<PAGE>
As Filed Pursuant to Rule 424(b)(2)
Registration No. 033-62166
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 27, 1993)
$100,000,000
SONAT INC.
7% NOTES DUE FEBRUARY 1, 2018
---------
Interest on the 7% Notes due February 1, 2018 (the "Notes") is payable
semiannually on February 1 and August 1 of each year, commencing August 1, 1998.
The Notes will be redeemable as a 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 the Notes to be redeemed and (ii) the sum of the present
values of the Remaining Scheduled Payments (as defined herein) thereon,
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate (as defined herein)
plus twenty basis points, plus in each case accrued interest on the principal
amount being redeemed to the date of redemption.
The Notes do not provide for any sinking fund. The Notes will be represented
by one or more global Notes registered in the name of the nominee of The
Depository Trust Company. Beneficial interests in the global Notes 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. 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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note 99.787% .875% 98.912%
Total $99,787,000 $875,000 $98,912,000
</TABLE>
(1) Plus accrued interest, if any, from February 3, 1998.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting".
(3) Before deducting expenses payable by the Company, estimated to be
$50,000.
------------------
The Notes are offered subject to receipt and acceptance by the Underwriters,
to prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that the Notes will be made available through the facilities of DTC on or about
February 3, 1998 against payment therefor in immediately available funds.
----------------
SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
J.P. MORGAN & CO.
January 29, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH NOTES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THIS
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
--------------
THE COMPANY
Sonat Inc. (the "Company" or "Sonat"), a Delaware corporation organized in
1973, is a diversified energy holding company. It is engaged through Sonat
Exploration Company ("Exploration") in domestic oil and natural gas exploration
and production, through Southern Natural Gas Company ("Southern") and Citrus
Corp. ("Citrus") in the interstate transmission and storage of natural gas, and
through Sonat Energy Services Company ("Energy Services") in natural gas and
electric power marketing. The Company disposed of its remaining shares of Sonat
Offshore Drilling Inc., a former subsidiary referred to in the accompanying
Prospectus, in 1995.
Exploration, which is an independent oil and gas producer, operates
primarily in Texas, Oklahoma, Louisiana, Arkansas, and the Gulf of Mexico. Oil
and gas exploration and production activities contributed approximately 47
percent of Sonat's consolidated operating income for 1996.
Southern is a major transporter of natural gas to the southeastern United
States. Its natural gas pipeline system extends primarily from gas producing
areas of Texas and Louisiana, both onshore and offshore, to markets in a
seven-state area of the Southeast. Sonat and Enron Corp., an unaffiliated
company, each owns a one-half interest in Citrus, a holding company that owns
100 percent of Florida Gas Transmission Company ("Florida Gas"). Florida Gas is
an interstate natural gas pipeline that serves electric generation, resale and
industrial markets in Florida. Natural gas transmission operations, excluding
Citrus, contributed approximately 49 percent of Sonat's consolidated operating
income for 1996. Sonat's share of Citrus' earnings is reflected in Equity in
Earnings of Unconsolidated Affiliates.
Energy Services's largest subsidiary, Sonat Marketing Company L.P.
("Marketing"), sells natural gas throughout much of the United States. Marketing
is 65-percent owned by a subsidiary of Energy Services, with the remaining
interest owned by a subsidiary of AGL Resources, Inc., an unaffiliated company
("AGL Resources"). At year-end 1996, Marketing was one of the ten largest
natural gas marketers in the United States. Energy Services owns 65 percent of
Sonat Power Marketing L.P. ("Power Marketing"), which markets electric power
throughout much of the United States. AGL Resources owns the other 35 percent of
Power Marketing. Energy Services's marketing activities contributed
approximately three percent of Sonat's consolidated operating income for 1996
(which is prior to deduction of amounts attributable to the minority interests).
PROPOSED ACQUISITION OF ZILKHA ENERGY COMPANY
Sonat entered into an Agreement and Plan of Merger, dated as of November 22,
1997 (the "Merger Agreement"), with Zilkha Energy Company ("Zilkha"), pursuant
to which a wholly-owned subsidiary of Sonat will be merged (the "Merger") into
Zilkha in a share-for-share exchange. The terms of the Merger Agreement provide
for Sonat to issue an aggregate number of shares of its common stock having a
value of approximately $1.04 billion, based upon the average closing price of
such shares on the New York Stock Exchange for a specified period prior to the
consummation of the Merger; provided that, for the purposes of such calculation,
the average closing price shall not be more than $51 per share or, unless Sonat
otherwise agrees, less than $39 per share. After giving effect to the debt and
other obligations of Zilkha that will be obligations of the surviving company in
the Merger, the total consideration will be approximately $1.3 billion. Sonat
intends to repay substantially all of such debt and obligations promptly after
the effectiveness of the Merger. See "Use of Proceeds". The Merger is expected
to be consummated on
S-2
<PAGE>
January 30, 1998, subject to the approval of the Company's shareholders at a
meeting scheduled for that date and the satisfaction of the other conditions set
forth in the Merger Agreement.
Zilkha is a privately-owned oil and gas exploration, development and
production company operating primarily offshore in the Gulf of Mexico. Zilkha
has an ownership interest in approximately 490 state and federal lease blocks,
of which approximately 340 lease blocks (covering approximately 1.4 million net
acres) are undeveloped. Zilkha has a contractual interest (with rights to drill
to earn) in approximately 200,000 additional undeveloped acres. It also has
licensed or contracted to license 3-D seismic data covering approximately 6,100
lease blocks in both shallow and deep water areas of the Gulf of Mexico.
REVOLVING CREDIT AGREEMENT
On January 26, 1998, Sonat entered into a new revolving credit agreement
with a group of banks providing for borrowings of up to $700 million from time
to time within 364 days of the effectiveness of such agreement. In connection
with this new agreement, the Company intends to terminate existing lines of
credit providing for up to $200 million of borrowings.
1997 RESULTS OF OPERATIONS
Sonat had net income of $175.9 million in 1997, or $201.3 million before
giving effect to a third quarter write-down of $25.4 million relating to its
Gulf of Mexico properties. This compares with net income of $201.2 million in
1996. For the fourth quarter of 1997, the Company's net income was $59.9
million, as compared with $67 million for the same period in 1996.
Exploration's operating income for the fourth quarter of 1997 was $41
million compared with $65 million in the fourth quarter of 1996. Natural gas and
oil production rose from 65 billion cubic feet of natural gas equivalent (Bcfe)
to 67 Bcfe. The primary reasons for lower financial results in the fourth
quarter of 1997 versus the 1996 fourth quarter were lower natural gas and oil
prices and higher operating expenses. Realized natural gas prices declined from
$2.57 per thousand cubic feet in the fourth quarter of 1996 to $2.32 in the 1997
period, while realized oil prices declined to $19.16 from $19.97 per barrel.
Fourth quarter operating income in 1997 for the Company's natural gas
transmission segment rose to $47 million from $45 million in the 1996 period,
principally due to lower general and administrative expenses. Southern's
market-area throughput rose to 172 billion cubic feet (Bcf) in the 1997 period
from 169 Bcf last year, while production-area throughput rose to 107 Bcf from 73
Bcf. Fourth quarter equity in earnings of Citrus rose from $6 million to $10
million in the 1997 period, primarily due to the restructuring of Sonat and
Enron Corp.'s marketing arrangements with Citrus Trading Company. Throughput on
the Florida Gas system rose from 104 Bcf to 107 Bcf in the 1997 period.
Fourth quarter financial results in 1997 for Energy Services were up from
1996's levels, as operating income rose to $9 million in 1997 from a loss of $1
million in the previous year. The principal reason for the increase was the
recognition of mark-to-market income from a new long-term natural gas sales
contract. Marketing's natural gas sales volumes in the 1997 quarter rose 22
percent compared to the 1996 period, and trading margins were higher. At year
end, its sales volumes reached 4.2 Bcf per day, up from 3.3 Bcf per day at the
beginning of the year. Power Marketing increased its sales volumes to 2.1
million megawatt hours in the 1997 quarter from 1.3 million megawatt hours in
the fourth quarter of 1996.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used for general
corporate purposes of the Company, including working capital and repayment of
debt. The Company expects that substantially all of such net proceeds will be
utilized to repay commercial paper borrowings that mature on February 3, 1998,
approximately $36.2 million of which bears interest at a rate per annum of 5.74%
and the balance of which is expected to be borrowed after the date of this
Prospectus Supplement.
S-3
<PAGE>
RATIOS OF EARNINGS FROM CONTINUING OPERATIONS
TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- -------------------------------------
1997 1996 1995 1994
----------------- ----- ----- -----
<S> <C> <C> <C> <C>
Total Enterprise................................................ 2.5 2.9 2.7 2.2
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Total Enterprise................................................ 3.8 1.8
</TABLE>
For the purpose of calculating the ratios of earnings from continuing
operations to fixed charges, earnings is defined as the sum of net income, fixed
charges (net of interest capitalized) and taxes based on income. Fixed charges
is defined as gross interest on debt, including interest on amounts subject to
refund, amortization of debt discount and expense and one-third of rental
expense, which is considered representative of the interest factor. The ratios
also include the Company's share of the earnings and fixed charges of continuing
joint ventures.
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE TERMS OF THE NOTES OFFERED HEREBY (REFERRED
TO IN THE ACCOMPANYING PROSPECTUS AS THE "OFFERED DEBT SECURITIES") SUPPLEMENTS,
AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, INSOFAR AS SUCH DESCRIPTION
RELATES TO THE NOTES, THE DESCRIPTION OF THE OFFERED DEBT SECURITIES SET FORTH
IN THE ACCOMPANYING PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
GENERAL
The Notes are to be issued under an Indenture, dated as of June 1, 1986,
between the Company and The Chase Manhattan Bank (formerly Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company), as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture, dated as of
June 1, 1995, between the Company and the Trustee.
The Notes will be limited to $100,000,000 aggregate principal amount and
will mature on February 1, 2018. The Notes will bear interest at the rate of 7%
per annum from February 3, 1998, or from the most recent Interest Payment Date
to which interest has been paid or provided for, payable semiannually on
February 1 and August 1 of each year, commencing August 1, 1998, to the person
in whose name a Note (or any predecessor Note) is registered at the close of
business on the January 15 or July 15, as the case may be, next preceding such
Interest Payment Date.
The Notes will not be entitled to the benefit of any sinking fund.
The Notes are subject to defeasance and covenant defeasance as described
under "Description of Debt Securities -- Defeasance and Covenant Defeasance" in
the accompanying Prospectus. As more fully discussed therein, it is likely that
a defeasance of the Notes by the Company would result in a taxable event to the
holders of the Notes under current Federal income tax law.
OPTIONAL REDEMPTION
The Notes will be redeemable as a 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 the Notes to be redeemed and (ii) the sum of the present
values of the Remaining Scheduled Payments (as hereinafter defined) thereon,
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus twenty basis
points, plus in either case accrued interest on the principal amount being
redeemed to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
S-4
<PAGE>
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the arithmetic average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the arithmetic
average of the Reference Treasury Dealer Quotations for such redemption date.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the arithmetic average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer by 5:00 p.m. on the
third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Credit
Suisse First Boston Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation and J.P. Morgan Securities Inc. and their respective successors;
PROVIDED, HOWEVER, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any Note, the
remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but for
such redemption; PROVIDED, HOWEVER, that, if such redemption date is not an
interest payment date with respect to such Note, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
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 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 SYSTEM
The Notes will be issued in the form of one or more fully registered global
notes (collectively, the "Global Notes"), which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depositary")
and registered in the name of the Depositary's nominee. Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
the Depositary or another nominee of the Depositary.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
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 "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Depositary was created to hold
securities of institutions that have accounts with the Depositary or its nominee
("participants") and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing
S-5
<PAGE>
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The Depositary agrees with and
represents to its participants that it will administer its book-entry system in
accordance with its rules and bylaws and requirements of law.
Upon the issuance of the Global Notes, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Global Notes to the accounts of participants. The
accounts to be credited shall be designated by the Underwriters. Ownership of
beneficial interests in the Global Notes will be limited to participants or
persons that may hold interests through participants. Ownership of interests in
the Global Notes will be shown on, and the transfer of those ownership interests
will be effected only through, records maintained by the Depositary (with
respect to participants' interests) and such participants (with respect to the
owners of beneficial interest in the Global Notes through such participants).
The laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
laws may impair the ability to transfer beneficial interests in the Global
Notes.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Notes, the Depositary or such nominee, as the case may be,
will be considered the sole owner and holder of the related Notes for all
purposes of such Notes and for all purposes under the Indenture. Except as set
forth below, owners of beneficial interests in the Global Notes will not be
entitled to have the Notes represented by such Global Notes registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Notes in definitive form and will not be considered to be the
owners or holders of any Notes under the Indenture or the Global Notes.
Accordingly, each person owning a beneficial interest in the Global Notes 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 of Notes under the Indenture or
the Global Notes. The Company understands that under existing industry practice,
in the event the Company requests any action of holders of Notes or an owner of
a beneficial interest in the Global Notes desires to take any action that the
Depositary, as the holder of the Global Notes, is entitled to take, the
Depositary would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal (and premium, if any) and interest on Notes represented
by the Global Notes registered in the name of or held by the Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner and holder of the Global Notes.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest in respect of the Global Notes, will credit immediately
participants' accounts with payment in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Notes as shown on the
records of the Depositary. The Company also expects that payments by
participants to owners of beneficial interests in the Global Notes held through
such participants will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the responsibility of
such participants. None of the Company, the Trustee or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Global Notes for any Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
other aspect of the relationship between the Depositary and its participants or
the relationship between such participants and the owners of beneficial
interests in the Global Notes owning through such participants.
Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form, the Global Notes may not be transferred except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
S-6
<PAGE>
The Notes represented by the Global Notes are exchangeable for certificated
Notes in definitive registered form of like tenor as such Notes in denominations
of $1,000 and in any greater amount that is an integral multiple thereof if (i)
the Depositary notifies the Company that it is unwilling or unable to continue
as Depositary for the Global Notes or if at any time the Depositary ceases to be
a clearing agency registered under the Exchange Act, (ii) the Company in its
discretion at any time determines not to have all of the Notes represented by
the Global Notes and notifies the Trustee thereof or (iii) an Event of Default
with respect to the Notes represented by such Global Notes has occurred and is
continuing. Any Notes that are exchangeable pursuant to the preceding sentence
are exchangeable for certificated Notes issuable in authorized denominations and
registered in such names as the Depositary shall direct. Subject to the
foregoing, the Global Notes are not exchangeable except for a Global Note or
Global Notes of the same aggregate denominations to be registered in the name of
the Depositary or its nominee.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and each
of the Underwriters has severally agreed to purchase, the principal amount of
the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
- ---------------------------------------------------------------------------------------- --------------
<S> <C>
Salomon Brothers Inc.................................................................... $ 25,000,000
Credit Suisse First Boston Corporation.................................................. 25,000,000
Donaldson, Lufkin & Jenrette Securities Corporation..................................... 25,000,000
J.P. Morgan Securities Inc.............................................................. 25,000,000
--------------
Total............................................................................... $ 100,000,000
--------------
--------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all 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 0.50% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% 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 Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but they are under no obligation to do so and such market
making may be terminated at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes.
In the ordinary course of their respective businesses, each of the
Underwriters and their affiliates have provided, and may in the future provide,
investment banking and/or commercial banking services for the Company and its
affiliates.
In connection with the offering of the Notes, 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 syndicate
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 syndicate 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
S-7
<PAGE>
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Notes sold in the offering for their account
may be reclaimed by the syndicate if such Notes are repurchased by the syndicate
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.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by Hughes
Hubbard & Reed LLP, and for the Underwriters by Sullivan & Cromwell, New York,
New York. L. Edwin Smart, Counsel to Hughes Hubbard & Reed LLP, has retired as a
director of the Company.
EXPERTS
The consolidated financial statements of Sonat Inc. and subsidiaries
appearing in Sonat's Annual Report (Form 10-K) for the year ended December 31,
1996 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated in the Prospectus by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference its Annual Report on Form 10-K
for the year ended December 31, 1996, its Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 1997 and its Current Reports
on Form 8-K dated September 25 and November 22, 1997 and January 22, 1998 filed
under the Exchange Act with the Securities and Exchange Commission (the
"Commission").
Reference is made to the information under "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus. All documents filed
under the Exchange Act with the Commission prior to January 1, 1997 and
incorporated by reference in the Prospectus have been superseded by the
above-listed documents and shall not be deemed to constitute a part of the
Prospectus or this Prospectus Supplement.
S-8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE 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 BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS 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 OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
---------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Company.................................... S-2
Use of Proceeds................................ S-3
Ratios of Earnings from Continuing Operations
to Fixed Charges.............................. S-4
Description of Notes........................... S-4
Underwriting................................... S-7
Validity of the Notes.......................... S-8
Experts........................................ S-8
Incorporation of Certain Documents by
Reference..................................... S-8
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
Use of Proceeds................................ 3
Capital Expenditure Budget..................... 3
Ratios of Earnings from Continuing Operations
to Fixed Charges.............................. 4
Description of Debt Securities................. 4
Plan of Distribution........................... 8
Legal Opinions................................. 9
Experts........................................ 9
</TABLE>
$100,000,000
SONAT INC.
7% NOTES
DUE FEBRUARY 1, 2018
---------
P R O S P E C T U S S U P P L E M E N T
JANUARY 29, 1998
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SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
J.P. MORGAN & CO.
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