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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 31, 1996
NGC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11156 94-3248415
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
13430 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 507-6400
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PAGE 1 OF 10
EXHIBIT INDEX - PAGE 7
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ALL REFERENCES HEREIN TO NGC REFER TO NGC CORPORATION PRIOR TO THE
CONSUMMATION OF THE COMBINATION (HEREINAFTER DEFINED). ALL REFERENCES TO NEW NGC
CONTAINED HEREIN REFER TO NGC CORPORATION (FORMERLY MIDSTREAM COMBINATION
CORP.), AS THE SURVIVING CORPORATION IN THE COMBINATION AND THE
SUCCESSOR-IN-INTEREST TO NGC. ALL REFERENCES HEREIN TO THE PROXY
STATEMENT/PROSPECTUS REFER TO THE PROXY STATEMENT/PROSPECTUS DATED AUGUST 2,
1996, OF NGC AND MIDSTREAM COMBINATION CORP., WHICH IS ATTACHED HERETO AS
EXHIBIT 2.1. WITH RESPECT TO EACH CONTRACT, AGREEMENT OR OTHER DOCUMENT REFERRED
TO HEREIN AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS AN EXHIBIT TO
THIS REPORT, 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.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
BACKGROUND. On May 22, 1996, NGC, Chevron U.S.A. Inc. ("Chevron") and Midstream
Combination Corp., a wholly-owned subsidiary of Chevron ("Newco"), entered into
a Combination Agreement and Plan of Merger (the "Combination Agreement"), which
provided for the strategic combination of NGC with substantially all of
Chevron's midstream assets and certain strategic alliances. On August 30, 1996,
the stockholders of NGC approved the Combination Agreement and the transactions
contemplated thereby (the "Combination"). The Combination closed August 31,
1996. Upon closing, Chevron and NGC's two other major stockholders, British Gas,
plc and NOVA Corporation, each own approximately 25.8% of New NGC's outstanding
Common Stock. See the sections entitled "Summary-The Special Meeting" and "The
Special Meeting" in the Proxy Statement/Prospectus, which sections are
incorporated herein by reference in their entirety.
ACQUISITION OF ASSETS THROUGH THE COMBINATION. As a result of the transactions
contemplated by the Combination, Chevron and certain of its affiliated entities
(the "Contributing Parties") contributed to Newco their right, title and
interest (the "Contribution") in substantially all of the assets comprising
Warren Petroleum Company, which was an unincorporated division of Chevron
("Warren"), and Chevron's Natural Gas Business Unit and an undivided 49%
interest in those Chevron assets that constituted the West Texas LPG Pipeline
(collectively, the "Contributed Businesses"). Specifically, these assets include
(i) interests in a number of gas processing facilities and related assets; (ii)
an interest in one fractionation facility and a connected underground storage
facility; (iii) additional assets including transportation and terminaling
assets required to support liquids marketing operations; (iv) an undivided 49%
interest in those assets that constitute the West Texas LPG Pipeline and (v)
certain gas marketing and sales contracts and related assets. See the sections
entitled "Summary - Summary Business Descriptions", - The Combination",
"Contributed Warren Business" and "Contributed NGBU Business" in the Proxy
Statement/Prospectus, which sections are incorporated herein by reference in
their entirety. See also the section entitled "The Contributions" in the
Combination Agreement, which section is incorporated herein by reference in its
entirety.
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As consideration for the Contribution, (A) Newco issued to Chevron 38,623,210
shares of common stock, par value $0.01 per share ("Newco Common Stock") and
7,815,363 shares of Series A Participating Preferred Stock of Newco, par value
$0.01 per share ("Newco Series A Participating Preferred Stock"), (B) Newco
assumed an aggregate principal amount of approximately $155.4 million in
indebtedness of Chevron, subject to adjustment, pursuant to the Note Assumption
Agreement defined below, (C) Newco issued a promissory note payable on demand to
the Contributing Parties in the principal amount of approximately $128.8 million
(the "Newco Note"), and (D) Newco assumed substantially all of the liabilities
and obligations related to the Contributed Businesses. Upon consummation of the
Contribution, Chevron and Newco entered into an assumption agreement (the "Note
Assumption Agreement"). Pursuant to the Note Assumption Agreement, Newco assumed
approximately $155.4 million (subject to certain adjustments) in outstanding
principal (as adjusted, the "Assumed Indebtedness") under that certain
promissory note (the "Chevron Capital Note") made payable on demand by Chevron
in favor of Chevron Capital U.S.A. Inc. ("Chevron Capital"). Under the terms of
the Note Assumption Agreement, interest shall accrue on the Assumed Indebtedness
at an annual rate of 7.95% commencing on August 31, 1996 and shall be due and
payable in equal semi-annual installments on August 14 and February 14 of each
year. Pursuant to the terms of the Note Assumption Agreement, New NGC (as
successor to Newco) shall be obligated to pay the Assumed Indebtedness, plus all
accrued and unpaid interest thereon, on demand by Chevron Capital made on or
after the second anniversary of the Closing Date or, if Chevron Capital does not
demand repayment earlier, on August 14, 2004. See the sections entitled
"Summary-The Combination", "The Combination-Contribution; Merger; Conversion of
NGC Common Stock", " Certain Provisions of the Combination
Agreement-Consideration Due to the Contributing Parties", Consideration
Adjustment", and "Description of Newco Certificate of Incorporation and Bylaws
Newco Common Stock ", and - Newco Preferred Stock " in the Proxy
Statement/Prospectus, which sections are incorporated herein by reference in
their entirety. See also the section "The Contributions" in the Combination
Agreement, which section is incorporated herein by reference in its entirety.
NGC and Chevron, or affiliates thereof, also entered into certain ancillary
supply, sales and service agreements with respect to natural gas, natural gas
liquids and electricity, pursuant to which, among other things, New NGC has the
right to (i) purchase and/or market substantially all natural gas and natural
gas liquids produced or controlled by Chevron in the United States (except
Alaska) and to supply natural gas and feedstock to Chevron refineries and
Chevron Chemical plants in the United States and (ii) participate in existing
and future opportunities to provide electricity to United States facilities of
Chevron and Chevron Chemical, as well as to purchase or market excess
electricity generated by such facilities. See the sections entitled "Summary -
Ancillary Agreements" and "Ancillary Agreements" in the Proxy
Statement/Prospectus, which sections are incorporated herein by reference in
their entirety.
Immediately following the Contribution, NGC merged with and into Newco (the
"Merger"), and Newco, as the surviving corporation (in such capacity, "New NGC")
was renamed "NGC
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Corporation." New NGC, as the successor in interest to NGC, assumed NGC's rights
and obligations under the aforementioned supply, sales and services agreements.
See the section entitled "Ancillary Agreements" in the Proxy
Statement/Prospectus, which section is incorporated herein by reference in its
entirety.
Upon consummation of the Combination, each issued and outstanding share of NGC
Common Stock was automatically converted without any action on the part of the
holder thereof into one share of New NGC Common Stock, and each share of Newco
Common Stock and Newco Series A Participating Preferred Stock remained issued
and outstanding as one share of New NGC Common Stock and New NGC Series A
Participating Preferred Stock, respectively. See the sections entitled "Summary
- - The Combination", "The Combination - Contribution; Merger; Conversion of NGC
Common Stock", "Certain Provisions of the Combination Agreement Consideration
Due to the Contributing Parties" and "Comparison of Rights of Holders of NGC
Common Stock and New NGC Common Stock" in the Proxy Statement/Prospectus, which
sections are incorporated herein by reference in their entirety.
ACCOUNTING TREATMENT. The Combination will be accounted for as a purchase of the
Contributed Businesses by NGC as promulgated by APB Opinion No. 16 "Business
Combinations". New NGC, as the surviving corporation, will reflect, in its
consolidated financial statements, the assets and liabilities of NGC at book
value and the assets and liabilities of the Contributed Businesses at the fair
market value (determined in accordance with accounting guidelines) of the
consideration to be paid to the Contributing Parties for the Contributed
Businesses. In accordance with accounting guidelines, the fair market value of
the Contributed Businesses shall be based upon (i) the market value of the NGC
Common Stock on and around January 21, 1996, the date on which NGC and Chevron
entered into the Exclusivity Agreement relating to the Combination and (ii) the
amount of indebtedness that New NGC assumed or issued in connection with the
Combination. See the sections entitled "Summary - Accounting Treatment" and "The
Combination - Accounting Treatment" in the Proxy Statement/Prospectus, which
sections are incorporated herein by reference in their entirety.
INTEGRATION OF ACQUIRED ASSETS. As a major integrated oil company, Chevron
historically operated the Contributed Businesses as vertically integrated
service and support functions for its production, refining and marketing
operations. A substantial portion of the business activities engaged in by the
Contributed Businesses, including purchases and sales, have historically been of
an intercompany nature. However, upon consummation of the Combination, the
Contributed Businesses will be integrated into New NGC and operated using the
"Energy Store" strategy. For these reasons, New NGC does not believe that the
historical operational results of the Contributed Businesses provide a
meaningful basis for evaluating the results of operations that the Contributed
Businesses would have realized had they been managed and operated with
independent operational and financial goals or the contribution to New NGC's
results of operations once integrated into NGC's "Energy Store" concept.
Therefore, no historical financial information on any of the Contributed
Businesses was included in the Proxy Statement/Prospectus nor is any included in
this Form 8-K. See the section entitled "Summary Business Strategy and
Operations of New NGC"
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in the Proxy Statement/Prospectus, which section is incorporated herein by
reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements, pro forma financial information and exhibits
are filed as a part of this report.
(a) Financial statements of businesses acquired.
None required.
(b) Pro forma financial information.
None required.
(c) Exhibits
2.1 Combination Agreement and Plan of Merger, dated as of May 22, 1996,
among NGC Corporation, Chevron U.S.A. Inc. and Midstream Combination
Corp. (incorporated by reference to Exhibit 2.1 of NGC's Current
Report on Form 8-K dated May 22, 1996, Commission File Number
1-11156).
99.1 Proxy Statement/Prospectus of NGC Corporation and Midstream
Combination Corp., dated August 2, 1996 (incorporated by reference
to Midstream Combination Corp.'s Registration Statement on Form S-4
(registration number 333-09419) of which the Proxy
Statement/Prospectus was a part).
*99.2 Press Release dated September 3, 1996.
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*Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NGC CORPORATION
(Registrant)
Date: September 12, 1996
By: /s/ KENNETH E. RANDOLPH
Kenneth E. Randolph,
Senior Vice President and
General Counsel
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EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
NO. PAGE
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2.1 Combination Agreement and Plan of Merger, dated as of
May 22, 1996, among NGC Corporation, Chevron U.S.A.
Inc. and Midstream Combination Corp. (incorporated by
reference to Exhibit 2.1 of NGC's Current Report on
Form 8-K dated May 22, 1996, Commission File Number
1-11156).
99.1 Proxy Statement/Prospectus of NGC Corporation and
Midstream Combination Corp., dated August 2, 1996
(incorporated by reference to Midstream Combination
Corp.'s Registration Statement on Form S-4
(registration number 333-09419) of which the Proxy
Statement/Prospectus was a part).
*99.2 Press Release dated September 3, 1996. 8
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*Filed herewith.
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EXHIBIT 99.2
[NGC CORPORTAION LETTERHEAD]
MEDIA CONTACT: Katherine K. Putnam
713/507-3936
ANALYST CONTACT: R. Dean Ayers
713/507-6852
NGC CLOSES MERGER WITH CHEVRON MIDSTREAM BUSINESSES
HOUSTON (Sept. 3, 1996) -- NGC Corporation shareholders approved on
Friday the merger of NGC Corporation with Chevron Corporation's Natural Gas
Business Unit and Warren Petroleum Company. The merger, which closed on Saturday
Aug. 31, creates the largest natural gas and natural gas liquids marketer in
North America.
"NGC begins business today as North America's leading total energy
marketer," said Chuck Watson, chairman and chief executive officer. "We have
expanded dramatically our ability to be a multi-commodity provider of the
products and services that make up our Energy Store. Our goal now is clear: to
be not only the largest, but also the best provider of quality, competitively
priced energy products and services to our customers and deliver strong earnings
growth to our shareholders."
Watson said that the merger:
Significantly increases NGC's natural gas marketing sales volumes from
approximately 6.0 billion cubic feet per day (Bcf/d) to approximately 10
Bcf/d.
Virtually quadruples sales volumes of natural gas liquids from 120,000
barrels per day (Bpd) to 470,000 Bpd.
Increases the number of gas processing plants from 33 to 57
Increases NGC's interests in natural gas gathering and transmission
pipelines from 10,000 miles to approximately 15,000 miles.
Expands NGC's natural gas liquids storage capacity from approximately 12
million barrels to 60 million barrels.
Increases the number of import/export marine terminals from one to three,
which offer importers and exporters multiple solutions for moving products
to market.
Adds ten natural gas liquids terminals to NGC's asset base.
The shareholder vote was the last step toward completing the merger that
was announced Jan. 22. For its contribution of its midstream businesses and
assets, Chevron receives approximately 38.6 million new shares of NGC common
stock and approximately 7.8 million shares of participating preferred stock in
the new company. Chevron also receives approximately $285 million in cash and
notes, which takes into account certain purchase price adjustments contained in
the merger documents. Chevron and NGC's two current major shareholders, British
Gas, plc and NOVA Corp. will each own approximately 25 percent of NGC's common
stock.
NGC's primary businesses are:
NATURAL GAS CLEARINGHOUSE (Clearinghouse), the largest natural gas
marketer in North America combines Chevron's Natural Gas Business Unit, formerly
the fourth largest natural gas marketer in North America, with Clearinghouse,
formerly the second largest natural gas marketer in North America. The new
premier gas marketer will hold a 14 percent share of the North American market.
Under the merger agreement, Clearinghouse will supply natural gas to Chevron's
North American corporate facilities.
WARREN PETROLEUM COMPANY, L.P., NGC's natural gas liquids division,
combines NGC's former Trident division with Chevron's Warren Petroleum. NGC's
Trident was the largest independent gas liquids operation in North America. With
the assets of Warren, the combined new company will be the largest marketer and
second largest processor of natural gas liquids in the United States. Under the
merger agreement, Warren will supply gas liquids and feedstocks to Chevron's
refineries and chemical plants throughout North America.
ELECTRIC CLEARINGHOUSE, INC. (ECI) is NGC's wholesale purchaser,
transporter and marketer of electricity. ECI will, in some locations, market
Chevron's excess power generation capacity and will, in some cases, provide
electric power to Chevron's North American facilities.
NGC OIL TRADING AND TRANSPORTATION, INC. (NOTTI), NGC's crude oil
business, offers a full range of crude oil value-added marketing services to
producers and customers.
NGC GLOBAL ENERGY, NGC's international division, will take advantage of
opportunities around the globe as foreign energy markets are deregulated and NGC
can offer its expertise as an experienced energy commodity marketer.
NGC Corporation (NYSE:NGL) is a leading gatherer, processor, transporter
and marketer of energy products and services in North America and the United
Kingdom. Through its "Energy Store," NGC offers a multi-commodity
energy-product-and-services resource that provides natural gas, natural gas
liquids, electricity and crude oil.
