<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-86310
PROSPECTUS SUPPLEMENT (To Prospectus dated November 18, 1994)
$100,000,000
VASTAR RESOURCES, INC.
6% PUTABLE/CALLABLE NOTES (THE "NOTES")
DUE APRIL 20, 2010, PUTABLE/CALLABLE APRIL 20, 2000
The Notes due April 20, 2010 of Vastar Resources, Inc. (the "Company") bear
interest at the rate of 6% per annum from the date of issuance to April 20,
2000 (the "Coupon Reset Date"). The Notes will be subject to mandatory
redemption from the existing holders on the Coupon Reset Date, through either
(i) the exercise of the Call Option (as defined herein) by the Callholder (as
defined below) or (ii) in the event the Callholder does not exercise the Call
Option, the automatic exercise of the Put Option (as defined below) by the
Indenture Trustee (as defined below) on behalf of the holders. If Union Bank
of Switzerland, London branch, as Callholder (the "Callholder"), elects to
purchase the Notes, the Notes will be acquired by the Callholder from the
holders on the Coupon Reset Date at 100% of the entire principal amount
thereof. Unpaid interest accrued to but excluding the Coupon Reset Date will
be paid by the Company on such date to holders on the most recent Record Date
(as defined herein) preceding the Coupon Reset Date. See "Description of the
Notes--Call Option." If the Callholder for any reason does not purchase the
Notes on the Coupon Reset Date, the Company will be required to repurchase the
entire principal amount of the Notes from the holders thereof on the Coupon
Reset Date at 100% of the principal amount thereof pursuant to the put option
to be exercised by the Indenture Trustee on behalf of the holders under the
terms of the Notes (the "Put Option"). Unpaid interest accrued to but
excluding the Coupon Reset Date will be paid by the Company on such date to
the holders on the most recent Record Date preceding the Coupon Reset Date.
See "Description of the Notes--Put Option."
The Notes will represent obligations of the Company and will be issued under
the Indenture, dated as of January 1, 1995, as supplemented by the
Supplemental Indenture, dated May 18, 1995, and as further supplemented by the
Second Supplemental Indenture, dated April 16, 1998. Interest on the Notes is
payable semi-annually on April 20 and October 20 of each year, commencing
October 20, 1998. Except in the limited circumstances described herein
(including the Put Option), the Notes are not subject to redemption by the
Company prior to the Final Maturity Date (as defined herein).
If the Callholder has elected to exercise the Call Option, the interest rate
on the Notes will be reset effective on the Coupon Reset Date, pursuant to the
Coupon Reset Process (as defined herein).
Ownership of the Notes will be maintained in book-entry form by or through
The Depository Trust Company ("DTC"). Interests in the Notes will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants ("Participants"). The purchasers of the Notes will not
have the right to receive physical certificates evidencing their ownership
except under the limited circumstances referred to herein. Settlement for the
Notes will be made in immediately available funds. All payments of principal
and interest on the Notes will be made by the Company in immediately available
funds as long as the Notes are maintained in book-entry form. Beneficial
interests in the Notes may be acquired, or subsequently transferred, only in
denominations of $1,000 and integral multiples thereof.
SEE "RISK FACTORS" ON PAGE S-2 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED
HEREBY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)(4)
----------------- ------------ ----------------
<S> <C> <C> <C>
Per Note........................ 99.948% 0.25% 102.188%
Total........................... $99,948,000 $250,000 $102,188,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from April 21, 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933 as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $85,000 payable by the Company.
(4) Represents consideration for the Notes, which includes consideration for
the Call Option.
The Notes are being offered by the Underwriters, as specified herein,
subject to prior sale, when, as and if delivered to and accepted by them and
subject to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in
part. It is expected that delivery of the Notes will be made through the book-
entry facilities of DTC on or about April 21, 1998.
---------------
UBS SECURITIES LEHMAN BROTHERS
The date of this Prospectus Supplement is April 16, 1998.
<PAGE>
This prospectus supplement and the accompanying prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF NOTES TO COVER SYNDICATE
SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
USE OF PROCEEDS
Net proceeds from the sale of the Notes will be used by the Company to
refinance existing indebtedness of the Company and for general corporate
purposes, including investments in, or extensions of credit to, the Company's
subsidiaries. As of March 31, 1998, the Company's existing indebtedness had an
average interest rate of 5.74%.
RISK FACTORS
Global Securities
The Notes will initially be represented by global securities deposited with,
or on behalf of, DTC and will not be issued as individual definitive
securities to their purchasers. Consequently, unless and until such individual
definitive securities are issued, such purchasers will not be recognized as
holders of the Notes under the Indenture and DTC will be the sole holder for
all purposes under the Indenture and the Notes. Hence, until such time, such
purchasers will only be able to exercise the rights of holders of the Notes
indirectly through DTC and its respective participating organizations and, as
a result, the ability of any such purchaser to pledge the Notes to persons or
entities that do not participate in DTC's system, or to otherwise act with
respect to such Notes, may be limited. See "Description of Debt Securities--
Book-Entry Debt Securities" in the accompanying Prospectus.
S-2
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The following description of the terms of the Notes supplements and, to the
extent inconsistent therewith, replaces, the description of the general terms
of the Securities (as defined in the Indenture referred to below) set forth in
the accompanying Prospectus, to which description reference is made.
The Notes are to be issued as a series of debt securities under the
Indenture, dated as of January 1, 1995, between the Company and NationsBank of
Texas, N.A., as supplemented by the Supplemental Indenture dated May 18, 1995,
among the Company, Bank of Montreal Trust Company, as paying agent (the
"Paying Agent"), NationsBank Texas, N.A., as resigning trustee, and Harris
Trust and Savings Bank, as successor trustee (the "Indenture Trustee"), and as
further supplemented by the Second Supplemental Indenture, dated April 16,
1998, among the Company, the Paying Agent and the Indenture Trustee
(collectively, the "Indenture"), which is more fully described herein and in
the accompanying Prospectus.
The Notes will mature on April 20, 2010 (the "Final Maturity Date"). On the
Coupon Reset Date, the holders of the Notes will be entitled to receive 100%
of the principal amount thereof from either (i) the exercise by the Callholder
of the Call Option or (ii) in the event the Callholder does not exercise the
Call Option or fails for any reason to pay the Call Price to the Indenture
Trustee when required, the exercise of the Put Option by the Indenture Trustee
for and on behalf of the holders of the Notes. The Indenture Trustee will
exercise the Put Option without the consent of, or notice to, the holders of
the Notes.
The principal amount of Notes will be $100,000,000 ("Principal Amount") and
the Notes will be issuable only in registered form.
The Notes will initially be represented by one or more global securities
deposited with, or on behalf of, DTC and will not be issued as individual
definitive securities to their purchasers, except in limited circumstances set
forth in the Indenture. Consequently, unless and until such individual
definitive securities are issued, such purchasers will not be recognized as
holders of the Notes under the Indenture and DTC will be the sole holder for
all purposes under the Indenture and the Notes. Hence, until such time, such
purchasers will only be able to exercise the rights of holders of the Notes
indirectly through DTC and its respective participating organizations and, as
a result, the ability of any such purchaser to pledge the Notes to persons or
entities that do not participate in DTC's system, or to otherwise act with
respect to such Notes, may be limited. See "Description of Debt Securities--
Book-Entry Debt Securities" in the accompanying Prospectus.
The Notes will bear interest at the rate of 6% per annum from the date of
issuance to, but excluding, the Coupon Reset Date. If the Callholder elects to
purchase the Notes pursuant to the Call Option, the Calculation Agent will
reset the interest rate effective on the Coupon Reset Date, pursuant to the
Coupon Reset Process described below. In that event, (i) the Notes will be
purchased by the Callholder, in whole but not in part, at 100% of the
principal amount thereof on the Coupon Reset Date, on the terms and subject to
the conditions described herein, and (ii) on and after the Coupon Reset Date,
the Notes will bear interest at the rate determined by the Calculation Agent
in accordance with the procedures set forth below (the "Coupon Reset
Process"). Unpaid interest accrued to but excluding the Coupon Reset Date will
be paid by the Company on such date to the holders on the most recent Record
Date preceding the Coupon Reset Date. See "Coupon Reset Process" below.
If the Callholder for any reason does not purchase the Notes on the Coupon
Reset Date, the Indenture Trustee will be required pursuant to the Indenture
to exercise the Put Option without the consent of, or notice to, the holders
of the Notes and, upon such exercise, the Company will be required on the
Coupon Reset Date to repurchase the Notes from the holders thereof at 100% of
the principal amount thereof. Unpaid interest accrued to but excluding the
Coupon Reset Date will be paid by the Company on such date to the holders on
the most recent Record Date preceding the Coupon Reset Date. See "Put Option"
below.
S-3
<PAGE>
Interest will be payable on the Notes semi-annually on April 20 and October
20 of each year (each, an "Interest Payment Date"), commencing October 20,
1998, to the persons in whose name the Notes are registered on the fifteenth
calendar day (whether or not a Business Day) immediately preceding the related
Interest Payment Date (each, a "Record Date"). Interest will be calculated
based on a 360 day year consisting of twelve 30 day months. "Business Day"
means any day other than a Saturday, a Sunday or a day on which banking
institutions in the City of New York generally are authorized or obligated by
law or executive order to be closed.
The Notes will be issued in denominations of $1,000 and integral multiples
thereof.
CALL OPTION; PUT OPTION
(i) Call Option. Pursuant to the terms of the Notes, the Callholder has the
right to purchase the Notes in whole but not in part on the Coupon Reset Date
(the "Call Option"), at a price equal to 100% of the principal amount thereof
(the "Call Price"), by giving notice to the Indenture Trustee (the "Call
Notice"). Unpaid interest accrued to but excluding the Coupon Reset Date will
be paid by the Company on such date to the holders on the most recent Record
Date preceding the Coupon Reset Date. In order to exercise the Call Option,
the Callholder must deliver the Call Notice to the Indenture Trustee, in
writing, prior to 4:00 p.m., New York time, no later than 15 calendar days
prior to the Coupon Reset Date. In the event of exercise of the Call Option,
(i) the Callholder shall deliver immediately available funds equal to the Call
Price to the Indenture Trustee not later than 2:00 p.m., New York time, on the
Business Day prior to the Coupon Reset Date, for payment of the Call Price on
the Coupon Reset Date and (ii) the holders of the Notes shall be required to
deliver the Notes to the Callholder against payment therefor on the Coupon
Reset Date through the facilities of DTC.
If the Callholder elects to exercise the Call Option, the obligation of the
Callholder to pay the Call Price is subject to certain conditions precedent,
including the following: (i) since the date of the Call Notice, no Event of
Default (as defined in the Indenture) with respect to the Notes, or any event
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default, with respect to the Notes, shall have occurred and be
continuing; (ii) since the date of the Call Notice, no Market Disruption Event
(as defined below) shall have occurred; and (iii) since the date of the Call
Notice two or more Dealers (as defined below) shall have provided timely Bids
in the manner described under "Coupon Reset Process." No holder of Notes or
any interest therein shall have any rights or claims against the Callholder as
a result of the Callholder purchasing or not purchasing the Notes.
(ii) Put Option. If the Call Option has not been exercised, or in the event
the Callholder is not required or fails to deliver the Call Price to the
Indenture Trustee by 2:00 p.m., New York time, on the Business Day prior to
the Coupon Reset Date, the Indenture Trustee will be required, for and on
behalf of the holders of the Notes, to exercise the option to put the Notes to
the Company pursuant to the Put Option. Upon exercise of the Put Option, the
Company will be required to purchase all of the Notes on the Coupon Reset
Date, at a purchase price equal to 100% of the entire principal amount thereof
(the "Put Redemption Price"). Unpaid interest accrued to but excluding the
Coupon Reset Date will be paid by the Company on such date to the holders on
the most recent Record Date preceding the Coupon Reset Date. The Put Option
will be exercised automatically by the Indenture Trustee, on behalf of the
holders, if the Call Option has not been exercised. If the Put Option is
exercised, the Company will deliver the Put Redemption Price to the Indenture
Trustee by no later than 12:00 noon, New York time, on the Coupon Reset Date
and the holders of Notes will be required to deliver the Notes to the Company
against payment therefor on the Coupon Reset Date through the facilities of
DTC. No holder of Notes or any interest therein shall have the right to
consent or object to the Indenture Trustee's exercise of the Put Option. By
its purchase of Notes, each holder irrevocably agrees that the Indenture
Trustee shall exercise the Put Option relating to such Notes for and on behalf
of such holder as provided herein.
COUPON RESET PROCESS
Pursuant to the Indenture, UBS Securities LLC has been appointed the
"Calculation Agent" for the Notes under the Indenture. If the Callholder has
exercised the Call Option as set forth above under "Call Option," the Company
and the Calculation Agent shall complete the following steps in order to
determine
S-4
<PAGE>
the interest rate to be paid on the Notes from and including the Coupon Reset
Date to the Final Maturity Date. The Company and the Calculation Agent shall
use reasonable efforts to cause the actions contemplated below to be completed
in as timely a manner as possible.
(a) The Company shall provide the Calculation Agent with a list (the "Dealer
List"), no later than seven Business Days prior to the Coupon Reset Date,
containing the names and addresses of five dealers (each a "Dealer"), one of
which shall be UBS Securities LLC, or its successor as Calculation Agent, from
which it desires the Calculation Agent to obtain the Bids (as defined below)
for the purchase of the Notes.
(b) Within one Business Day following receipt by the Calculation Agent of
the Dealer List, the Calculation Agent shall provide to each Dealer on the
Dealer List (i) a copy of the Prospectus dated November 18, 1994 and a copy of
this Prospectus Supplement, (ii) a copy of the form of Notes and (iii) a
written request that each such Dealer submit a Bid to the Calculation Agent by
12:00 noon, New York time (the "Bid Deadline"), on the third Business Day
prior to the Coupon Reset Date (the "Bid Date"). "Bid" shall mean an
irrevocable written offer given by a Dealer for the purchase of all the Notes
subject to the exercise of the Call Option settling on the Coupon Reset Date,
and shall be quoted by such Dealer as a stated yield to maturity on the Notes
("Yield to Maturity"). The Calculation Agent shall also provide each Dealer
with (i) the name of the Company, (ii) an estimate of the Purchase Price
(which shall be stated as a United States Dollar amount and be calculated by
the Calculation Agent in accordance with clause (c) below, (iii) the principal
amount and maturity of the Notes and (iv) the method by which interest will be
calculated on the Notes.
(c) The entire purchase price to be paid by any Dealer for the Notes (the
"Purchase Price") shall be equal to (i) the entire principal amount of the
Notes plus (ii) a premium (the "Notes Premium") which shall be equal to the
excess, if any, of (A) the discounted present value to the Coupon Reset Date
of a bond with a maturity of April 20, 2010 which has an interest rate of
5.443%, semi-annual interest payments on each April 20 and October 20,
commencing October 20, 2000, and a principal amount of $100,000,000, and
assuming a discount rate equal to the Treasury Rate, over (B) $100,000,000.
"Treasury Rate" means the per annum rate equal to the offer side yield to
maturity of the current on-the-run 10-year United States Treasury Security per
Telerate page 500 at 11:00 a.m., New York time, on the Bid Date (or such other
date or time that may be agreed upon by the Company and the Calculation Agent)
or, if such rate does not appear on Telerate page 500 at such time, the rates
on GovPx End-of-Day Pricing at 3:00 p.m., New York time, on the Bid Date (or
such other date or time that may be agreed upon by the Company and the
Calculation Agent).
(d) Immediately following receipt of the Bids, and in no event later than
12:30 p.m., New York time, on the Bid Date, the Calculation Agent shall
provide written notice to the Company, setting forth (i) the names of each of
the Dealers from whom the Calculation Agent received Bids on the Bid Date,
(ii) the Bid submitted by each such Dealer and (iii) the Purchase Price as
determined pursuant to paragraph (c) above. Except as provided below, the
Calculation Agent shall, on the Bid Date, select from the Bids received the
Bid with the lowest Yield to Maturity (the "Selected Bid") and establish the
coupon reset rate for the Notes (the "Coupon Reset Rate") at a rate equal to
the interest rate which would amortize the Notes Premium fully over the term
of the Notes at the Yield to Maturity indicated by the Selected Bid; provided,
however, that if the Calculation Agent has not received a Bid from a Dealer by
the Bid Deadline, the Selected Bid shall be the lowest of all Bids received by
such time; and provided, further that if any two or more of the lowest Bids
submitted are equivalent, the Company shall in its sole discretion select any
of such equivalent Bids (and such selected Bid shall be the Selected Bid). The
Calculation Agent will notify the Dealer that submitted the Selected Bid by
12:30 p.m., New York time, on the Bid Date that its Bid has been selected.
(e) Immediately after calculating the Coupon Reset Rate, and in no event
later than 12:30 p.m., New York time, on the Bid Date, the Calculation Agent
shall provide written notice to the Company and the Indenture Trustee, setting
forth the Coupon Reset Rate. The Company shall thereafter establish the Coupon
Reset Rate as the new interest rate on the Notes, effective from and including
the Coupon Reset Date, by delivering an officers' certificate to the Indenture
Trustee on the Coupon Reset Date.
S-5
<PAGE>
(f) The Callholder shall sell the Notes to the Dealer that made the Selected
Bid at the Purchase Price, such sale to be settled on the Coupon Reset Date in
immediately available funds.
If the Calculation Agent determines (which determination must be reflected
in a written notice delivered by the Calculation Agent to the Company and the
Indenture Trustee no later than 2:00 p.m., New York time, on the Business Day
prior to the Coupon Reset Date) that (i) since the delivery of the Call
Notice, an Event of Default with respect to the Notes, or an event which, with
the giving of notice or the passage of time, or both, would constitute an
Event of Default, with respect to the Notes shall have occurred and be
continuing, (ii) since the delivery of the Call Notice, a Market Disruption
Event (as described below) has occurred or (iii) fewer than two Dealers have
provided Bids in a timely manner substantially as provided above, the Call
Option will automatically terminate, and the Indenture Trustee will exercise
the Put Option on behalf of the holders. "Market Disruption Event" shall mean
any of the following, as determined by both the Calculation Agent and the
Company: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the establishment of minimum
prices in such exchange; (ii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities; (iii) any
material adverse change in the existing financial, political or economic
conditions in the United States of America; (iv) an outbreak or escalation of
major hostilities involving the United States of America or the declaration of
a national emergency or war by the United States of America; or (v) any
material disruption of the U.S. government securities market, U.S. corporate
bond market or U.S. federal wire system.
The Indenture provides that the Calculation Agent may resign at any time as
Calculation Agent, such resignation to be effective ten Business Days after
the delivery to the Company and the Indenture Trustee of notice of such
resignation. In that event, the Company shall appoint a successor Calculation
Agent.
The Calculation Agent, in its individual capacity, may buy, sell, hold and
deal in Notes and, in its capacity as a holder, may exercise any vote or join
in any action which any holder of Notes may be entitled to exercise or take as
if it were not the Calculation Agent. The Calculation Agent, in its individual
capacity, may also engage in any transaction with the Company as if it were
not the Calculation Agent.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States Federal income tax
considerations relating to the purchase, ownership and disposition of the
Notes by an initial holder of Notes who purchases the Notes on the original
issue date. This summary is based upon laws, regulations, rulings and
decisions currently in effect, all of which are subject to change. The
discussion does not deal with all Federal tax considerations applicable to all
categories of investors, some of which may be subject to special rules. In
addition, this summary is limited to investors who will hold the Notes as
"capital assets" (generally, property held for investment) within the meaning
of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES RELATING TO THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
An opinion of tax counsel is not binding on the Internal Revenue Service
(the "Service") or the courts. Prospective investors should note that no
rulings have been or are expected to be sought from the Service with respect
to any of the Federal income tax considerations discussed below, and no
assurance can be given that the Service will not take contrary positions.
Treatment of Notes
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, although there
are no precedents directly applicable to instruments such as the Notes, the
Notes should be treated as fixed rate debt instruments that mature on the
Coupon Reset Date. Each holder should include in income the interest paid or
accrued on
S-6
<PAGE>
the Notes in accordance with its usual method of accounting. Upon the sale,
exchange, redemption or other disposition by a holder of Notes, the holder
should recognize capital gain or loss equal to the difference between the
amount realized from the disposition of the Notes (exclusive of amounts
attributable to the payment of accrued interest, original issue discount, if
any, or any market discount which has theretofore accrued on the Notes which
has not been previously included in income, which will be taxable as ordinary
income) and the holder's adjusted tax basis in the Notes at the time of the
sale, exchange, redemption or other disposition. A holder's adjusted tax basis
in Notes generally will equal the holder's purchase price for such Notes. In
the case of a holder who is an individual, any capital gain recognized on the
disposition of the Notes will generally be subject to U.S. Federal income tax
at a rate of (i) 20%, if the holder's holding period in the Notes was more
than 18 months at the time of such sale, exchange, redemption or other
disposition, or (ii) 28%, if the holder's holding period in such Notes was
more than one year, but not more than 18 months, at the time of such sale,
exchange, redemption or other disposition. The ability to use capital losses
to offset ordinary income in determining taxable income is generally limited.
It is possible that the Service could contend that the Notes mature on the
Final Maturity Date rather than the Coupon Reset Date. Because of the Coupon
Reset Process, if the Notes were treated as maturing on the Final Maturity
Date, holders would be subject to certain Treasury Regulations dealing with
contingent debt obligations (the "Contingent Debt Regulations"). Under the
Contingent Debt Regulations, each holder would be required (regardless of such
holder's usual method of accounting) to include in income original issue
discount for each interest accrual period in an amount equal to the product of
the adjusted issue price of the Notes at the beginning of each interest
accrual period and a projected yield to maturity of the Notes. The projected
yield to maturity would be based on the "comparable yield" (i.e., the yield at
which the Company would issue a fixed rate debt instrument maturing on the
Final Maturity Date, with terms and conditions otherwise similar to those of
the Notes). In addition, if the Contingent Debt Regulations applied, any gain
recognized on the sale of Notes would be treated as interest income, while any
losses would generally be ordinary to the extent of previously accrued
original issue discount, and any excess would be capital loss. The ability to
use capital losses to offset ordinary income in determining taxable income is
generally limited.
Foreign Holders of Notes
Interest paid to a holder that is not a United States person (a "Foreign
Holder") generally will not be subject to the 30% withholding tax generally
imposed with respect to U.S. source interest paid to such persons, provided
that such holder is not engaged in a trade or business in the United States in
connection with which it holds such Notes, does not bear certain relationships
to the Company and fulfills certain certification requirements. Under such
certification requirements, the holder must certify, under penalties of
perjury, that it is not a "United States person" and is the beneficial owner
of the Notes, and must provide its name and address. For this purpose, "United
States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any State thereof (including the District of
Columbia), an estate the income of which is includible in gross income for
United States Federal income tax purposes, regardless of its source, or a
trust subject to the primary supervision of a court within the United States
and the control of one or more U.S. fiduciaries with respect to substantial
decisions.
A Foreign Holder generally will not be subject to United States Federal
income tax with respect to any gain recognized under the disposition of Notes
unless (i) such gain is effectively connected with the conduct by the Foreign
Holder of a trade or business in the United States, (ii) in the case of an
individual holder, such Foreign Holder is present in the United States for 183
days or more in the taxable year during which the disposition occurs and
certain other conditions are met or (iii) the Notes are treated as subject to
the Contingent Debt Regulations and the holder fails to satisfy the
certification requirements of the preceding paragraph.
S-7
<PAGE>
Backup Withholding
Payments made on the Notes and proceeds from the sale of Notes will not be
subject to a "backup" withholding tax of 31% unless, in general, the holder
fails to comply with certain reporting procedures and is not an exempt
recipient under applicable provisions of the Code.
The United States Treasury Department has recently issued final regulations
that impose certain new requirements for establishing an exemption from backup
withholding.
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated as of April 16, 1998 (the "Underwriting Agreement") among the Company
and the Underwriters named below (the "Underwriters"), with Union Bank of
Switzerland, London branch, joining solely for purposes of the assignment of
the Call Option, the Company has agreed to sell each of the Underwriters and
each of the Underwriters has severally agreed to purchase, the principal
amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
UBS Securities LLC.............................................. $ 80,000,000
Lehman Brothers Inc............................................. $ 20,000,000
------------
Total......................................................... $100,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose initially to offer the Notes to the public from
time to time for sale in negotiated transactions or otherwise at prices
relating to prevailing market prices at the time of the sale. The Underwriters
may effect such transactions by selling Notes to or through certain dealers
and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Underwriters and any purchasers
of Notes for who they act as agent. The Underwriters and any dealers that
participate with the Underwriters in the distribution of Notes may be deemed
to be underwriters, and any discounts or commissions received by them and any
profit on the resale of the Notes by them may be deemed to be underwriting
compensation.
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.
The Company has agreed to indemnify each of the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriters may be required to make in
respect thereof.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Notes in accordance with Regulation M under the Securities Exchange Act of
1934, as amended. Over-allotment transactions involve syndicate sales in
excess of the offering size creating a syndicate short position. Stabilizing
transactions permit bids to purchase the Notes so long as the bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases
of the Notes in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the Underwriters
to reclaim a selling concession from a syndicate member when the Notes
originally sold by such syndicate member are purchased in a syndicate covering
transaction. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause prices of the Notes
to be higher than they would otherwise be in the absence of such transactions.
Neither the Company nor the Underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the Notes. In addition, neither the Company nor
the Underwriters make any representation that the Underwriters will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
In the ordinary course of business, the Underwriters and their affiliates
have and may in the future engage in investment banking transactions with the
Company and certain of its affiliates.
S-9
<PAGE>
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Albert D.
Hoppe, Vice President and General Counsel of the Company. As of April 1, 1998,
Mr. Hoppe owned options to purchase 67,358 shares of the Company's common
stock, par value $0.01 per share. Certain legal matters will be passed upon
for the Underwriters by its counsel, Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York. Certain Federal income tax matters will be passed upon for
the Company by its special tax counsel, Skadden, Arps, Slate, Meagher & Flom
LLP.
S-10
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No person is authorized in connection with any offering made hereby to give
any information or to make any representation other than as contained in this
Prospectus Supplement or the Prospectus and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or by any Underwriter. This Prospectus Supplement
and the Prospectus do not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered hereby to any
person in any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus
Supplement and the Prospectus at any time nor any sale made hereunder shall
under any circumstances create any implication that the information herein is
correct as of any time subsequent to the date hereof. No action has been or
will be taken in any jurisdiction by the Company or by any Underwriter that
would permit a public offering of the shares of the securities offered hereby
or possession or distribution of this Prospectus Supplement and the Prospectus
in any jurisdiction where action for that purpose is required, other than in
the United States. Persons into whose possession this Prospectus Supplement
and the Prospectus come are required by the Company and the Underwriters to
inform themselves about and to observe any restrictions as to the offering of
the securities offered hereby and the distribution of this Prospectus
Supplement and Prospectus.
---------------
Table of Contents
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Use of Proceeds............................................................ S-2
Risk Factors............................................................... S-2
Description of the Notes................................................... S-3
Certain Federal Income Tax Considerations.................................. S-6
Underwriting............................................................... S-9
Legal Matters.............................................................. S-10
Prospectus
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 11
Principal Stockholder; Control of the Company.............................. 12
Experts.................................................................... 12
Validity of Debt Securities................................................ 12
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$100,000,000
6% PUTABLE/CALLABLE NOTES
(THE "NOTES")
VASTAR RESOURCES, INC.
DUE APRIL 20, 2010,
PUTABLE/CALLABLE APRIL 20, 2000
---------------
PROSPECTUS SUPPLEMENT
April 16, 1998
(Including Prospectus dated November 18, 1994)
---------------
UBS SECURITIES
LEHMAN BROTHERS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
