Empire Gas Corporation, Post-Effective Supplement to Prospectus,
dated June 23, 1994 (No. 33-53343), Filed Pursuant to Rule 424(b)(3).
EMPIRE GAS CORPORATION
SUPPLEMENT DATED JANUARY 16, 1995 TO PROSPECTUS DATED JUNE 23, 1994
As used herein, unless the context requires otherwise, all
references to defined terms shall be to terms as defined in the prospectus
of Empire Gas Corporation, dated June 23, 1994 relating to the issuance of
12,720 Units (the "Prospectus").
Completion of the Transaction
_____________________________
On June 30, 1994, the Company completed the Transaction,
consisting of the Acquisition and the Stock Purchase, on the terms set forth
in the Prospectus. Pursuant to the terms of the Stock Redemption Agreement
and in connection with the completion of the Transaction, the Company made a
payment of $1,497,031 to Energy based on the balance of certain liabilities
net of certain assets as of the date on which the Transaction was
consummated.
Acquisitions
____________
Since the date of the Prospectus, the Company completed the
acquisition of four retail service centers. These service centers were
purchased for an aggregate of $1.1 million in cash and $1.4 million in new
mortgages. The service centers acquired are located in Arkansas, Missouri,
South Carolina, and Wyoming. The aggregate historical gallons, for the most
recent year, of the four service centers was approximately 3.3 million
gallons.
Following the Transaction and subsequent to the acquisitions
described above, the Company's operations consist of 162 retail service
centers with 18 additional bulk storage facilities. The Company has retail
service centers with an aggregate storage capacity of approximately 8.7
million gallons of propane.
Since June 30, 1994, the Company has opened six new retail
service centers (five in New York and one in Michigan) and acquired new
transportation and storage equipment. As of September 30, 1994, the Company
has spent $1.1 million on the opening of new service centers and acquisition
of storage equipment and $2.2 million on acquisition of new transportation
equipment.
Underground Storage Facility
____________________________
The Company owns salt cavern LPG underground storage
facilities which are not in use and are subject to a consent agreement with
the state of Kansas. Under the agreement, the Company was to submit a plan
to the state for resuming use of the facilities or permanently closing them.
The due date of the plan was initially January 1, 1994. The state has
extended the due date until October 1, 1995.
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The Company has obtained from an engineering and
construction company a study of the costs of rehabilitating and opening the
facilities. The Company has received various reports which estimate the
cost of rehabilitating and opening the facility to be from $500,000 to
$3.0 million. Based on the approximately one million barrel capacity of the
facilities, management believes the fair market value of the facilities
after rehabilitation would be approximately $4.0 million. Accordingly, the
Company reduced the current carrying value of the facilities to $1.0 million
by charging $1.4 million against 1994 earnings.
The Company is presently evaluating several options after
rehabilitation of the facility, including use as expanded storage for
Company inventories, use as leased storage to customers and other
distributors, and sale. If the rehabilitation work is not performed and the
facilities cannot be sold, then the Company would be required to close the
facilities at a cost not yet estimated and write off any remaining book
value.
Insurance
_________
Effective July 1994, the Company reduced its deductible on
its automobile liability policy from $500,000 to $250,000 per occurrence.
Excess coverage for comprehensive general liability continues to provide a
loss limitation that limits the Company's aggregate of self-insured losses
to $1 million per policy period. As of September 30, 1994, the Company has
not exceeded the $1 million loss limit for the comprehensive general
liability policy periods July 1, 1991 through June 30, 1992, and July 1,
1992 through June 30, 1993.
1994 Stock Option Plan
______________________
On October 24, 1994, the Board of Directors approved the
1994 Stock Option Plan of Empire Gas Corporation (the "1994 Stock Option
Plan"). Pursuant to the 1994 Stock Option Plan, the Company will grant
options to eligible employees, consultants, and outside directors for the
purchase of its Common Stock. Options issued pursuant to the 1994 Stock
Option Plan are intended to be either Incentive Stock Options or Non-
Qualified Stock Options as determined by the plan administrator. The
aggregate number of shares of Common Stock that may be issued pursuant to
options under the 1994 Stock Option Plan may not exceed 500,000 shares. The
administrator shall determine the exercise price of each option under the
1994 Stock Option Plan, but the exercise price shall not be less than one
hundred percent (100%) of the fair market value on the date of grant. The
plan administrator shall also determine the vesting schedule of options
issued pursuant to the 1994 Stock Option Plan; provided, however, that no
options shall be exercisable after the expiration of 10 years from the date
on which the Company granted such option.
On July 6, 1994, the Board of Directors approved a grant of
stock options to the three outside directors and certain officers of the
Company in anticipation of the 1994 Stock Option Plan as follows: Douglas A.
Brown (options to purchase 122,830 shares of Common Stock); Bruce M.
Whithers, Jr. (options to purchase 17,548 shares of Common Stock); Jim J.
Shoemake (options to purchase 17,548 shares of Common Stock); and certain
officers of the Company (options to purchase up to 342,074 to be allocated
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based on recommendations by the President of the Company). The exercise
price for these options is $7 per share of Common Stock.
The date of this Supplement is January 16, 1995.
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