holders of at least a majority in aggregate principal amount of the Outstanding
Debt Securities. If the Trustee resigns, is removed or becomes incapable of
acting as Trustee or if a vacancy occurs in the office of the Trustee for any
cause, a successor Trustee shall be appointed in accordance with the provisions
of the Indenture.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through one or more underwriters
or dealers and also may sell Debt Securities to other investors directly or
through agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the Applicable Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
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<PAGE> 24
If so indicated in the Applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt Securities from the
Company pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Offered Debt Securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject. The
underwriter and such other agents will not have any responsibility in respect of
the validity or performance of such contracts.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities and certain other legal matters will be
passed upon for the Company by Schiff Hardin & Waite, Chicago, Illinois and
McLachlan, Rissman & Doll, Chicago, Illinois, and, unless otherwise indicated in
a Prospectus Supplement relating to Offered Debt Securities, by Sullivan &
Cromwell, New York, New York, counsel for the underwriters or agents.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996 have been incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, which report is incorporated herein by reference, and upon their
authority as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREIN OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.............................. S-3
Use of Proceeds.......................... S-5
Capitalization........................... S-5
Selected Consolidated Financial and
Operating Data......................... S-6
Management's Summary Discussion and
Analysis of Financial Condition and
Results of Operations.................. S-8
Forward-Looking Statements............... S-9
Description of Notes..................... S-9
Underwriting............................. S-11
Validity of Notes........................ S-12
PROSPECTUS
Available Information.................... 2
Documents Incorporated by Reference...... 2
The Company.............................. 3
Use of Proceeds.......................... 3
Consolidated Ratio of Earnings to Fixed
Charges................................ 3
Description of Debt Securities........... 4
Plan of Distribution..................... 11
Validity of the Debt Securities.......... 12
Experts.................................. 12
</TABLE>
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$150,000,000
WISCONSIN CENTRAL
TRANSPORTATION CORPORATION
% NOTES DUE , 2008
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[WISC CENTRAL LOGO]
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GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
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