<PAGE>
Pursuant to Rule 424(b)(2)
File No. 333-62181
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 27, 1998
[LOGO]
$500,000,000
UNION PACIFIC RESOURCES GROUP INC.
$200,000,000 7.30% Notes Due April 15, 2009
$300,000,000 7.95% Debentures Due April 15, 2029
------------------
The Notes and the Debentures are collectively referred to herein as the
"Securities." We will pay interest on the Securities on April 15 and
October 15, commencing on October 15, 1999. We may redeem the
Securities prior to maturity. There will not be a sinking fund for
the Securities.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS UPRG(1)(2)
------------ ------------- ------------
<S> <C> <C> <C>
Per Note............................................... 99.719% 0.650% 99.069%
Total.................................................. $199,438,000 $ 1,300,000 $198,138,000
Per Debenture.......................................... 99.863% 0.875% 98.988%
Total.................................................. $299,589,000 $ 2,625,000 $296,964,000
</TABLE>
(1) Plus accrued interest, if any, from April 13, 1999.
(2) Before deducting expenses payable by UPRG estimated at $300,000.
Delivery of the Securities, in book-entry form only, will be made through
The Depository Trust Company on or about April 13, 1999, against payment in
immediately available funds.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
ABN AMRO INCORPORATED
DEUTSCHE BANK SECURITIES
RBC DOMINION SECURITIES
CORPORATION
WARBURG DILLON READ LLC
Prospectus Supplement dated April 9, 1999.
<PAGE>
------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
PAGE
----
CERTAIN DEFINED TERMS.......................... S-2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE................................. S-3
BACKGROUND..................................... S-3
THE COMPANY.................................... S-3
RECENT DEVELOPMENTS............................ S-6
USE OF PROCEEDS................................ S-8
RATIO OF EARNINGS TO FIXED CHARGES............. S-9
CAPITALIZATION................................. S-10
SUMMARY HISTORICAL OPERATING DATA.............. S-11
SUMMARY HISTORICAL RESERVE DATA................ S-12
SELECTED HISTORICAL AND PRO FORMA FINANCIAL
INFORMATION.................................. S-14
DESCRIPTION OF THE SECURITIES.................. S-16
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES TO NON-U.S. HOLDERS............. S-18
UNDERWRITING................................... S-20
NOTICE TO CANADIAN RESIDENTS................... S-21
LEGAL OPINIONS................................. S-22
EXPERTS........................................ S-22
FORWARD-LOOKING INFORMATION.................... S-22
PROSPECTUS
PAGE
----
AVAILABLE INFORMATION.......................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.................................... 3
THE COMPANY.................................... 4
UNION PACIFIC RESOURCES INC.................... 5
UPR CAPITAL COMPANY............................ 5
THE UPRG TRUSTS................................ 6
USE OF PROCEEDS................................ 6
DESCRIPTION OF DEBT SECURITIES AND COMPANY
GUARANTEES................................... 7
DESCRIPTION OF PREFERRED STOCK................. 15
DESCRIPTION OF COMMON STOCK.................... 16
DESCRIPTION OF WARRANTS........................ 16
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND
STOCK PURCHASE UNITS......................... 17
DESCRIPTION OF TRUST PREFERRED SECURITIES AND
TRUST GUARANTEES............................. 18
PLAN OF DISTRIBUTION........................... 21
LEGAL OPINIONS................................. 22
EXPERTS........................................ 22
</TABLE>
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
------------------
The address of our principal executive offices is: Union Pacific Resources
Group Inc., 777 Main Street, Fort Worth, Texas 76102, and the telephone number
of our principal executive offices is (817) 321-6000.
------------------
CERTAIN DEFINED TERMS
Unless otherwise specified herein or the context otherwise requires:
o References to "dollars," "U.S. dollars," "U.S.$" and "$" are to
United States dollars. References to"C$" are to Canadian dollars.
o References to "n/a" mean "not available."
o Quantities of natural gas are expressed in terms of thousand cubic
feet ("Mcf"), million cubic feet ("MMcf") or billion cubic feet
("Bcf").
o Oil and natural gas liquids are quantified in terms of barrels
("Bbl"), thousands of barrels ("MBbl") or millions of barrels
("MMBbl").
o Oil and natural gas liquids are compared to natural gas in terms of
thousands of cubic feet of natural gas equivalent ("Mcfe"), millions
of cubic feet of natural gas equivalent ("MMcfe"), billions of cubic
feet of natural gas equivalent ("Bcfe") or trillions of cubic feet
of natural gas equivalent ("Tcfe"). One barrel of oil or natural gas
liquids is the energy equivalent of six Mcf of natural gas.
o Daily oil and gas production is signified by the addition of the
letter "d" to the end of the terms defined above.
o Natural gas volumes may also be expressed in terms of one million
British thermal units ("MMBtu"), which is approximately equal to one
Mcf.
o With respect to information relating to working interests in wells
or acreage, "net" oil and gas wells or acreage is determined by
multiplying gross wells or acreage by the working interest owned
therein.
o Unless otherwise specified, all references to wells and acres are
gross.
S-2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which we have filed with the Securities and
Exchange Commission (the "Commission") pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, are incorporated by reference: (i) our Annual
Report on Form 10-K for the year ended December 31, 1998 and (ii) our Current
Reports on Form 8-K dated January 13, 1999, and January 25, 1999. Our file
number with the Commission is 1-13916. See "Incorporation of Certain Documents
by Reference" in the Prospectus. You may access the Form 10-K and Forms 8-K
electronically through the Commission's web site, "http://www.sec.gov".
BACKGROUND
We are Union Pacific Resources Group Inc., a Utah corporation. We sometimes
refer to ourselves in this document as the "Company". On October 17, 1995, we
completed an initial public offering of approximately 17% of our outstanding
common stock. Prior to the initial public offering we were a wholly owned
subsidiary of Union Pacific Corporation. At the time of the initial public
offering, Union Pacific Corporation announced its intention to distribute the
remaining 83% of the outstanding common stock to its shareholders as a dividend
by means of a tax-free distribution. On October 15, 1996, Union Pacific
Corporation consummated the distribution.
THE COMPANY
GENERAL
We explore for, develop and produce natural gas, natural gas liquids and
crude oil in several major producing basins in the United States, Canada,
Guatemala, Venezuela and other international areas. We emphasize natural gas in
our exploration and production activities. In addition, we engage in the hard
minerals business through a nonoperated joint venture and royalty interests in
several coal and trona (natural soda ash) mines located on lands within and
adjacent to our "Land Grant" holdings in Wyoming. The "Land Grant" consists of
land that passes through the states of Colorado and Wyoming and into Utah, which
the federal government granted to our predecessor in the mid-1800s. In the Land
Grant, we have fee ownership of the mineral rights under approximately 7.9
million acres.
BUSINESS STRATEGY
We focus on the exploration and development of natural gas and crude oil
resources, and make efforts to increase margins by reducing drilling and
operating costs. Our long-term strategy is to increase production by expanding
our drill site inventory and enhancing well results. We plan to accomplish this
by applying economies of scale, our operating experience in our core geographic
areas and our expertise in advanced drilling and completion technologies. We
keep our drilling inventory high to supply our drilling operations, striving to
maintain a three-year inventory of drill sites in our core areas through
development of existing properties, exploration, farm-in agreements and
acquisitions of properties and companies. However, in the current price
environment, we are holding our exploration drilling inventory for the future.
We generally maintain a high working interest in our core areas and typically
serve as operator. This allows us to control the timing and cost of exploration
and development activities and to enhance our ability to apply our expertise to
these properties.
EXPLORATION & PRODUCTION
We recently reorganized our oil & gas operations into four primary business
units:
1. The U.S. Offshore business unit includes our oil and gas activities
in the Gulf of Mexico;
2. The Canada business unit includes our interests in Western Canada
and properties of the recently acquired Norcen Energy Resources
Limited (the "Norcen Acquisition");
3. The Latin America business unit is comprised of our operations in
Guatemala, Venezuela and other international operations, including
Argentina, Australia, Egypt and Brazil; and
S-3
<PAGE>
4. The U.S. Onshore business unit consists of our oil and gas
activities in Texas, Louisiana, Colorado, Wyoming, Utah and Kansas.
Natural gas constituted 56% of our total proved reserves of 6.1 Tcfe as of
December 31, 1998, and 58% of our sales volumes of 2.5 Bcfed for the year ended
December 31, 1998.
<TABLE>
<CAPTION>
TOTAL PROVED
RESERVES PERCENT
BUSINESS UNIT(A) (BCFE) OF TOTAL
- -------------------------------------------------------------------------------------- ------------ --------
<S> <C> <C>
U.S. Offshore......................................................................... 358 6%
Canada................................................................................ 1,731 28%
Latin America......................................................................... 927 15%
U.S. Onshore.......................................................................... 3,108 51%
------ ----
Total............................................................................ 6,124 100%
------ ----
------ ----
</TABLE>
- ------------------
(a) Reflects new business unit structure following the reorganization.
U.S. OFFSHORE BUSINESS UNIT. The U.S. Offshore business unit manages our
oil and gas activities in the Gulf of Mexico, including operations added in the
Norcen Acquisition in 1998. During 1997, we drilled a successful deepwater well
in Mississippi Canyon Block 755. We have and will continue to delineate the
discovery during 1999 with first production anticipated in 2002.
The unit had production volumes of 182 MMcfed during 1998 which represent a
94% improvement over 1997, with 74% of the production attributable to
company-operated properties.
CANADA BUSINESS UNIT. The Canadian operations principally include
properties from the Norcen Acquisition which were combined with our previous
interests in western Canada. Operations are centered in the province of Alberta,
with additional properties in northeastern British Columbia and southwestern
Saskatchewan. Production volume in 1998 was 519 MMcfed.
The Canada unit provides a balanced commodity mix of 46% crude oil and
natural gas liquids and 54% natural gas. Approximately 40% of Canadian oil
production is heavy oil and we have working interests in approximately 5,500
gross producing wells, and operate about 4,200 of them.
LATIN AMERICA BUSINESS UNIT. The Latin America business unit consists of
operations in Guatemala, Venezuela, Argentina, Australia and Egypt. Our
Guatemalan operations consist of the former Basic Resources International
acquired as part of the Norcen Acquisition. The majority of activity in
Guatemala is currently in the Xan area, producing heavy to medium quality crude
oil. Production volumes were 125 MMcfed in 1998. In Venezuela, our operations
consist of the Oritupano-Leona block, the West Guarico farm-in agreement and the
Delta Centro exploration block. Production volumes in Venezuela were 100 MMcfed.
Other international operations include interests in six fields in Argentina, two
non-operated platforms in Australia and an interest in a non-operated property
in Egypt.
U.S. ONSHORE BUSINESS UNIT. The U.S. Onshore business unit consists of
operations in the Austin Chalk trend in Texas and Louisiana, East/West Texas,
onshore Gulf Coast, and in the western part of the U.S. Austin Chalk production
is located primarily in three fields: Giddings, Brookeland and Masters Creek.
Since 1988, we have made aggregate capital expenditures of $2.4 billion in the
Austin Chalk. 1998 production from the Austin Chalk was 581 MMcfed with 90% of
the production attributable to company-operated properties.
Our two major northeastern Texas producing areas are the Carthage and
Oakhill fields. In West Texas, activities are principally in the Ozona field in
the Permian Basin area. Production from East/West Texas was 308 MMcfed in 1998.
Approximately 90% of the producing wells were company-operated and 84% of the
1998 production was attributable to company-operated properties.
Our Gulf Coast onshore activities are primarily in the Gulf Coastal plain
of Texas and Louisiana. Production from Gulf Coast onshore operations increased
30% in 1998 to 121 MMcfed. Approximately 80% of production volume was
attributable to company-operated properties.
S-4
<PAGE>
Our oil and gas activities in the western U.S. are in the Land Grant area
in Colorado, Wyoming and Utah, and the Hugoton/Panoma field in Kansas. We
control approximately 8.9 million developed and undeveloped net acres,
principally attributable to the Land Grant. Production volumes from this western
region were 500 MMcfed in 1998, with 29% of the production attributable to
company-operated properties.
MINERALS OPERATIONS
Minerals operations contribute significantly to our operating income. We
exploit the hard minerals portion of our extensive fee mineral interests in the
Land Grant through nonoperated joint venture and royalty arrangements in coal
and trona (natural soda ash) mines. In general, we reinvest the cash flow from
our hard minerals operations into our oil and gas operations. The following
table illustrates that for the year ended December 31, 1998, the minerals
operations generated $133.5 million of operating income.
<TABLE>
<CAPTION>
OPERATING INCOME
---------------------------
YEAR ENDED DECEMBER 31,
1998
---------------------------
AMOUNT PERCENT
------------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Royalties:
Soda ash(a).......................................................................... $ 31.8 24%
Coal(b).............................................................................. 15.5 12
------- ---
Total royalties................................................................... 47.3 36
------- ---
Nonoperated joint ventures:
Soda ash(c).......................................................................... 3.7 3
Coal(d).............................................................................. 86.0 64
------- ---
Total joint ventures.............................................................. 89.7 67
Overhead/other......................................................................... (3.5) (3)
------- ---
Total operating income............................................................ $ 133.5 100%
------- ---
------- ---
</TABLE>
- ------------------
(a) Includes properties leased to five soda ash producers, estimated to contain
resources sufficient to support over 30 years of production at current
production levels.
(b) We lease coal resources to six operating mines. In 1998, 60% of our coal
royalties were attributable to a single mine which supplies an adjacent
power station that is owned and operated by affiliates of the mine owners.
(c) Represents a 49% interest in OCI Wyoming LP, a nonoperated joint venture.
(d) Represents our 50% nonoperating interest in Black Butte Coal Company. In
1998, $79.3 million of operating income is attributable to a single coal
supply contract, which terminates at the end of 2000.
Our low sulfur coal deposits compete with other western coals for
industrial and utility boiler markets. At current coal pricing and extraction
cost levels, however, most of this resource is not economic to extract except
for sale to local markets. As a result, there are limited opportunities for new
coal mine development in the Land Grant.
The world's largest deposit of trona, constituting 90% of the world's known
trona resources, is located in the Green River Basin in southwestern Wyoming.
Approximately 40% of this trona deposit lies within the Land Grant and we
therefore own it. Natural soda ash, which is produced by refining trona ore, is
used primarily in the production of glass for containers and flat glass, in the
paper and water treatment industries and in the manufacture of certain chemicals
and detergents. Natural soda ash from Wyoming contributes 32% of the world's
soda ash supply with the remainder principally from synthetic processes. In
1998, together with our partner, Oriental Chemical Industries, Inc. ("OCI"), we
completed process improvement projects and construction of additional refining
capacity at the OCI Wyoming LP soda ash facility. These improvements increased
the plant's nameplate capacity to 3.1 million tons per year. The facility is now
ranked second in soda ash capacity among domestic producers.
S-5
<PAGE>
RECENT DEVELOPMENTS
RECENT FINANCIAL RESULTS
Discretionary cash flow, which is computed as the sum of income from
continuing operations, depreciation, depletion and amortization, exploration
expenses and deferred taxes, was $922.2 million for the year ended December 31,
1998, representing a 17% decrease as compared to the year ended December 31,
1997. On January 25, 1999, we announced a loss of $898.7 million for the year
ended December 31, 1998, or $3.63 per share. Producing property volumes averaged
approximately 2.5 billion cubic feet of gas equivalent per day, representing a
53% increase as compared to the year ended December 31, 1997. Proved reserves
were approximately 6.1 trillion cubic feet of gas equivalent as of December 31,
1998, representing a 49% increase as compared to December 31, 1997.
A pretax charge of $1.23 billion ($760.1 million after tax) significantly
affected our financial results for the year ended December 31, 1998. This charge
was required by Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" ("FAS 121"). The principal factors contributing to the asset impairment were
current and anticipated low hydrocarbon prices--particularly their effect on the
value of our heavy oil properties in Canada and Guatemala--and reserve revisions
following a comprehensive review of reserves completed in December 1998. Our
financial results for the year ended December 31, 1998 also include a pretax
charge of $17 million ($11 million after tax) associated with a workforce
reduction at our headquarters in Fort Worth, Texas and other domestic locations,
a long-term drilling rig commitment and excess office space commitments.
NORCEN ACQUISITION
In March 1998, we completed the acquisition of Norcen Energy Resources
Limited. We paid an aggregate purchase price of approximately $2.6 billion for
the outstanding shares of Norcen and assumed approximately $1 billion of its
long-term debt obligations. Shortly after the Norcen Acquisition, we combined
Norcen with our wholly owned subsidiary, Union Pacific Resources Inc. ("UPRI").
Norcen was a major Canadian oil and gas exploration and production company
with primary operations in western Canada, the Gulf of Mexico, Guatemala and
Venezuela. The Norcen Acquisition significantly increased our drill site
inventory and expanded our operations beyond our historical domestic focus.
Reserve revisions associated with Norcen's properties in Canada and offshore
were a principal factor contributing to the impairment of our assets required by
FAS 121. These revisions were primarily due to low hydrocarbon prices,
comprehensive reserve reviews and disappointing well performance from recent
discoveries that were not in production at the time of the Norcen Acquisition.
DELEVERAGING PROGRAM
GENERAL. On April 20, 1998, we announced that we would proceed with a
deleveraging program to reduce outstanding indebtedness following the completion
of the Norcen Acquisition. The program included the monetization of our natural
gas and natural gas liquids gathering, processing and marketing ("GPM") business
and sales of our non-strategic oil and gas producing properties.
Except for smaller packages in South Louisiana and East Texas, the
divestiture program is substantially complete. The proceeds, including
$1.35 billion received at the closing of the sale of the GPM business (as
described below) in March, bring pre-tax deleveraging proceeds to a total of
approximately $2.1 billion. An after-tax net of roughly $1.7 billion will be
applied to debt reduction. We expect to reduce debt further from 1999 operating
cash flow to achieve our $2 billion debt reduction objective.
GPM BUSINESS. On March 31, 1999, we consummated the sale of our GPM
business to Duke Energy Field Services, Inc. ("Duke") for a cash purchase price
of $1.35 billion. In connection with the sale agreement, we reclassified our GPM
business as a discontinued operation for the purposes of preparing our financial
statements.
Pursuant to the terms of the Merger and Purchase Agreement with Duke (the
"Agreement"), Duke has asserted environmental claims against us for costs to
remediate alleged environmental conditions. These environmental claims are in
excess of a $40 million deductible that Duke has assumed for environmental
matters.
S-6
<PAGE>
Under the Agreement, we have the right to contest such claims through
arbitration. If it is determined that there are valid environmental claims in
excess of the $40 million deductible, then we will be required to make a payment
to Duke for such excess amount. We are analyzing Duke's claims and believe that
we have substantial defenses to them.
The sale of our GPM business, which was operated under the name "UPFuels,"
included assets located in Texas, Wyoming, Utah, Colorado, New Mexico and
Louisiana. The sale included interests in 19 natural gas and natural gas liquids
processing plants as well as six natural gas liquids fractionation plants, all
of which were owned and operated by UPFuels (together with an interest in two
additional fractionation plants). In addition, in connection with its purchase
of our GPM business, Duke has agreed to market, and UPR is committed to supply
for a period of five years, our existing natural gas and natural gas liquids
production.
OIL AND GAS PRODUCING PROPERTIES. On January 22, 1999, we announced that
the aggregate sales price from completed sales of non-strategic oil and gas
producing properties undertaken as part of our deleveraging program were nearly
$700 million. In addition, we announced that we had substantially completed the
portion of our deleveraging program that involved sales of producing properties.
Only relatively small packages of properties in southern Louisiana and eastern
Texas remain to be sold. All of the producing properties sold or identified for
sale in the aggregate represent approximately 13% of our total proved reserves
as of December 31, 1998 and approximately 6% of the production volumes for 1998.
The oil and gas producing properties sold as part of our deleveraging program
include:
<TABLE>
<CAPTION>
SALE PRICE
PROPERTY SALE PACKAGE (MILLIONS)
- --------------------------------------------------------------------------------------------- ----------
<S> <C>
DJ Basin..................................................................................... $ 41
Matagorda Island Blocks...................................................................... 158
Rockies Package.............................................................................. 46
Eugene Island Blocks......................................................................... 8
Canadian Package............................................................................. 145
Caroline--Swan Hill(a)....................................................................... 108
South Texas Package(a)....................................................................... 138
Superior Propane............................................................................. 48
----
Total...................................................................................... $692
----
----
</TABLE>
- ------------------
(a) Sale closed in January 1999.
RECENT DISCOVERIES
EDWARDS PROJECT. On January 21, 1999, we announced that we expect to begin
a new natural gas production, gathering and processing project in a field
located in the North Giddings Edwards area of the Austin Chalk in Texas. We
expect this project, which includes seven wells, to result in production of
approximately 60 million cubic feet of gas per day. These wells produce "sour
gas" (containing hydrogen sulfide and carbon dioxide) that is piped to a new
"sweetening plant" (where the hydrogen sulfide and carbon dioxide are removed
from the gas). The sweetening plant (together with the supporting pipelines) are
among the assets that we sold to Duke in connection with the sale of our GPM
business. In connection with this sale, we agreed to dedicate all production
from certain areas to the "sweetening plant" for ten years.
DEEP GIDDINGS WELLS. On January 21, 1999, we also announced that five
successful wells had been drilled in the Deep Giddings area of the Austin Chalk
in Texas during the quarter ended December 31, 1998. The initial gross
production from these wells exceeded 140 million cubic feet of gas per day. We
own an average working interest in these wells of 45% and as of January 21, 1999
were receiving total net production of nearly 29 million cubic feet of gas per
day from these wells.
S-7
<PAGE>
COST REDUCTION AND CAPITAL BUDGETING
We have adopted programs designed to reduce the costs of our operations. In
the fourth quarter of 1998, we announced plans to reduce the workforce at our
Fort Worth headquarters by 14% as well as to reduce the workforces at other
domestic locations. In the first quarter of 1999, we announced the
reorganization of our exploration and production operations into four primary
business units. At the end of the first quarter of 1999, we completed an
additional workforce reduction program and a voluntary incentive retirement
program. We believe that the cost reduction programs and reductions in force
will better align staffing levels with expected capital spending and operating
activity levels, provide an improved cost structure and create a more efficient
organization in the current economic environment.
In 1999, we anticipate spending approximately $500 million in capital and
exploratory expenditures (as compared to expenditures of approximately
$1.2 billion in 1998, exclusive of expenditures associated with the Norcen
Acquisition), with a focus on high-return, quick-payout projects. These
expenditures are expected to be funded through cash provided by operations.
Approximately 20% of the capital will be directed toward each of the following
areas: Canada, the Austin Chalk trend in Texas and Louisiana, other U.S.
Onshore, U.S. Offshore and Latin America. As a result of the planned reduction
in capital spending, we may not increase production in 1999 from 1998 levels.
PRICE FLUCTUATIONS
Prices for oil and natural gas declined during 1998 as a result of several
factors, including high production levels from members of the Organization of
Petroleum Exporting Companies and other countries, generally mild weather
conditions, economic weakness in several Asian countries and excessive natural
gas storage levels. The price declines were a principal factor contributing to
the impairment of our assets required by FAS 121 and the related pretax charge
of $1.23 billion ($760.1 million after tax) included in our financial results
for the year ended December 31, 1998. The price declines were also an important
factor contributing to our plans to reduce the workforce at our headquarters in
Fort Worth, Texas and other domestic locations and the related pretax charge of
$17 million ($11 million after tax) included in our financial results for the
year ended December 31, 1998. If prices for oil and natural gas remain depressed
and we determine that the price declines have additional negative long-term
implications for the Company, we may be required to recognize significant
non-cash charges to earnings in future periods, reduce capital expenditures,
adopt new programs designed to reduce the costs of our operations or take other
actions that may have an adverse impact on our operations and financial results.
USE OF PROCEEDS
The aggregate net proceeds from the offering of the Securities is expected
to be approximately $494,802,000. We intend to use all of such net proceeds to
repay a portion of our outstanding commercial paper and other short term
indebtedness. As of March 31, 1999, the weighted average interest rate on all of
our outstanding commercial paper borrowings was 5.64% per annum with maturities
ranging from 1 to 57 days.
S-8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratio of earning to fixed charges for the
periods indicated. The ratio of earnings to fixed charges has been computed on a
total enterprise basis. Earnings represent income before the cumulative effect
of accounting changes less equity in undistributed earnings of unconsolidated
affiliates, plus income taxes and fixed charges. Fixed charges represent
interest, amortization of debt discount and expense, and the estimated interest
portion of rental charges.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a)............................... 51.0 21.8 8.9 9.4 (4.7)(b)
</TABLE>
- ------------------
(a) Our GPM business has been reclassified as a discontinued operation in
connection with its sale to Duke. Accordingly, the results of our GPM
business are reported as "Discontinued Operations," and all amounts have
been reclassified in connection with the reporting of discontinued
operations to conform to the current presentation. The GPM segment results
of operations and cash flows have been excluded from the calculation of the
Ratio of Earnings to Fixed Charges.
(b) For the year ended December 31, 1998, earnings were insufficient by
$1.5 billion to cover our fixed charges.
S-9
<PAGE>
CAPITALIZATION
The following table illustrates our short-term indebtedness and
capitalization (i) as of December 31, 1998, (ii) as of December 31, 1998,
adjusted to give pro forma effect to the completion of the sale of our GPM
business to Duke and the closing of the sales of our South Texas Properties and
the Caroline Swan-Hill Properties and (iii) as of December 31, 1998, adjusted to
give pro forma effect to the completion of the sale of our GPM business to Duke
and the closing of the sales of our South Texas Properties and the Caroline
Swan-Hill Properties, and further adjusted to give effect to the offering of the
Securities.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
--------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Short-term debt:............................................................ $ 853.8 $ 1.9 $ 1.9
Long-term debt:
Commercial paper/Bankers acceptances...................................... 1,500.0 990.2 495.4(a)
7 1/2% Debentures due November 1, 2096.................................... 150.0 150.0 150.0
7% Notes due October 15, 2006............................................. 200.0 200.0 200.0
7 1/2% Debentures due October 15, 2026.................................... 200.0 200.0 200.0
6.8% Debentures due July 2, 2002.......................................... 250.0 250.0 250.0
7.8% Debentures due July 2, 2008.......................................... 150.0 150.0 150.0
7.375% Debentures due May 15, 2006........................................ 250.0 250.0 250.0
6.50% Notes due May 15, 2005.............................................. 200.0 200.0 200.0
6.75% Notes due May 15, 2008.............................................. 200.0 200.0 200.0
7.05% Debentures due May 15, 2018......................................... 200.0 200.0 200.0
7.15% Debentures due May 15, 2028......................................... 425.0 425.0 425.0
7.30% Notes due April 15, 2009............................................ -- -- 200.0(b)
7.95% Debentures due April 15, 2029....................................... -- -- 300.0(c)
Other debt(c)............................................................. 19.9 19.9 19.9
-------- --------- ---------
Total long-term debt................................................... 3,744.9 3,235.1 3,240.3
Shareholders' equity:
Common stock.............................................................. -- -- --
Paid-in surplus........................................................... 992.6 992.6 992.6
Retained earnings......................................................... 9.1 225.9 225.9
Unearned compensation..................................................... (6.0) (6.0) (6.0)
Unearned employees stock ownership plan................................... (95.7) (95.7) (95.7)
Minimum pension liability................................................. (4.9) (4.9) (4.9)
Deferred foreign exchange adjustment...................................... (84.4) (84.4) (84.4)
Treasury stock............................................................ (82.5) (82.5) (82.5)
-------- --------- ---------
Total shareholders' equity............................................. 728.2 945.0 945.0
-------- --------- ---------
Total capitalization................................................. 5,326.9 $ 4,182.0 $ 4,187.2
</TABLE>
- ------------------
(a) All of the net proceeds from the sale of the Securities (estimated to be
approximately $494,802,000) will be used to repay a portion of our
outstanding commercial paper and other short term indebtedness.
(b) The aggregate principal amount of the Notes is expected to be $200,000,000.
(c) The aggregate principal amount of the Debentures is expected to be
$300,000,000.
(d) This amount represents capital lease obligations and a net premium on
previously issued and outstanding debt.
S-10
<PAGE>
SUMMARY HISTORICAL OPERATING DATA
The following table summarizes the Company's volumes of, and average price
realizations for, natural gas, natural gas liquids and crude oil sales, and
average production costs per Mcfe, for each of the years ended December 31,
1996, December 31, 1997 and December 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,(A)
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Producing Properties:
Average daily production:
Natural gas (MMcfd)................................... 988.9 1,108.5 1,441.1
Natural gas liquids (MBbld)........................... 30.5 31.7 33.1
Crude oil (MBbld)..................................... 50.6 52.9 137.9
Total (MMcfed)(b)................................... 1,475.3 1,615.7 2,467.0
Average sales prices(c):
Natural gas (per Mcf)................................. $ 1.85 $ 2.00 $ 1.74
Natural gas liquids (per Bbl)......................... 11.48 11.23 7.88
Crude oil (per Bbl)................................... 18.84 18.36 10.48
Production costs (per Mcfe)(d)........................... $ 0.49 $ 0.51 $ 0.49
</TABLE>
- ------------------
(a) Our GPM business has been reclassified as a discontinued operation in
connection with its sale to Duke. Accordingly, the results of our GPM
business are reported as "Discontinued Operations," and all amounts have
been reclassified in connection with the reporting of discontinued
operations to conform to the current presentation.
(b) Calculated using the ratio of one Bbl to six Mcf.
(c) The following are the average price realizations for producing properties
excluding the impacts of hedging:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Average sales prices:
Natural gas (per Mcf).......................................... $ 1.94 $ 2.19 $ 1.77
Natural gas liquids (per Bbl).................................. 11.48 11.23 7.88
Crude Oil (per Bbl)............................................ 20.14 18.80 10.37
</TABLE>
(d) Includes lease operating costs, production overhead, other operating
expenses and taxes other than income taxes.
S-11
<PAGE>
SUMMARY HISTORICAL RESERVE DATA
The following table summarizes our estimated proved natural gas, natural
gas liquids and crude oil reserves and the standardized measure of discounted
future net cash flows (after tax) relating to such proved reserves as of
December 31, 1996, 1997 and 1998. Unless otherwise noted, all information in
this prospectus supplement relating to natural gas, natural gas liquids and
crude oil reserves is based upon our estimates and reflects our net interest.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Natural gas (Bcf):
Proved developed............................................................. 2,125 2,217 2,968
Proved undeveloped........................................................... 253 403 471
------ ------ ------
Total proved................................................................... 2,378 2,620 3,439
------ ------ ------
------ ------ ------
Natural gas liquids (MMBbl)(a):
Proved developed............................................................. 98 103 79
Proved undeveloped........................................................... 9 15 12
------ ------ ------
Total proved................................................................... 107 118 91
------ ------ ------
------ ------ ------
Crude oil, including condensate (MMBbl):
Proved developed............................................................. 74 94 252
Proved undeveloped........................................................... 7 35 104
------ ------ ------
Total proved................................................................... 81 129 356
------ ------ ------
------ ------ ------
Proved reserves equivalent (Bcfe)(b):
Natural gas.................................................................. 2,378 2,620 3,439
Natural gas liquids.......................................................... 645 707 548
Crude oil, including condensate.............................................. 484 773 2,137
------ ------ ------
Total proved(c)................................................................ 3,507 4,100 6,124
Total proved developed(c)...................................................... 3,156 3,400 4,956
------ ------ ------
------ ------ ------
Standardized measure of discounted future net cash flows relating to proved
oil and gas reserves (after tax) (in millions) (d)........................... $4,239 $3,046 $3,225
</TABLE>
- ------------------
(a) Reserves at the end of 1996 and 1997 include the plant share of equity gas
processed (natural gas and natural gas liquids, as appropriate, earned by
gas processing facilities through the processing our equity production).
(b) Calculated using the ratio of one Bbl to six Mcf.
(c) The reserve data set forth or incorporated by reference in this prospectus
supplement represent only estimates. There are numerous uncertainties
inherent in estimating quantities of proved reserves and in projecting
future rates of production and timing of development expenditures, including
many factors beyond our control. Reserve engineering is a subjective process
of estimating underground accumulations of crude oil and natural gas that
cannot be measured in an exact manner, and the accuracy of any reserve
estimate is a function of the quality of available data and of engineering
and geological interpretation and judgment. Accordingly, reserve estimates
often differ from the quantities of oil and gas that are ultimately
recovered.
(d) In accordance with the guidelines of the Securities and Exchange Commission,
our estimate of the standardized measure of discounted future net cash flows
from our properties has been made using oil and natural gas sales prices in
effect as of the date of such estimate and have been held constant
throughout the life of the properties except where such guidelines permit
alternate treatment, including the use of fixed and determinable contractual
price escalations. Prices used to estimate oil and gas sales represent the
closing price for trading in December contracts on the New York Mercantile
Exchange adjusted for appropriate
(Footnotes continued on next page)
S-12
<PAGE>
(Footnotes continued from previous page)
regional price differentials. Such weighted average prices for 1996, 1997
and 1998 were $3.41 per Mcfe, $2.24 per Mcfe and $1.63 per Mcfe,
respectively. Prices for natural gas, natural gas liquids and crude oil are
subject to substantial fluctuations as a result of numerous factors. In
1998, for example, prices for oil and natural gas declined as a result of
several factors, including (1) high production levels from members of the
Organization of Petroleum Exporting Companies and other countries,
(2) generally mild weather conditions, (3) economic weakness in several
Asian countries and (4) excessive natural gas storage levels. Prices for oil
and gas are expected to remain depressed in 1999. The standardized measure
of discounting future net cash flows relating to proved reserves should not
be construed as the current market value of estimated natural gas, natural
gas liquids and crude oil reserves.
S-13
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The table below sets forth selected income statement and cash flow data for
the year ended December 31, 1996 and December 31, 1997, which data have been
derived from our consolidated financial statements that have been audited by
Deloitte & Touche LLP, independent auditors, and selected income statement and
cash flow data for the year ended December 31, 1998, which data have been
derived from our consolidated financial statements that have been audited by
Arthur Andersen LLP, independent public accountants. The table below also sets
forth our selected pro forma income statement data for the year ended
December 31, 1998, adjusted to give effect to the Norcen Acquisition as if it
had occurred on January 1, 1998, and selected financial position data as of
December 31, 1998. The following data should be read in conjunction with our
consolidated financial statements (and related notes) and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the year ended December 31, 1998,
which has been filed with the Commission and is incorporated in this prospectus
supplement by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
PRO FORMA
1996(a) 1997(a) 1998(a) 1998(b)
-------- -------- -------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues:
Oil and gas operations:
Producing properties..................................... $1,148.2 $1,293.5 $1,539.2 $ 1,639.0
Other oil and gas revenues............................... 92.1 84.7 160.7 160.7
Minerals................................................. 128.9 139.8 141.1 141.1
-------- -------- -------- ---------
Total operating revenues............................... 1,369.2 1,518.0 1,841.0 1,940.8
-------- -------- -------- ---------
Operating expenses:
Production.................................................. 263.2 300.8 444.3 472.4
Exploration................................................. 144.6 204.7 339.0 352.5
Minerals.................................................... 8.0 3.4 3.5 3.5
Depreciation, depletion and amortization.................... 478.0 504.0 2,125.6 2,210.8
General and administrative.................................. 66.9 71.2 104.8 109.0
Restructuring charge........................................ -- -- 17.0 17.0
-------- -------- -------- ---------
Total operating expenses............................... 960.7 1,084.1 3,034.2 3,165.2
-------- -------- -------- ---------
Operating income (loss)....................................... 408.5 433.9 (1,193.2) (1,224.4)
Other income (expense)--net................................... (3.5) 24.5 (45.3) (45.3)
Interest expense--net......................................... (38.9) (39.5) (249.8) (284.3)
-------- -------- -------- ---------
Income (loss) from continuing operations before income
taxes....................................................... 366.1 418.9 (1,488.3) (1,554.0)
Income tax (expense) benefit.................................. (112.4) (115.8) 605.2 629.4
-------- -------- -------- ---------
Income (loss) from continuing operations...................... 253.7 303.1 (883.1) (924.6)
Income (loss) from discontinued operations--net of tax........ 67.1 29.9 (15.6) (15.3)
-------- -------- -------- ---------
Net income (loss)............................................. $ 320.8 $ 333.0 $ (898.7) $ (939.9)
-------- -------- -------- ---------
-------- -------- -------- ---------
Earnings (loss) per share--basic:
Continuing operations....................................... $ 1.02 $ 1.21 $ (3.57) $ (3.73)
Discontinued operations..................................... 0.27 0.12 (0.06) n/a
Total.................................................... $ 1.29 $ 1.33 $ (3.63) n/a
Earnings (loss) per share--diluted:
Continuing operations....................................... $ 1.01 $ 1.21 $ (3.57) $ (3.73)
Discontinued operations..................................... 0.27 0.12 (0.06) n/a
Total.................................................... $ 1.28 $ 1.33 $ (3.63) n/a
Cash dividends per share...................................... $ 0.20 $ 0.20 $ 0.20 $ 0.20
CASH FLOW DATA:
Cash provided by operations................................... $ 772.5 $ 856.2 $1,031.1 n/a
Capital and exploratory expenditures.......................... 773.0 1,188.4 1,194.5 n/a
</TABLE>
S-14
<PAGE>
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
1998(a)
------------
(IN
MILLIONS)
<S> <C>
FINANCIAL POSITION DATA:
Assets:
Current assets............................................................................... $ 441.4
Total properties--net........................................................................ 6,093.3
Intangible and other assets.................................................................. 180.8
Net assets of discontinued operations........................................................ 926.9
--------
Total assets.............................................................................. $7,642.4
--------
--------
Liabilities and shareholders' equity:
Short-term debt.............................................................................. $ 853.8
Other current liabilities.................................................................... 492.9
Long-term debt............................................................................... 3,744.9
Deferred income taxes........................................................................ 1,291.6
Retiree benefits obligations................................................................. 142.9
Other long-term liabilities.................................................................. 388.1
Shareholders' equity......................................................................... 728.2
--------
Total liabilities and shareholders' equity................................................ $7,642.4
--------
--------
</TABLE>
- ------------------
(a) Our GPM business has been reclassified as a discontinued operation in
connection with the sale of the business to Duke. Accordingly, the results
of our GPM business are reported as "Discontinued Operations," and all
amounts have been reclassified in connection with the reporting of
discontinued operations to conform to the current presentation.
(b) The unaudited pro forma income statement data for the year ended
December 31, 1998, have been prepared to give effect to the Norcen
Acquisition as if it had occurred on January 1, 1998, and was accounted for
as a purchase in accordance with the provisions of Accounting Principles
Board Opinion No. 16, "Business Combinations."
S-15
<PAGE>
DESCRIPTION OF THE SECURITIES
The Securities will be issued under an Indenture dated April 13, 1999, as
supplemented from time to time (such Indenture, as so supplemented, being called
the "Indenture") among the Company, UPRI, UPR Capital Company, a Nova Scotia
unlimited liability company and a wholly owned subsidiary of the Company, and
The Bank of New York, as trustee (the "Trustee"). The following description of
the particular terms of the Securities supplements and, when inconsistent,
replaces, the description of the general terms and provisions of the Debt
Securities in the accompanying prospectus. Capitalized terms used but not
defined in this prospectus supplement or in the accompanying prospectus have the
meanings assigned to them in the Indenture.
GENERAL
The Securities will be limited to $500,000,000 aggregate principal amount,
consisting of $200,000,000 aggregate principal amount of 7.30% Notes due April
15, 2009 and $300,000,000 aggregate principal amount of 7.95% Debentures due
April 15, 2029. Each Security will bear interest at the applicable rate per
annum stated on the cover page of this prospectus supplement, payable
semiannually on April 15, and October 15, of each year, commencing October 15,
1999, to the person in whose name the Security is registered, subject to certain
exceptions as provided in the Indenture, at the close of business on April 1 or
October 1 (each a "Record Date"), as the case may be, immediately preceding such
April 15 or October 15. Interest will be computed on the basis of a 360-day
year, consisting of twelve 30-day months. The Notes will mature on April 15,
2009 and the Debentures will mature on April 15, 2029.
OPTIONAL REDEMPTION
The Notes and the Debentures will be redeemable as a whole or in part, at
our option at any time, at a redemption price equal to the greater of (i) 100%
of the principal amount of such Notes or Debentures, as the case may be, to be
redeemed and (ii) the sum of the present values of the Remaining Scheduled
Payments (as hereinafter defined) on such Notes or Debentures, as the case may
be, 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 hereinafter
defined) plus 35 basis points in the case of the Notes and 40 basis points in
the case of the Debentures, in each case plus 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.
"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 or the Debentures, as the
case may be, to be redeemed that would be used, 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 or Debentures, as the case may be.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with us.
"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 before such redemption date, as
published in the daily statistical release (or any successor release) 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 available 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" means Credit Suisse First Boston
Corporation and its successors; provided, however, that if Credit Suisse
First Boston Corporation ceases 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.
"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
S-16
<PAGE>
writing to the Trustee by such Reference Treasury Dealer by 5:00 p.m. on
the third business day before such redemption date.
"Remaining Scheduled Payments" means, the remaining scheduled payments
of the principal of the Notes or Debentures, as the case may be, 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, 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 Securities to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the Securities or portions
thereof called for redemption.
NO MANDATORY REDEMPTION
There is no provision for mandatory redemption of the Notes or of the
Debentures prior to maturity.
DEFEASANCE
Under certain circumstances, we will be deemed to have discharged the
entire indebtedness on all of the outstanding Notes or Debentures by defeasance.
See "Description of Debt Securities and Guarantees--Defeasance of the Indenture
and Debt Securities" in the accompanying Prospectus for a description of the
terms of any such defeasance.
BOOK-ENTRY SYSTEM
The Notes and Debentures will each initially be represented by one or more
global securities (each a "Global Security") deposited with the Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC, except as set
forth below. The settlement of transactions with respect to each Global Security
will be facilitated through computerized book-entry changes in Participants'
accounts, thereby eliminating the physical movement of Security certificates.
The Securities will be available for purchase in denominations and integral
multiples of $1,000 in book-entry form only. Unless and until certificated
Securities are issued under the limited circumstances described below, no
beneficial owner of a Security shall be entitled to receive a definitive
certificate representing a Security. So long as DTC or any successor depositary
(the "Depositary") or its nominee is the registered owner of a Global Security,
the Depositary or such nominee, as the case may be, will be considered to be the
sole owner or holder of the Securities represented thereby for all purposes.
Unless and until it is exchanged in whole or in part for the Securities
presented thereby, a Global Security may not be transferred except as a whole
among the Depositary and its nominees and successors.
So long as Securities are represented by a Global Security, all payments of
principal and interest with respect thereto will be made to the Depositary or
its nominee (or a successor), as the case may be, as the sole registered owner
of the Global Security representing such Securities.
We expect that the Depositary or its nominee, upon receipt of any payment
of principal or interest in respect of a Global Security representing
Securities, will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of the Depositary or its
nominee.
If DTC is at any time unwilling, unable or ineligible to continue as
Depositary for a Global Security and a successor Depositary is not appointed by
the Issuer within 90 days, we will issue certificated Securities in definitive
form in exchange for the Global Security. In addition, we may at any time
determine not to have the Securities represented by a Global Security, in which
case we will issue certificated Securities in definitive form in exchange for
such Global Security. In either instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of certificated Securities
in definitive form equal in principal amount to such beneficial interest in such
Global Security and to have such certificated Securities registered in its name.
Certificated Securities so issued in definitive form will be issued in
denominations and integral multiples of $1,000 in registered form only, without
coupons.
S-17
<PAGE>
SAME DAY SETTLEMENT AND PAYMENT
Settlement for the Securities will be made by the underwriters in
immediately available funds. All payments of principal and interest to the
Depositary will be made by the Company in immediately available funds.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following summary describes the material United States Federal income
tax consequences of the ownership of Securities as of the date hereof by a
Non-U.S. Holder (as defined below). Except where noted it deals only with
Securities held as capital assets by Non-U.S. Holders. As used herein the term
"Non-U.S. Holder" means any person or entity that is not a "U.S. Holder". A U.S.
Holder is any beneficial owner of a Security that is (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is subject to U.S. Federal income taxation
regardless of its source or (iv) a trust that is subject to the supervision of a
court within the United States and the control of one or more United States
persons as described in section 7701(a)(30) of the Code (as defined below).
The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
regulations promulgated thereunder and current administrative rulings and
judicial decisions, all of which are subject to change, possibly on a
retroactive basis. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF
SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL
AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
Under present United States Federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States Federal income tax will be
required with respect to the payment by us or any paying agent of principal
or interest on a Security owned by a Non-U.S. Holder, provided that
(i) the beneficial owner does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote within the meaning of section 871(h)(3) of the
Code and the regulations thereunder, (ii) the beneficial owner is not a
controlled foreign corporation that is related to the Company through stock
ownership, (iii) the beneficial owner is not a bank whose receipt of
interest on a Security is described in section 881(c)(3)(A) of the Code and
(iv) the beneficial owner satisfies the statement requirement (described
generally below) set forth in section 871(h) and section 881(c) of the Code
and the regulations thereunder;
(b) no withholding of United States Federal income tax will be
required with respect to any gain or income realized by a Non-U.S. Holder
upon the sale, exchange, retirement or other disposition of a Security; and
(c) a Security beneficially owned by an individual who at the time of
death is a Non-U.S. Holder will not be subject to United States Federal
estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote within the meaning of section 871(h)(3) of the Code and provided that
the interest payments with respect to such Security would not have been, if
received at the time of such individual's death, effectively connected with
the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Security, or a financial institution holding the Security on
behalf of such owner, must provide, in accordance with specified procedures, our
paying agent with a statement to the effect that the beneficial owner is not a
U.S. Holder. Currently, these requirements will be met if:
(1) the beneficial owner provides its name and address, and certifies,
under penalties of perjury, that it is not a U.S. Holder (which
certification may be made on an Internal Revenue Service ("IRS") Form W-8
(or successor form) or
(2) a financial institution holding the Security on behalf of the
beneficial owner certifies, under penalty of perjury, that such statement
has been received by it and furnishes a paying agent with a copy thereof.
S-18
<PAGE>
Under recently finalized Treasury regulations (the "Final Regulations"),
the statement requirement referred to in (a)(iv) above may also be satisfied
with other documentary evidence for interest paid after December 31, 1999, with
respect to an offshore account or through certain foreign intermediaries.
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the Security is effectively connected with the conduct of such
trade or business, the Non-U.S. Holder, although exempt from the withholding tax
discussed above (provided that the Non-U.S. Holder files the appropriate
certification with us or our agent), will be subject to United States Federal
income tax on such interest on a net income basis in the same manner as if it
were a U.S. Holder. In addition, if such holder is a foreign corporation, it may
be subject to a branch profits tax equal to 30% (or lower applicable treaty
rate) of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, interest on a Security will be
included in such foreign corporation's earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Security generally will not be subject to United States Federal
income tax unless:
(1) such gain or income is effectively connected with the conduct of a
trade or business in the United States by the Non-U.S. Holder, or
(2) in the case of a Non-U.S. Holder who is an individual, such
individual is present in the United States for 183 days or more in the
taxable year of such sale, exchange, retirement or other disposition, and
certain other conditions are met.
Special rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations," "passive foreign investment companies" and "foreign
personal holding companies" that are subject to special treatment under the
Code. Such entities should consult their own tax advisors to determine the U.S.
Federal, state, local and other tax consequences that may be relevant to them.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, no information reporting or backup withholding tax (which is a
withholding tax imposed at the rate of 31% on certain payments to persons who
fail to furnish the information required under United States information
reporting requirements) will be required with respect to payments made by the
Company or any paying agent to Non-U.S. Holders if a statement described in
(a)(iv) above has been received and the payor does not have actual knowledge
that the beneficial owner is a United States Person.
In addition, backup withholding and information reporting generally will
not apply if payments of the principal or interest on a Security are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Security, or if a foreign office of a
broker (as defined in applicable Treasury regulations) pays the proceeds of the
sale of a Security to the owner thereof. If, however, such nominee, custodian,
agent or broker is, for United States Federal income tax purposes, a United
States person, a controlled foreign corporation or a foreign person that derives
50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States, or, for taxable years beginning after
December 31, 1999, a foreign partnership in which one or more United States
persons, in the aggregate, own more than 50% of the income or capital interests
in the partnership or which is engaged in a trade or business in the United
States, such payments will not be subject to backup withholding but will be
subject to information reporting, unless (1) such custodian, nominee, agent or
broker has documentary evidence in its records that the beneficial owner is not
a United States person and certain other conditions are met or (2) the
beneficial owner otherwise establishes an exemption.
Payments of principal or interest on a Security paid to the beneficial
owner of a Security by a United States office of a custodian, nominee or agent,
or the payment by the United States office of a broker of the proceeds of sale
of a Security, will be subject to both backup withholding and information
reporting unless the beneficial owner provides the statement referred to in
(a)(iv) above and the payor does not have actual knowledge that the beneficial
owner is a United States person or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's United States Federal income tax
liability provided the required information is furnished to the IRS.
S-19
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated April 8, 1999, the underwriters named below, for whom Credit
Suisse First Boston Corporation is acting as representative, have agreed to
purchase from us the following respective principal amounts of Notes and
Debentures, as set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------------------
UNDERWRITERS NOTES DEBENTURES
- ------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Credit Suisse First Boston Corporation....................... $108,000,000 $162,000,000
Chase Securities Inc......................................... 24,000,000 36,000,000
Salomon Smith Barney Inc..................................... 24,000,000 36,000,000
NationsBanc Montgomery Securities LLC........................ 16,000,000 24,000,000
ABN AMRO Incorporated........................................ 7,000,000 10,500,000
Deutsche Bank Securities Inc................................. 7,000,000 10,500,000
RBC Dominion Securities Corporation.......................... 7,000,000 10,500,000
Warburg Dillon Read LLC...................................... 7,000,000 10,500,000
------------ ------------
Total................................................... $200,000,000 $300,000,000
------------ ------------
------------ ------------
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Securities if any are purchased. If an underwriter defaults,
the purchase commitments of non-defaulting underwriters may be increased or the
offering may be terminated.
We have been advised by the underwriters that they propose to offer the
Securities to the public initially at the public offering prices set forth on
the cover page of this prospectus supplement and to certain selling group
members at that price less a concession of 0.40% of the principal amount per
Note and 0.50% of the principal amount per Debenture. The underwriters and
selling group members may allow a discount of 0.25% of the principal amount per
Note and 0.25% of the principal amount per Debenture on sales to other
broker/dealers. After the initial public offering, the public offering price and
concession and discount to broker/dealers may be changed by the underwriters.
We estimate that our out-of-pocket expenses for this offering will be
approximately $300,000.
The Notes and the Debentures are each a new issue of securities with no
established trading market. The underwriters have advised us that they intend to
act as market makers for the Securities. However, the underwriters are not
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Securities.
We have agreed that we will not offer, sell, contract to sell, announce our
intention to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the Commission a registration statement under the Securities Act
relating to, any additional debt securities, shares of our common stock, or
securities convertible into or exchangeable for any shares of our common stock
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus supplement.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be required
to make in respect thereof.
The underwriters or their affiliates engage in transactions with and
perform services, including commercial and investment banking and hedging
services, for us and our affiliates in the ordinary course of business.
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act.
o Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
o Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
o Syndicate covering transactions involve purchases of the Securities in
the open market after the distribution has been completed in order to
cover syndicate short positions.
S-20
<PAGE>
o Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the Securities originally sold by such
syndicate member are purchased in a syndicate covering transaction to
cover syndicate short positions.
Such stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the Securities to be higher than it would otherwise be in
the absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Securities in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Securities are effected. Accordingly, any resale of the Securities in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Securities.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Securities in Canada who receives a purchase confirmation
will be deemed to represent to us and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Securities without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Securities to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Securities acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of Securities acquired on the same date and under the
same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Securities should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Securities
in their particular circumstances and with respect to the eligibility of the
Securities for investment by the purchaser under relevant Canadian legislation.
S-21
<PAGE>
LEGAL OPINIONS
The validity of the Securities will be passed upon for us by Morgan, Lewis
& Bockius, LLP, Philadelphia, Pennsylvania, our counsel. The validity of the
Securities will be passed upon for the underwriters by Cravath, Swaine & Moore,
New York, New York. Cravath, Swaine & Moore has from time to time acted as our
counsel and may do so in the future.
EXPERTS
The financial statements as of and for the year ended December 31, 1998
incorporated by reference in this prospectus supplement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing. Reference is made
to said report which contains an explanatory fourth paragraph with respect to
adjustments related to discontinued operations that were applied to restate the
1997 and 1996 financial statements.
The financial statements as of December 31, 1997 and for the two years then
ended (which have been restated and are no longer presented in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998) incorporated by
reference in this prospectus supplement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report and are incorporated herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
FORWARD-LOOKING INFORMATION
Certain information included and incorporated by reference in this
prospectus supplement, and other materials we have filed or will file with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements we have made or will make) contain
projections and forward-looking statements within the meaning of Section 21E of
the Exchange Act, and Section 27A of the Securities Act. Such forward-looking
statements may be or may concern, among other things, capital expenditures,
drilling activity, acquisitions and dispositions (including the timing and
completion of our deleveraging program), development activities, cost savings
efforts, production activities and volumes, hydrocarbon reserves, hydrocarbon
prices, hedging activities and the results thereof, liquidity, regulatory
matters and competition. Such forward-looking statements generally are
accompanied by words such as "estimate," "expect," "predict," "anticipate,"
"goal," "should," "assume," "believe" or other words that convey the uncertainty
of future events or outcomes.
Such forward-looking information is based upon management's current plans,
expectations, estimates and assumptions and is subject to a number of risks and
uncertainties that could significantly affect current plans, anticipated
actions, the timing of such actions and our financial condition and results of
operations. As a consequence, actual results may differ materially from
expectations, estimates or assumptions expressed in or implied by any
forward-looking statements made by us or on our behalf. The risks and
uncertainties include generally:
o the volatility of oil, gas and hydrocarbon-based financial derivative
prices;
o basis risk and counter party credit risk in executing hydrocarbon price
risk management activities;
o economic, political, judicial and regulatory developments;
o competition in the oil and gas industry as well as competition from other
sources of energy;
o the economics of producing certain reserves;
o demand and supply of oil and gas;
o the ability to find or acquire and develop reserves of natural gas and
crude oil; and
o the actions of customers and competitors.
Additionally, unpredictable or unknown factors not discussed in this
prospectus supplement could have material adverse effects on actual results
related to matters which are the subject of forward-looking information. With
respect to expected capital expenditures and drilling activity, additional
factors such as oil and gas prices
S-22
<PAGE>
and the ability to achieve debt repayment objectives, the extent of our success
in acquiring oil and gas properties and in identifying prospects for drilling,
the availability of acquisition opportunities which meet our objectives as well
as competition for such opportunities, exploration and operating risks, the
success of management's cost reduction efforts and the availability of
technology may affect the amount and timing of such capital expenditures and
drilling activity. With respect to our deleveraging program, factors such as the
ability to identify qualified buyers, the buyer's ability to obtain financing
(if necessary), successful negotiation of contract terms and completion of due
diligence may affect the success and timing of the completion of the program.
With respect to expected growth in production and sales volumes and estimated
reserve quantities, factors such as the extent of our success in finding,
developing and producing reserves, the timing of capital spending, deleveraging
programs, uncertainties inherent in estimating reserve quantities and the
availability of technology may affect such production volumes and reserve
estimates.
With respect to liquidity, factors such as the state of domestic capital
markets, credit availability from banks or other lenders and our results of
operations may affect management's plans or ability to incur additional
indebtedness. With respect to cash flow and the ability to reduce debt, factors
such as changes in oil and gas prices, our success in acquiring properties or
divesting producing properties or other assets, environmental matters and other
contingencies, hedging activities and our credit rating and debt levels may
affect our ability to generate expected cash flows. With respect to
contingencies, factors such as changes in environmental and other governmental
regulation, and uncertainties with respect to legal matters may affect our
expectations regarding the potential impact of contingencies on our operating
results or financial condition. Certain factors, such as changes in oil and gas
prices and underlying demand and the extent of our success in exploiting our
current reserves and acquiring or finding additional reserves may have pervasive
effects on many aspects of our business in addition to those outlined above.
S-23
<PAGE>
[This page intentionally left blank]
<PAGE>
[LOGO]
$1,000,000,000
UNION PACIFIC RESOURCES GROUP INC.
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
WARRANTS, STOCK PURCHASE CONTRACTS, STOCK PURCHASE UNITS
UNION PACIFIC RESOURCES INC.
UPR CAPITAL COMPANY
DEBT SECURITIES GUARANTEED BY
UNION PACIFIC RESOURCES GROUP INC.
UPRG CAPITAL TRUST I
UPRG CAPITAL TRUST II
UPRG CAPITAL TRUST III
TRUST PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED BY UNION PACIFIC RESOURCES GROUP INC.
------------------------
Union Pacific Resources Group Inc., a Utah corporation (the "Company"), may
issue from time to time, together or separately, (i) unsecured senior debt
securities (the "Company Senior Debt Securities"), (ii) unsecured subordinated
debt securities (the "Company Subordinated Debt Securities" and, together with
the Company Senior Debt Securities, the "Company Debt Securities"), (iii)
warrants to purchase Company Senior Debt Securities (the "Debt Warrants"), (iv)
shares of preferred stock, without par value, of the Company (the "Preferred
Stock"), (v) warrants to purchase shares of Preferred Stock (the "Preferred
Stock Warrants"), (vi) shares of common stock, without par value, of the Company
(the "Common Stock"), (vii) warrants to purchase shares of Common Stock (the
"Common Stock Warrants"), (viii) stock purchase contracts ("Stock Purchase
Contracts") to purchase shares of Common Stock or Preferred Stock and (ix) stock
purchase units ("Stock Purchase Units"), each representing ownership of a Stock
Purchase Contract and Debt Securities (as defined), debt obligations of the
United States of America or agencies or instrumentalities thereof ("US
Obligations") or Trust Preferred Securities (as defined below), securing the
holder's obligation to purchase shares of Common Stock or Preferred Stock under
the Stock Purchase Contract, in amounts, at prices and on terms to be determined
by market conditions at the time of offering. The Debt Warrants, Preferred Stock
Warrants and Common Stock Warrants are referred to herein collectively as the
"Warrants", and the Company Debt Securities, Preferred Stock, Common Stock,
Warrants, Stock Purchase Contracts, Stock Purchase Units, Company Guarantees and
Trust Guarantees are referred to herein collectively as the "Company
Securities".
Union Pacific Resources Inc., an Alberta corporation ("UPRI"), and UPR Capital
Company, a Nova Scotia unlimited liability company ("UPR Capital Company"), may
issue from time to time, together or separately (i) non-convertible unsecured
senior debt securities (the "Subsidiary Senior Debt Securities", together with
the Company Senior Debt Securities, the "Senior Debt Securities") and
(ii) non-convertible unsecured subordinated debt securities (the "Subsidiary
Subordinated Debt Securities", together with the Subsidiary Senior Debt
Securities, the "Subsidiary Debt Securities"; the Subsidiary Subordinated Debt
Securities, together with the Company Subordinated Debt Securities, the
"Subordinated Debt Securities"; the Subsidiary Debt Securities together with the
Company Debt Securities, the "Debt Securities"). The Subsidiary Debt Securities
will be irrevocably and unconditionally guaranteed (the "Company Guarantees") by
the Company (in such capacity, the "Guarantor"), and unless the Prospectus
Supplement otherwise provides, the Company Guarantees will rank pari passu with
all other unsecured and unsubordinated debt of the Company. UPRI and UPR Capital
Company are collectively referred to herein as the "Subsidiary Issuers" and, the
Company, in its capacity as an issuer, and the Subsidiary Issuers are
collectively referred to herein as the "Issuers".
(Continued on following page)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company, the Subsidiary Issuers or the UPRG Trusts
or any dealers or underwriters are involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered, the names of
such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price or underwriter's discount will be set forth in or may be
calculated from the Prospectus Supplement. The net proceeds to the Company, the
Subsidiary Issuers or the UPRG Trusts from such sale will be the purchase price
less such commission in the case of an agent, the purchase price in the case of
a dealer, or the public offering price less such discount in the case of an
underwriter and less, in each case, other attributable issuance expenses. See
"Plan of Distribution".
This Prospectus may not be used to consummate sales of Offered Securities unless
accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS AUGUST 27, 1998.
<PAGE>
(Continued from previous page)
UPRG Capital Trust I, UPRG Capital Trust II and UPRG Capital Trust III
(each, a "UPRG Trust" and collectively, the "UPRG Trusts"), each a statutory
business trust formed under Delaware law, may offer, from time to time,
preferred securities (the "Trust Preferred Securities") with the payment of
dividends and payments on liquidation or redemption of the Trust Preferred
Securities issued by each such UPRG Trust guaranteed on a subordinated basis by
the Company to the extent described herein and in an accompanying prospectus
supplement (the "Trust Guarantees"). The Company will be the owner of the trust
interests represented by common securities (the "Trust Common Securities") to be
issued by each UPRG Trust. Unless indicated otherwise in a prospectus
supplement, each UPRG Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Company Subordinated Debt
Securities. The Company Securities, Subsidiary Debt Securities and the Trust
Preferred Securities are referred to herein collectively as the "Offered
Securities".
The Offered Securities may be issued in one or more series or issuances and
will be limited to $1,000,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt Securities
are issued for one or more foreign currencies or currency units). The Offered
Securities may be sold for U.S. dollars, or any foreign currency or currencies
or currency units, and the principal of, any premium on, and any interest on,
the Debt Securities may be payable in U.S. dollars, or any foreign currency or
currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series in amounts, at prices and on terms to be
determined at or prior to the time of sale. The sale of other securities under
the Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Offered Securities which may be sold hereunder.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, without limitation, where
applicable, (i) in the case of Debt Securities, the identity of the Issuer of
and the specific designation, aggregate principal amount, authorized
denomination, initial offering price, maturity (which may be fixed or
extendible), premium (if any), interest rate (which may be fixed or floating),
time of and method of calculating the payment of interest, if any, the currency
in which principal, premium, if any, and interest, if any, are payable, any
redemption or sinking fund terms, any conversion or exchange provisions and
other specific terms; (ii) in the case of Preferred Stock or Trust Preferred
Securities, the designation, number of shares, liquidation preference per share,
initial public offering price, dividend rate (or method of calculation thereof),
dates on which dividends shall be payable and dates from which dividends shall
accrue, any redemption or sinking fund provisions, any conversion or exchange
provisions and other specific terms; (iii) in the case of Common Stock, the
number of shares and the terms of the offering and sale thereof; (iv) in the
case of Warrants, the number and terms thereof, the designation, description and
the number of securities issuable upon exercise, the exercise price, the terms
of the offering and sale thereof and where applicable, the duration and
detachability thereof; (v) in the case of Stock Purchase Contracts, the
designation and number of shares of Common Stock or Preferred Stock issuable
thereunder, the purchase price of the Common Stock or Preferred Stock, the date
or dates on which the Common Stock or Preferred Stock is required to be
purchased by the holders of the Stock Purchase Contracts, any periodic payments
required to be made by the Company to the holders of the Stock Purchase
Contracts or vice versa, and the terms of the offering and sale thereof;
(vi) in the case of Stock Purchase Units, the specific terms of the Stock
Purchase Contracts and any Debt Securities, U.S. Obligations or Trust Preferred
Securities securing the holder's obligation to purchase the Common Stock or
Preferred Stock under the Stock Purchase Contracts, and the terms of the
offering and sale thereof; and (vii) in the case of all Offered Securities,
whether such Offered Securities will be offered separately or as a unit with
other Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States Federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by the Prospectus Supplement.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission") relating to its business, financial position,
results of operations and other matters. Such reports and other information can
be inspected and copied at the Public Reference Section maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at certain of its Regional Offices, located at Northwest Atrium Center
(Suite 1400), 500 West Madison Street, Chicago, Illinois 60661, and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission at
prescribed rates. Such material can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet (http://www.sec.gov).
The Company, on behalf of the Subsidiary Issuers, and each Subsidiary
Issuer intend to make application to the Commission for an order of the
Commission exempting each Subsidiary Issuer from the reporting requirements of
the Exchange Act. If such order is granted, or the Commission otherwise grants
relief to the Subsidiary Issuers from such reporting requirements, neither of
the Subsidiary Issuers will be subject to the reporting requirements of the
Exchange Act.
No separate financial statements of the Subsidiary Issuers have been
included or incorporated by reference herein. Neither Subsidiary Issuer nor the
Company considers such financial statements material to holders of Subsidiary
Debt Securities because (i) all of the voting securities of each Subsidiary
Issuer will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, and (ii) the obligations of each Subsidiary
Issuer under the Subsidiary Debt Securities are fully and unconditionally
guaranteed by the Company to the extent set forth herein. See "Union Pacific
Resources Inc.", "UPR Capital Company" and "Description of Debt Securities and
Company Guarantees--Company Guarantees".
No separate financial statements of the UPRG Trusts have been included or
incorporated by reference herein. Neither the UPRG Trusts nor the Company
considers such financial statements material to holders of Trust Preferred
Securities because (i) all of the voting securities of each UPRG Trust will be
owned, directly or indirectly, by the Company, a reporting company under the
Exchange Act, (ii) no UPRG Trust has independent operations but rather each
exists for the purpose of issuing securities representing undivided beneficial
interests in the assets of such UPRG Trust and investing the proceeds thereof in
Company Subordinated Debt Securities, and (iii) the obligations of the UPRG
Trusts under the Trust Preferred Securities are fully and unconditionally
guaranteed on a subordinated basis by the Company to the extent set forth
herein. See "The UPRG Trusts" and "Description of Trust Preferred Securities and
Trust Guarantees--Trust Guarantees."
The Company, the Subsidiary Issuers and the UPRG Trusts have filed with the
Commission a joint registration statement (the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to the Company, the Subsidiary
Issuers, the UPRG Trusts and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference herein its Annual Report on
Form 10-K for the year ended December 31, 1997, its Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, 1998 and June 30, 1998, its
Current Reports on Form 8-K dated January 27, 1998, March 17, 1998, March 27,
1998, May 6, 1998, May 26, 1998 and its Current Report on Form 8-K/A dated May
6, 1998 (the "Norcen 8-K"), all of which have been previously filed with the
Commission under File No. 1-13916, and the description of capital stock of the
Company that is contained in the Registration Statement filed under the Exchange
Act under File No. 1-13916, including all amendments or reports filed for the
purpose of updating such description.
3
<PAGE>
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Offered Securities offered hereby shall be
deemed incorporated herein by reference, and such documents shall be deemed to
be a part hereof from the date of filing such documents. Any statement contained
herein, in a document incorporated or deemed to be incorporated by reference
herein, or in the accompanying Prospectus Supplement, shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the accompanying Prospectus
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the above documents incorporated or deemed to be
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests should be directed to:
Union Pacific Resources Group Inc., 801 Cherry Street, Fort Worth, Texas 76102,
Attention: Secretary (Telephone 817-877-6000).
THE COMPANY
The Company is engaged primarily in the exploration for and the development
and production of natural gas, natural gas liquids and crude oil in several
major producing basins in the United States, Canada, Guatemala and Venezuela.
The Company emphasizes natural gas in its exploration and production activities
and also owns and operates significant assets, in proximity to its principal
producing properties, dedicated to "gas value chain" activities, which consist
of the gathering, processing, transportation and marketing of natural gas and
natural gas liquids. In addition, the Company engages in the hard minerals
business through a non-operated joint venture and royalty interests in several
coal and trona (natural soda ash) mines located on lands within and adjacent to
its Land Grant (as defined) holdings in Wyoming. The "Land Grant" consists of
land granted by the Federal government to a predecessor and former affiliate of
UPR in the mid-1800's which passes through the states of Colorado and Wyoming
and into Utah. UPR has fee ownership of the mineral rights under approximately
7.9 million acres in the Land Grant.
The Company's oil and gas activities are concentrated in five core
geographic areas in the United States and four core geographic areas for
international operations. The core areas in the United States are: (1) the
Austin Chalk trend in Texas and Louisiana, unchanged from the previous
structure, (2) the East/West Texas business unit representing the combination of
the former East Texas and West Texas business units, (3) the Western Region
business unit consisting of the Land Grant area in Colorado, Wyoming and Utah,
as well as additional properties in Kansas, (4) the Gulf Coast Onshore business
unit covering the onshore coastal plain of Texas and Louisiana and (5) the
Offshore business unit, which manages the Company's Gulf of Mexico operations.
International core geographic areas are (1) Canada, (2) Guatemala, (3) Venezuela
and (4) other international. In each of these core areas, the focus of the
Company is on the exploration for and development of natural gas and crude oil
resources, and on efforts to increase margins through reductions in drilling and
operating costs and effective and efficient sales and distribution networks.
The address of the Company is: Union Pacific Resources Group Inc., 777 Main
Street, Fort Worth, Texas 76102. Telephone: (817) 321-6000.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------ JUNE 30,
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............................... 41.7 44.4 17.7 9.1 8.1 0.9(a)
</TABLE>
- ------------------
(a) Due to lower earnings, primarily caused by lower hydrocarbon prices and
higher fixed charges resulting from higher interest expense, for the six
months ended June 30, 1998, earnings are insufficient by $10.2 million to
cover fixed charges of the Company.
The ratio of earnings to fixed charges has been computed on a total
enterprise basis. Earnings represent income before the cumulative effect of
accounting changes less equity in undistributed earnings of unconsolidated
affiliates, plus income taxes and fixed charges. Fixed charges represent
interest, amortization of debt discount and expense, and the estimated interest
portion of rental charges.
UNION PACIFIC RESOURCES INC.
UPRI is an indirect wholly owned subsidiary of the Company. The Canadian
assets of the Company are held by UPRI. On January 25, 1998, the Company and
UPRI entered into a pre-acquisition agreement ("Pre-acquisition Agreement") with
Norcen Energy Resources Limited ("Norcen"). Under the Pre-acquisition Agreement,
the Company agreed to cause UPRI to make and UPRI agreed to make an offer to
purchase (the "tender offer") all of the outstanding common shares of Norcen,
subject to certain conditions. On March 2, 1998, the Company announced the
closing of the tender offer. In total, 95.5 percent of the outstanding common
shares of Norcen were tendered at a purchase price of US$13.65 per share. On
March 5, 1998, UPRI completed the compulsory acquisition of the remaining common
shares outstanding which were not tendered. On April 17, 1998 the amalgamation
of UPRI and Norcen was completed with UPRI taking over Norcen's holdings.
UPRI manages the Company's oil and gas activities in western Canada. With
the acquisition of Norcen the primary areas of activity are the Hatton area in
western Saskatchewan and Two Hills area in eastern Alberta, the Rendy and Cabon
areas in western Alberta and the Gedney area of northeastern British Columbia.
UPRI is also developing light oil production in the Tager and Peace River area
and heavy oil in the Linber and Provolt areas. The principal place of business
of UPRI is 400, 425-1st Street, Calgary, Alberta, Canada T2P 4V4. Telephone:
(403) 231-0111.
UPR CAPITAL COMPANY
UPR Capital Company is a Nova Scotia unlimited liability company
incorporated on March 23, 1998. UPR Capital Company is intended to be used
primarily to finance UPRI's Canadian business operations. The principal place of
business of UPR Capital Company is 400, 425-1st Street, Calgary, Alberta, Canada
T2P 4V4. Telephone: (403) 231-0111.
Under the Companies Act (Nova Scotia), in the event of the winding up or
bankruptcy of UPR Capital Company, Union Pacific Resources Company, a Delaware
corporation and indirect wholly owned subsidiary of the Company ("UPRC"), as
sole owner of all of the outstanding equity of UPR Capital Company, is liable,
subject to certain limited exceptions, to pay those debts and liabilities of UPR
Capital Company that were not specifically contracted on the basis that the
creditor would look only to the assets of UPR Capital Company. UPRC holds
substantially all of the assets of the Company's business.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
Some of the directors and executive officers of UPRI and UPR Capital
Company (and certain of the experts named herein) are citizens or residents of
jurisdictions other than the United States. All or a substantial portion of the
assets of such directors, executive officers and experts residing outside of the
United States and all of the assets of UPRI and UPR Capital Company are or may
be located outside the United States. As a result, it may not be possible to
effect service of process on such directors, executive officers or experts or
UPRI and UPR Capital
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Company in the United States or to enforce, collect or realize, in United States
courts, upon judgments that may be obtained against such persons in United
States courts and predicated upon civil liability under United States securities
laws. The Company, UPRI and UPR Capital Company have been advised by Bennett
Jones Verchere, special Canadian counsel to the Company, UPRI and UPR Capital
Company that there is doubt as to the enforceability in Canada, in original
actions or actions for the enforcement of judgments of United States courts, of
civil liabilities predicated solely on United States Federal securities laws.
The indenture pursuant to which the Debt Securities will be issued will provide
that UPRI and UPR Capital Company will appoint the Company as its agent for
service of process in any suit, action or proceeding with respect to such
indenture brought under Federal or state securities laws in any Federal or state
court located in The City of New York, and will submit to such jurisdiction.
THE UPRG TRUSTS
Each of UPRG Capital Trust I, UPRG Capital Trust II and UPRG Capital Trust
III is a statutory business trust formed under Delaware law pursuant to (i) a
separate Declaration of Trust (a "Declaration") executed by the Company, as
sponsor for such UPRG Trust, and the Trustees (as defined herein) of such trust
and (ii) the filing of a certificate of trust with the Delaware Secretary of
State. Unless an accompanying Prospectus Supplement provides otherwise, each
UPRG Trust exists for the sole purposes of (i) issuing the Trust Preferred
Securities, (ii) investing the gross proceeds of the sale of the Trust Preferred
Securities in a specific series of Company Subordinated Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
All of the Trust Common Securities will be owned by the Company. The Trust
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Trust Preferred Securities, except that upon the occurrence and
continuance of an event of default under the applicable Declaration, the rights
of the holders of the applicable Trust Common Securities to payment in respect
of distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the applicable Trust Preferred
Securities. The Company will acquire Trust Common Securities having an aggregate
liquidation amount equal to a minimum of 1% of the total capital of each UPRG
Trust. Each UPRG Trust will have a term of at least 20 but not more than
50 years, but may terminate earlier as provided in the applicable Declaration.
Each UPRG Trust's business and affairs will be conducted by the Trustees. The
holder of the Trust Common Securities will be entitled to appoint, remove or
replace any of, or increase or reduce the number of, the Trustees of each UPRG
Trust. The duties and obligations of the Trustees shall be governed by the
Declaration of such UPRG Trust. At least one of the Trustees of each UPRG Trust
will be a person who is an employee or officer of or who is affiliated with the
Company (a "Regular Trustee"). One Trustee of UPRG Trust will be a financial
institution that is not affiliated with the Company, which shall act as property
trustee and as indenture trustee for the purposes of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), pursuant to the terms set forth in
a Prospectus Supplement (the "Property Trustee"). In addition, unless the
Property Trustee maintains a principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, one Trustee of
each UPRG Trust will be a legal entity having a principal place of business in,
or an individual resident of, the State of Delaware (the "Delaware Trustee").
The Company will pay all fees and expenses related to each UPRG Trust and the
offering of the Trust Preferred Securities. Unless otherwise set forth in the
Prospectus Supplement, the Property Trustee will be Chase Bank of Texas, N.A.
("CBT"), and the Delaware Trustee will be The Chase Manhattan Bank, Delaware.
The office of the Delaware Trustee in the State of Delaware is 1201 Market
Street, Wilmington, Delaware 19801. The principal place of business of each UPRG
Trust is c/o Union Pacific Resources Group Inc., 801 Cherry Street, Fort Worth,
Texas 76102. Telephone: (817) 877-6000.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities and the Subsidiary Debt Securities
offered hereby will be used for general corporate purposes, including repayment
of borrowings, working capital, capital expenditures, stock repurchase programs
and acquisitions. Unless otherwise specified in the Prospectus Supplement, each
UPRG Trust will use all proceeds received from the sale of Trust Preferred
Securities to purchase Company Subordinated Debt Securities. Additional
information on the use of net proceeds from the sale of the Offered Securities
offered hereby may be set forth in the Prospectus Supplement relating to such
Offered Securities.
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DESCRIPTION OF DEBT SECURITIES AND COMPANY GUARANTEES
The following description of the terms of the Debt Securities and the
Company Guarantees summarizes certain general terms and provisions of the Debt
Securities and the Company Guarantees to which any Prospectus Supplement may
relate. The particular terms of the Senior Debt Securities, the Subordinated
Debt Securities, the Company Guarantees, any Company Subordinated Debt
Securities issued in connection with Trust Preferred Securities, and the extent,
if any, to which such general provisions may apply to any series of Debt
Securities and Company Guarantees will be described in the Prospectus Supplement
relating to such series and Company Guarantees.
Senior Debt Securities and Company Guarantees may be issued, from time to
time, in one or more series under an Indenture (the "Senior Indenture"), among
the Company, the Subsidiary Issuers and The Bank of New York ("BONY"), as
trustee, or such other trustee as shall be named in a Prospectus Supplement (the
"Senior Trustee"). Subordinated Debt Securities and Company Guarantees may be
issued, from time to time, in one or more series under an indenture (the
"Subordinated Indenture") among the Company, the Subsidiary Issuers and a
trustee to be identified in the related Prospectus Supplement (the "Subordinated
Trustee"). The Senior Indenture and the Subordinated Indenture are sometimes
referred to collectively as the "Indentures," and the Senior Trustee and the
Subordinated Trustee are sometimes referred to collectively as the "Debt
Trustees." The Indentures will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part. The following statements are subject to the detailed provisions of
the Indentures. Wherever any particular provisions of the Indentures or terms
defined therein are referred to, such provisions and terms are incorporated by
reference as a part of the statements made herein and such statements are
qualified in their entirety by such references, including the definitions
therein of certain terms. References to particular sections of the Indentures
are noted below. Capitalized terms used herein but not defined herein shall have
the meanings ascribed to them in the Indentures.
GENERAL
The Company will irrevocably and unconditionally guarantee payments of
principal of, premium, if any, and interest, if any, with respect to Subsidiary
Debt Securities.
The Company Senior Debt Securities and Company Guarantees will be unsecured
obligations of the Company and will rank equally and ratably with other
unsecured and unsubordinated debt of the Company, unless the Company shall be
required to secure the Company Senior Debt Securities as described below under
"Covenants--Limitation on Liens and Sale Leaseback Transactions." The Subsidiary
Senior Debt Securities issued will be unsecured obligations of such Subsidiary
Issuer, and will rank pari passu with all other unsecured and unsubordinated
debt of such Subsidiary Issuer. Under the Companies Act (Nova Scotia), in the
event of the winding up or bankruptcy of UPR Capital Company, UPRC, as sole
owner of all of the outstanding equity of UPR Capital Company, is liable,
subject to certain limited exceptions, to pay those debts and liabilities UPR
Capital Company that were not specifically contracted on the basis that the
creditor would look only to the assets of UPR Capital Company. UPRC holds
substantially all of the assets of the Company's business. The Senior Indenture
does not limit the amount of Senior Debt Securities that can be issued
thereunder. (Section 301) Senior Debt Securities will be issued from time to
time and offered on terms determined by market conditions at the time of sale.
The obligations of any Issuer pursuant to any Subordinated Debt Securities
will be subordinate in right of payment to all Senior Indebtedness of such
Issuer, and will be described in an accompanying Prospectus Supplement. The
Subordinated Indenture will not contain any limitation on the amount of Senior
Indebtedness which may be hereafter incurred by any Issuer.
The Debt Securities may be issued in one or more series with the same or
various maturities, at par, at a premium or at a discount. Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates will be sold at a discount (which may be substantial) from their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such substantially discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
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Reference is made to the Prospectus Supplement for the Issuer of and the
following terms of the Debt Securities offered hereby: (i) the designation,
aggregate principal amount and authorized denominations of such Debt Securities;
(ii) the percentage of their principal amount at which such Debt Securities will
be issued; (iii) the date or dates on which the Debt Securities will mature
(which may be fixed or extendible); (iv) the rate or rates (which may be fixed
or floating) per annum at which the Debt Securities will bear interest, if any,
or the method of determining such rate or rates; (v) the date or dates on which
any such interest will be payable, the date or dates on which payment of any
such interest will commence and the Regular Record Dates for such Interest
Payment Dates; (vi) the terms of any mandatory or optional redemption (including
any provisions for any sinking, purchase or other analogous fund) or repayment
option; (vii) the currency, currencies or currency units for which the Debt
Securities may be purchased and the currency, currencies or currency units in
which the principal thereof, any premium thereon and any interest thereon may be
payable; (viii) if the currency, currencies or currency units for which the Debt
Securities may be purchased or in which the principal thereof, any premium
thereon and any interest thereon may be payable is at the election of the Issuer
thereof or the purchaser, the manner in which such election may be made;
(ix) if the amount of payments on the Debt Securities is determined with
reference to an index based on one or more currencies or currency units, changes
in the price of one or more securities or changes in the price of one or more
commodities, the manner in which such amounts may be determined; (x) the extent
to which any of the Debt Securities will be issuable in temporary or permanent
global form, or the manner in which any interest payable on a temporary or
permanent Global Security will be paid; (xi) the terms and conditions upon which
the Debt Securities may be convertible into or exchanged for Common Stock of the
Company, Preferred Stock of the Company, or indebtedness or other securities of
any kind of the Company; (xii) information with respect to book-entry
procedures, if any; (xiii) a discussion of certain Federal income tax,
accounting and other special considerations, procedures and limitations with
respect to the Debt Securities; (xiv) Debt Securities issued by a Subsidiary
Issuer will be entitled to the benefits of the Company Guarantees afforded by
the Indenture, or any other form of Guarantee to be endorsed on the Debt
Securities; and (xv) any other specific terms of the Debt Securities not
inconsistent with the Indenture. In addition, the applicable Prospectus
Supplement will describe the following terms of the series of Subordinated Debt
Securities offered hereby in respect of which this Prospectus is being
delivered: (a) the rights, if any, to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period, and the
duration of such extensions, and (b) the subordination terms of the Subordinated
Debt Securities of such series.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or any
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, Federal
income tax consequences, specific terms and other information with respect to
such issue of Debt Securities and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement, the principal of,
any premium on, and any interest on the Debt Securities will be payable, and the
Debt Securities will be transferable, at the Corporate Trust Office of the
applicable Debt Trustee in New York, New York, provided that payment of
interest, if any, may be made at the option of the applicable Issuer by check
mailed on or before the payment date, first class mail, to the address of the
person entitled thereto as it appears on the registry books of such Issuer or
its agent.
Unless otherwise specified in the Prospectus Supplement, the Senior Debt
Securities will be issued only in fully registered form and in denominations of
$1,000 and any integral multiple thereof (Sections 301 and 302) and Subordinated
Debt Securities issued in connection with the Trust Preferred Securities will be
issued in denominations of $25 or integral multiples thereof. No service charge
will be made for any transfer or exchange of any Debt Securities, but the Issuer
thereof may, except in certain specified cases not involving any transfer,
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 305)
COMPANY GUARANTEES
The Company will irrevocably and unconditionally guarantee to each Holder
of Subsidiary Debt Securities the due and punctual payment of the principal of,
and any premium and interest on, such Subsidiary Debt Securities, when and as
the same shall become due and payable, whether at maturity, upon acceleration or
otherwise. The Company has (a) agreed that its obligations under the Company
Guarantees upon the occurrence
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and continuance of an Event of Default will be as if it were principal obligor
and not merely surety, and will be enforceable irrespective of any invalidity,
irregularity or unenforceability of any series of the Debt Securities or the
Indenture and (b) waived its right to require the Trustee or the Holders of
Subsidiary Debt Securities to pursue or exhaust their legal or equitable
remedies against the applicable Subsidiary Issuer prior to exercising their
rights under the Company Guarantees.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee of such Depositary to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Each Issuer anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by the applicable
Issuer if such Debt Securities are offered and sold directly by an Issuer.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the applicable Depositary ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of any such
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the applicable Indenture governing such Debt
Securities.
Payments of principal of, any premium on, and any interest on, individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. Neither the applicable Issuer, the Guarantor, the applicable
Debt Trustee for such Debt Securities, any Paying Agent, nor the Security
Registrar for such Debt Securities will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Each Issuer expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. Each Issuer also expects that payments by
participants to
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owners of beneficial interests in such Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name". Such payments will be the responsibility of
such participants.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the applicable Issuer within 90 days, such Issuer will issue
individual Debt Securities of such series in exchange for the Global Security
representing such series of Debt Securities. In addition, an Issuer may at any
time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of a series represented by one or more Global Securities
and, in such event, will issue individual Debt Securities of such series in
exchange for the Global Security or Securities representing such series of Debt
Securities. Further, if such Issuer so specifies with respect to the Debt
Securities of a series, an owner of a beneficial interest in a Global Security
representing Debt Securities of such series may, on terms acceptable to such
Issuer, the applicable Debt Trustee and the Depositary for such Global Security,
receive individual Debt Securities of such series in exchange for such
beneficial interests, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the Issuer
thereof, of $1,000 and integral multiples thereof, in the case of Senior Debt
Securities, and $25 and integral multiples thereof, in the case of Subordinated
Debt Securities.
CERTAIN DEFINITIONS
Certain terms defined in Section 101 of the Indentures are summarized
below.
"Debt" means indebtedness for money borrowed.
"Domestic Subsidiary" means a Subsidiary incorporated or conducting its
principal operations within the United States or any State thereof or off the
coast of the United States within an area over which the United States or any
State thereof has jurisdiction.
"Funded Debt" of any person means all indebtedness for borrowed money
created, incurred, assumed or guaranteed in any manner by such person, and all
indebtedness, contingent or otherwise, incurred or assumed by such person in
connection with the acquisition of any business, property or asset, which in
each case matures more than one year after, or which by its terms is renewable
or extendible or payable out of the proceeds of similar indebtedness incurred
pursuant to the terms of any revolving credit agreement or any similar agreement
at the option of such person for a period ending more than one year after the
date as of which Funded Debt is being determined; provided, however, that Funded
Debt shall not include (i) any indebtedness for the payment, redemption or
satisfaction of which money (or evidences of indebtedness, if permitted under
the instrument creating or evidencing such indebtedness) in the necessary amount
shall have been irrevocably deposited in trust with a trustee or proper
depository either on or before the maturity or redemption date thereof or
(ii) any indebtedness of such person to any of its Subsidiaries or of any
Subsidiary to such person or any other Subsidiary or (iii) any indebtedness
incurred in connection with the financing of operating, construction or
acquisition projects, provided that the recourse for such indebtedness is
limited to the assets of such projects.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means (i) any property owned or leased by the Company
or any Subsidiary, or any interest of the Company or any Subsidiary in property,
located within the United States of America or any State thereof (including
property located off the coast of the United States of America held pursuant to
lease from any Federal, State or other governmental body) which is considered by
the Company to be capable of producing oil or gas or minerals in commercial
quantities and (ii) any refinery, smelter or processing or manufacturing plant
owned or leased by the Company or any Subsidiary and located within the United
States of America or any State thereof, except (a) facilities related thereto
employed in transportation, distribution or marketing or (b) any
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refinery, smelter or processing or manufacturing plant, or portion thereof,
which the Board of Directors declares is not material to the business of the
Company and its subsidiaries taken as a whole.
"Restricted Subsidiary" means any Subsidiary which owns or leases (as
lessor or lessee) a Principal Property, but does not include any Subsidiary the
principal business of which is leasing machinery, equipment, vehicles or other
properties none of which is a Principal Property, or financing accounts
receivable, or engaging in ownership and development of any real property which
is not a Principal Property.
"Subsidiary", when used with respect to the Company, means any corporation
of which a majority of the outstanding voting stock is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or both.
COVENANTS
The Senior Indenture contains the covenants summarized below, which will be
applicable (unless waived or amended) so long as any of the Senior Debt
Securities are outstanding, unless stated otherwise in the Prospectus
Supplement.
Limitation on Liens and Sale Leaseback Transactions. (a) The Company will
not, nor will it permit any Subsidiary to, create, assume, incur or suffer to
exist any Mortgage upon any stock or indebtedness of any Domestic Subsidiary,
whether owned on the date of the Senior Indenture or thereafter acquired, to
secure any Debt of the Company or any other person (other than the Senior Debt
Securities), without in any such case making effective provision whereby all the
outstanding Senior Debt Securities shall be directly secured equally and ratably
with such Debt. There will be excluded from this restriction any Mortgage upon
stock or indebtedness of a corporation existing at the time such corporation
becomes a Domestic Subsidiary or at the time stock or indebtedness of a Domestic
Subsidiary is acquired and any extension, renewal or replacement of any such
Mortgage.
(b) The Company will not, nor will it permit any Restricted Subsidiary to,
create, assume, incur or suffer to exist any Mortgage upon any Principal
Property, whether owned or leased on the date of the Senior Indenture, or
thereafter acquired, to secure any Debt of the Company or any other person
(other than the Senior Debt Securities), without in any such case making
effective provision whereby all the outstanding Senior Debt Securities shall be
directly secured equally and ratably with such Debt. (Section 1006)
There will be excluded from the restriction referred to in the next
preceding paragraph the following Mortgages (the Mortgages set forth in the
following clauses (i) through (vi) the "Permitted Mortgages") (i) any Mortgage
upon property owned or leased by a corporation existing at the time such
corporation becomes a Restricted Subsidiary, (ii) any Mortgage upon property
existing at the time of the acquisition thereof or to secure payment of any part
of the purchase price thereof or any Debt incurred to finance the purchase
thereof, (iii) any Mortgage upon property to secure any part of the cost of
exploration, drilling, development, construction, alteration, repair or
improvement of such property, or Debt incurred to finance such cost, (iv) any
Mortgage securing Debt of a Restricted Subsidiary owing to the Company or to
another Restricted Subsidiary, (v) any Mortgage existing on the date of the
Senior Indenture, and (vi) any extension, renewal or replacement, in whole or in
part, of any Mortgage referred to in the foregoing clauses (i) through (v);
provided, however, that the principal amount of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of such extension,
renewal or replacement; and provided, further, that such Mortgage shall be
limited to all or such part of the property which secured the Mortgage so
extended, renewed or replaced.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any Mortgage
upon any Principal Property without equally and ratably securing the Senior Debt
Securities if the aggregate amount of all Debt then outstanding secured by such
Mortgage and all similar Mortgages does not exceed 10% of the total consolidated
stockholders' equity (including preferred stock) of the Company as shown on the
audited consolidated balance sheet contained in the latest annual report to
stockholders of the Company; provided that Debt secured by Permitted Mortgages
shall not be included in the amount of such secured Debt.
For the purpose of the restriction referred to in the third preceding
paragraph, no Mortgage to secure any Debt will be deemed created by (i) the sale
or other transfer of (A) any oil or gas or minerals in place for a period
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of time until, or in an amount such that, the purchaser will realize therefrom a
specified amount of money (however determined) or a specified amount of such oil
or gas or minerals, or (B) any other interest commonly referred to as a
"production payment", and (ii) any Mortgage in favor of the United States (or
any State thereof), or any other country, or any political subdivision of any of
the foregoing, to secure partial, progress, advance or other payments pursuant
to any contract or statute, or any Mortgage upon property intended to be used
primarily for the purpose of or in connection with air or water pollution
control. (Section 1006)
(c) The Company will not, nor will it permit any Restricted Subsidiary to,
enter into any arrangement with any person providing for the leasing by the
Company or a Restricted Subsidiary as lessee of any Principal Property (except
for temporary leases for a term, including renewals, of not more than five
years), which property has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such person (herein referred to as a
"Sale-Leaseback Transaction"), unless (i) such Sale-Leaseback Transaction occurs
within 120 days from the date of acquisition of such Principal Property or the
date of the completion of construction or commencement of full operations on
such Principal Property, whichever is later, or (ii) the Company, within
120 days after such Sale-Leaseback Transaction, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company which by its terms or the terms of the instrument
pursuant to which it was issued is subordinate in right of payment to the Senior
Debt Securities) an amount not less than the net proceeds of the sale of such
Principal Property. (Section 1006)
Notwithstanding the foregoing provisions of this paragraph (c), the Company
may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback
Transaction involving any Principal Property, provided that the net sale
proceeds from such Sale-Leaseback Transaction, together with all Debt secured by
Mortgages other than Permitted Mortgages, does not exceed 10% of the total
consolidated stockholders' equity of the Company as shown on the audited
consolidated balance sheet contained in the latest annual report to stockholders
of the Company.
Limitation on Transfers of Principal Properties to Unrestricted
Subsidiaries. The Company will not, nor will it permit any Restricted
Subsidiary to, sell, transfer or otherwise dispose of any Principal Property to
any Subsidiary which is not a Restricted Subsidiary other than for cash or other
consideration which, in the opinion of the Company's Board of Directors,
constitutes fair value for such Principal Property. (Section 1007)
CONSOLIDATION, MERGER, SALE OR CONVEYANCE OF THE COMPANY
Each Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) the successor corporation
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by a supplemental indenture the due and punctual payment of the principal
of, any premium on, and any interest on, all the outstanding Debt Securities and
the performance of every covenant in the applicable Indenture on the part of the
Company to be performed or observed; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) the Company shall have delivered to the applicable Debt
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with the foregoing provisions relating to such transaction.
(Section 801) In case of any such consolidation, merger, conveyance or transfer,
such successor corporation will succeed to and be substituted for the Company as
obligor on the Debt Securities, with the same effect as if it had been named in
the applicable Indenture as the Company. (Section 803) Other than the
restrictions on Mortgages described above, the Indentures and the Debt
Securities do not contain any covenants or other provisions designed to protect
holders of Debt Securities in the event of a highly leveraged transaction
involving the Company or any Subsidiary.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE OF THE SUBSIDIARY ISSUERS
Each Indenture provides that so long as any Subsidiary Debt Securities of
any Subsidiary Issuer are outstanding, such Subsidiary Issuer may not
consolidate or amalgamate with or merge into any other corporation or convey or
transfer its properties and assets substantially as an entirety to any person,
unless (i) the successor corporation shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia or of Canada or any province or territory thereof, and
shall expressly assume by a supplemental indenture the due and punctual payment
of the principal of, any premium on, and any interest on,
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all the outstanding Subsidiary Debt Securities and the performance of every
covenant in the applicable Indenture on the part of such Subsidiary Issuer to be
performed or observed; (ii) immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing; and
(iii) such Subsidiary Issuer shall have delivered to the applicable Debt Trustee
an Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, amalgamation, merger, conveyance or transfer and such
supplemental indenture comply with the foregoing provisions relating to such
transaction. (Section 802) In case of any such consolidation, amalgamation,
merger, conveyance or transfer, such successor corporation will succeed to and
be substituted for such Subsidiary Issuer as obligor on the Subsidiary Debt
Securities, with the same effect as if it had been named in the applicable
Indenture as such Subsidiary Issuer. (Section 803)
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of Debt Securities, an Event of Default is defined in each
Indenture as (a) default for 30 days in payment of any interest on the Debt
Securities of such series; (b) default in payment of principal of or any premium
on the Debt Securities of such series at maturity; (c) default in payment of any
sinking or purchase fund or analogous obligation, if any, on the Debt Securities
of such series; (d) default by the Company in the performance of any other
covenant or warranty contained in the applicable Indenture for the benefit of
such series which shall not have been remedied for a period of 90 days after
notice is given as specified in the applicable Indenture; and (e) certain events
of bankruptcy, insolvency and reorganization of the Company. (Section 501)
A default under other indebtedness of the Company will not be a default
under the Indentures and a default under one series of Debt Securities will not
necessarily be a default under another series.
Each Indenture provides that (i) if an Event of Default described in clause
(a), (b), (c) or (d) above (if the Event of Default under clause (d) is with
respect to less than all series of Debt Securities then outstanding) shall have
occurred and be continuing with respect to any series, either the applicable
Debt Trustee or the holders of not less than 25% in aggregate principal amount
of the Debt Securities of such series then outstanding (each such series acting
as a separate class) may declare the principal (or, in the case of Original
Issue Discount Securities, the portion thereof specified in the terms thereof)
of all outstanding Debt Securities of such series and the interest accrued
thereon, if any, to be due and payable immediately and (ii) if an Event of
Default described in clause (d) or (e) above (if the Event of Default under
clause (d) is with respect to all series of Debt Securities then outstanding)
shall have occurred and be continuing, either the applicable Debt Trustee or the
holders of at least 25% in aggregate principal amount of all Debt Securities
then outstanding (treated as one class) may declare the principal (or, in the
case of Original Issue Discount Securities, the portion thereof specified in the
terms thereof) of all Debt Securities then outstanding and the interest accrued
thereon, if any, to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults (except for defaults in the
payment of principal of, any premium on, or any interest on, such Debt
Securities and in compliance with certain covenants) may be waived by the
holders of a majority in aggregate principal amount of the Debt Securities of
such series then outstanding. (Sections 502 and 513)
Under each Indenture the applicable Debt Trustee must give to the holders
of each series of Debt Securities notice of all uncured defaults known to it
with respect to such series within 90 days after such a default occurs (the term
"default" to include the events specified above without notice or grace
periods); provided that, except in the case of default in the payment of
principal of, any premium on, or any interest on, any of the Debt Securities, or
default in the payment of any sinking or purchase fund installment or analogous
obligations, the applicable Debt Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of the Debt Securities of such series.
(Section 602)
No holder of any Debt Securities of any series may institute any action
under either Indenture unless (a) such holder shall have given the Debt Trustee
thereunder written notice of a continuing Event of Default with respect to such
series, (b) the holders of not less than 25% in aggregate principal amount of
the Debt Securities of such series then outstanding shall have requested the
Debt Trustee thereunder to institute proceedings in respect of such Event of
Default, (c) such holder or holders shall have offered the Debt Trustee
thereunder such reasonable indemnity as such Debt Trustee may require, (d) the
Debt Trustee thereunder shall have failed to institute an action for 60 days
thereafter and (e) no inconsistent direction shall have been given to the Debt
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Trustee thereunder during such 60-day period by the holders of a majority in
aggregate principal amount of Debt Securities of such series. (Section 507)
The holders of a majority in aggregate principal amount of the Debt
Securities of any series affected and then outstanding will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Debt
Trustee or exercising any trust or power conferred on such Debt Trustee with
respect to such series of Debt Securities. (Section 512) Each Indenture provides
that, in case an Event of Default shall occur and be continuing, the Debt
Trustee thereunder, in exercising its rights and powers under such Indenture,
will be required to use the degree of care of a prudent man in the conduct of
his own affairs. (Section 601) Each Indenture further provides that the Debt
Trustee thereunder shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
under such Indenture unless it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
reasonably assured to it. (Section 601)
The Company must furnish to the Debt Trustees within 120 days after the end
of each fiscal year a statement signed by one of certain officers of the Company
to the effect that a review of the activities of the Company during such year
and of its performance under the applicable Indenture and the terms of the Debt
Securities has been made, and, to the best of the knowledge of the signatories
based on such review, the Company has complied with all conditions and covenants
of such Indenture or, if the Company is in default, specifying such default.
(Section 1004)
If any Debt Securities are denominated in a coin or currency other than
that of the United States, then for the purposes of determining whether the
holders of the requisite principal amount of Debt Securities have taken any
action as herein described, the principal amount of such Debt Securities shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of the spot rate of exchange into United
States dollars for the currency in which such Debt Securities are denominated
(as evidenced to the applicable Debt Trustee by an Officers' Certificate) as of
the date the taking of such action by the holders of such requisite principal
amount is evidenced to the applicable Debt Trustee as provided in the respective
Indenture. (Section 104)
If any Debt Securities are Original Issue Discount Securities, then for the
purposes of determining whether the holders of the requisite principal amount of
Debt Securities have taken any action herein described, the principal amount of
such Debt Securities shall be deemed to be the portion of such principal amount
that would be due and payable at the time of the taking of such action upon a
declaration of acceleration of maturity thereof. (Section 101)
MODIFICATION OF THE INDENTURES
With certain exceptions, the applicable Indenture or the rights of the
holders of the Debt Securities may be modified by the Issuer thereof, the
Company and the applicable Debt Trustee with the consent of the holders of a
majority in aggregate principal amount of the Debt Securities of each series
affected by such modification then outstanding, but no such modification may be
made without the consent of the holder of each outstanding Debt Security
affected thereby which would (i) change the maturity of any payment of principal
of, or any premium on, or any installment of interest on any Debt Security, or
reduce the principal amount thereof or the interest or any premium thereon, or
change the method of computing the amount of principal thereof or interest
thereon on any date or change any place of payment where, or the coin or
currency in which, any Debt Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof (or, in the case of redemption or
repayment, on or after the redemption date or the repayment date, as the case
may be), or (ii) reduce the percentage in principal amount of the outstanding
Debt Securities of any series, the consent of whose holders is required for any
such modification, or the consent of whose holders is required for any waiver of
compliance with certain provisions of the applicable Indenture or certain
defaults thereunder and their consequences provided for in such Indenture, or
(iii) modify any of the provisions of certain Sections of the applicable
Indenture, including the provisions summarized in this paragraph, except to
increase any such percentage or to provide that certain other provisions of such
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Debt Security affected thereby. (Section 902)
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DEFEASANCE OF THE INDENTURE AND DEBT SECURITIES
If the terms of any series of Debt Securities so provide, the Issuer
thereof and the Guarantor, if any, will be deemed to have paid and discharged
the entire indebtedness on all the outstanding Debt Securities of such series by
(a) depositing with the applicable Debt Trustee (i) as trust funds in trust an
amount sufficient to pay and discharge the entire indebtedness on all Debt
Securities of such series for principal, premium and interest or (ii) as
obligations in trust such amount of direct obligations of, or obligations the
principal of and interest on which are fully guaranteed by, the government which
issued the currency in which the Debt Securities are denominated as will,
together with the income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay and discharge the entire indebtedness
on all such Debt Securities for principal, premium and interest and
(b) satisfying certain other conditions precedent specified in the applicable
Indenture. (Section 403) In the event of any such defeasance, holders of such
Debt Securities would be able to look only to such trust fund for payment of
principal of, any premium on, and any interest on their Debt Securities.
In the event of such defeasance, such Issuer and Guarantor, if any, are
required, among other things, to deliver to the Trustee an Opinion of Counsel to
the effect that (i) the deposit and related defeasance would not cause the
holders of such Debt Securities to recognize income, gain or loss for Federal
income tax purposes, accompanied by a ruling to such effect received from or
published by the United States Internal Revenue Service and (ii) the creation of
the defeasance trust will not violate the Investment Company Act of 1940, as
amended. In addition, such Issuer and Guarantor, if any, are required to deliver
to the Trustee an officers' certificate stating that such deposit was not made
by such Issuer or Guarantor, if any, with the intent of preferring the holders
of such series over other creditors of such Issuer or Guarantor, as applicable,
or with the intent of defeating, hindering, delaying or defrauding creditors of
such Issuer or Guarantor, as applicable, or others.
CONCERNING THE SENIOR TRUSTEE
BONY and its affiliates provide customary commercial banking services to
the Company and certain of its subsidiaries and participate in various financing
agreements of the Company in the ordinary course of their business.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The summary of terms of the Company's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Amended and Restated Articles
of Incorporation, and the certificate of amendment relating to each series of
the Preferred Stock (the "Certificate of Amendment") which will be filed as an
exhibit to or incorporated by reference in the Registration Statement of which
this Prospectus is a part at or prior to the time of issuance of such series of
the Preferred Stock.
The Company's Amended and Restated Articles of Incorporation authorize the
Board of Directors of the Company to issue 100 million shares of Preferred
Stock, no par value per share, in one or more series and to fix the preferences,
limitations and relative rights of the shares of each such series, including
dividend rates, conversion rights, voting rights, terms of redemption and
liquidation preferences, and the number of shares constituting each such series,
without any further vote or action by the shareholders. No shares of Preferred
Stock are currently outstanding, and no shares are reserved for issuance.
Preferred Stock of a particular series shall have the dividend,
liquidation, redemption, conversion and voting rights set forth in the
Prospectus Supplement relating to such series. Reference is made to the
Prospectus Supplement relating to a particular series of Preferred Stock for
specific terms, including: (i) the distinctive serial designation and the number
of shares constituting such series; (ii) the dividend rate or rates, the payment
date or dates for dividends and the participating or other special rights, if
any, with respect to dividends; (iii) any redemption, sinking fund or other
analogous provisions applicable to such Preferred Stock; (iv) the amount or
amounts payable upon the shares of Preferred Stock in the event of voluntary or
involuntary liquidation,
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dissolution or winding up of the Company prior to any payment or distribution of
the assets of the Company to the holders of any class or classes of stock which
are junior in rank to the Preferred Stock; (v) any terms for the conversion into
or exchange for shares of Common Stock, shares of Preferred Stock or Debt
Securities and (vi) any other specific terms of the Preferred Stock not
inconsistent with the Company's Amended and Restated Articles of Incorporation
and any applicable Certificate of Amendment. The term "class or classes of stock
which are junior in rank to the Preferred Stock" means the Common Stock and any
other class or classes of stock of the Company hereafter authorized which shall
rank junior to the Preferred Stock as to dividends or upon liquidation.
DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Revised Business Corporation Law of
the State of Utah and the Company's Amended and Restated Articles of
Incorporation.
The Company is presently authorized to issue 400 million shares of Common
Stock, no par value per share. At June 30, 1997, an aggregate of 254,274,102
shares of Common Stock were outstanding. In addition, 16,000,000 shares of
Common Stock have been reserved for issuance upon exercise of options and for
the issuance of retention shares granted under the Company's 1995 Stock Option
Plan, and 1,000,000 shares of Common Stock have been reserved for issuance upon
exercise of options granted under the Company's 1995 Directors Stock Option
Plan.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors of the Company out of funds legally available
therefor. In the event of a dissolution of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after the discharge or the
provision for the discharge of liabilities and the payment of any liquidation
preference of any outstanding Preferred Stock. Holders of Common Stock have no
preemptive rights and have no rights to convert their Common Stock into any
other securities, and there are no redemption provisions with respect to such
shares. All of the outstanding shares of Common Stock are, and the shares
offered hereby will be, fully paid and nonassessable.
Harris Trust & Savings Bank is the transfer agent and registrar for the
Common Stock. The Common Stock is listed on the New York Stock Exchange.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Senior Debt Securities
or shares of Preferred Stock or Common Stock. Warrants may be issued
independently or together with any Senior Debt Securities or shares of Preferred
Stock or Common Stock offered by any Prospectus Supplement and may be attached
to or separate from such Senior Debt Securities or shares of Preferred Stock or
Common Stock. The Warrants are to be issued under Warrant Agreements to be
entered into between the Company and BONY, as Warrant Agent, or such other bank
or trust company as is named in the Prospectus Supplement relating to the
particular issue of Warrants (the "Warrant Agent"). The Warrant Agent will act
solely as an agent of the Company in connection with the Warrants and will not
assume any obligation or relationship of agency or trust for or with any holders
of Warrants or beneficial owners of Warrants. The following summaries of certain
provisions of the form of Warrant Agreement and Warrants do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the applicable Warrant Agreement and the Warrants.
GENERAL
If Warrants are offered, the Prospectus Supplement will describe the terms
of the Warrants, including the following: (i) the offering price; (ii) the
currency, currencies or currency units for which Warrants may be purchased;
(iii) the designation, aggregate principal amount, currency, currencies or
currency units and terms of the Senior Debt Securities purchasable upon exercise
of the Debt Warrants and the price at which such Senior Debt Securities may be
purchased upon such exercise; (iv) the designation, number of shares and terms
of the
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Preferred Stock purchasable upon exercise of the Preferred Stock Warrants and
the price at which such shares of Preferred Stock Warrants may be purchased upon
such exercise; (v) the designation, number of shares and terms of the Common
Stock purchasable upon exercise of the Common Stock Warrants and the price at
which such shares of Common Stock may be purchased upon such exercise; (vi) if
applicable, the designation and terms of the Senior Debt Securities, Preferred
Stock or Common Stock with which the Warrants are issued and the number of
Warrants issued with each such Senior Debt Security or share of Preferred Stock
or Common Stock; (vii) if applicable, the date on and after which the Warrants
and the related Senior Debt Securities, Preferred Stock or Common Stock will be
separately transferable; (viii) the date on which the right to exercise the
Warrants shall commence and the date (the "Expiration Date") on which such right
shall expire; (ix) whether the Warrants will be issued in registered or bearer
form; (x) a discussion of certain Federal income tax, accounting and other
special considerations, procedures and limitations relating to the Warrants; and
(xi) any other terms of the Warrants.
Warrants may be exchanged for new Warrants of different denominations, may
(if in registered form) be presented for registration of transfer, and may be
exercised at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Before the exercise of their Warrants,
holders of Warrants will not have any of the rights of holders of the Senior
Debt Securities or shares of Preferred Stock or Common Stock purchasable upon
such exercise, including the right to receive payments of principal of, any
premium on, or any interest on, the Senior Debt Securities purchasable upon such
exercise or to enforce the covenants in the Indenture or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Senior Debt Securities or such number of shares of Preferred Stock or Common
Stock at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to the Warrant. Warrants may
be exercised at such times as are set forth in the Prospectus Supplement
relating to such Warrants. After the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
Company), unexercised Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the certificate evidencing such Warrants
properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Senior Debt
Securities or shares of Preferred Stock or Common Stock purchasable upon such
exercise. The exercise price will be the price applicable on the date of payment
in full, as set forth in the Prospectus Supplement relating to the Warrants.
Upon receipt of such payment and the certificate representing the Warrants to be
exercised, properly completed and duly executed at the corporate trust office of
the Warrant Agent or any other office indicated in the Prospectus Supplement,
the Company will, as soon as practicable, issue and deliver the Senior Debt
Securities or shares of Preferred Stock or Common Stock purchasable upon such
exercise. If fewer than all of the Warrants represented by such certificate are
exercised, a new certificate will be issued for the remaining amount of
Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, which are contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock or Preferred Stock at a
future date or dates. The price per share of Common Stock or Preferred Stock may
be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. Any such formula may include anti-dilution provisions to adjust the
number of shares issuable pursuant to Stock Purchase Contracts upon certain
events. The Stock Purchase Contracts may be issued separately or as a part of
Stock Purchase Units each representing ownership of a Stock Purchase Contract
and Debt Securities, U.S. Obligations or Trust Preferred Securities securing the
holder's obligations to purchase the Common Stock or Preferred Stock under the
Stock Purchase Contracts.
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Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include U.S. Obligations, unless a holder
of Stock Purchase Units settles its obligations under the Stock Purchase
Contracts early through the delivery of consideration to the Company or its
agent in the manner discussed below, the principal of such U.S. Obligations,
when paid at maturity, will automatically be applied to satisfy the holder's
obligation to purchase Common Stock or Preferred Stock under the Stock Purchase
Contracts.
Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include Debt Securities or Trust Preferred
Securities, in the absence of any such early settlement or the election by a
holder to pay the consideration specified in the Stock Purchase Contracts, the
Debt Securities or Trust Preferred Securities will automatically be presented to
the applicable issuer for redemption at 100% of face or liquidation value and,
in the case of Trust Preferred Securities the applicable UPRG Trust will present
Subordinated Debt Securities in an equal principal amount to the Company for
redemption at 100% of principal amount. Amounts received in respect of such
redemption will automatically be applied to satisfy in full the holder's
obligation to purchase Common Stock or Preferred Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require the Company to make periodic
payments to the holders of the Stock Purchase Units or vice versa, and such
payments may be unsecured or refunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
Except as otherwise described in the applicable Prospectus Supplement,
holders of Stock Purchase Units may be entitled to settle the underlying Stock
Purchase Contracts prior to the stated settlement date by surrendering the
certificate evidencing the Stock Purchase Units, accompanied by the payment due,
in such form and calculated pursuant to such formula as may be prescribed in the
Stock Purchase Contracts and described in the applicable Prospectus Supplement.
Upon early settlement, the holder would receive the number of shares of Common
Stock or Preferred Stock deliverable under such Stock Purchase Contracts,
subject to adjustment in certain cases. Holders of Stock Purchase Units may be
entitled to exchange their Stock Purchase Units together with appropriate
collateral, for separate Stock Purchase Contracts and Trust Preferred
Securities, Debt Securities or U.S. Obligations. In the event of either such
early settlement or exchange, the Trust Preferred Securities, Debt Securities or
U.S. Obligations that were pledged as security for the obligation of the holder
to perform under the Stock Purchase Contracts would be transferred to the holder
free and clear of the Company's security interest therein.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units including differences, if any, from
the terms described above.
DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEES
TRUST PREFERRED SECURITIES
The Declaration pursuant to which each UPRG Trust is organized will be
replaced by an Amended and Restated Declaration of Trust (the "Amended
Declaration") which will authorize the trustees (the "Trustees") of such trust
to issue on behalf of such UPRG Trust one series of Trust Preferred Securities
and one series of Trust Common Securities (together, the "Trust Securities").
The Trust Preferred Securities will be issued to the public pursuant to the
Registration Statement of which this Prospectus forms a part, and the Trust
Common Securities will be issued directly or indirectly to the Company.
The Trust Preferred Securities will have such terms, including dividends,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the applicable Declaration or made part of such Declaration by the Trust
Indenture Act. Reference is made to the applicable Prospectus Supplement
relating to the Trust Preferred Securities of such UPRG Trust for specific
terms, including (i) the distinctive designation of Trust Preferred Securities,
(ii) the number of Trust Preferred Securities issued by such UPRG Trust, (iii)
the annual dividend rate (or method of determining such rate) for Trust
Preferred Securities issued by such UPRG Trust and the date or dates upon which
such dividends shall be payable, (iv) whether dividends on Trust Preferred
Securities issued by such UPRG Trust shall be cumulative, and, in the case of
Trust Preferred Securities having such cumulative dividend rights, the date or
dates or method of determining the date or dates from which dividends on Trust
Preferred Securities issued by such UPRG Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of such UPRG Trust to
the
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holder of Trust Preferred Securities of such UPRG Trust upon voluntary or
involuntary dissolution, winding-up or termination of such UPRG Trust, (vi) the
terms and conditions, if any, under which Trust Preferred Securities of such
UPRG Trust may be converted into shares of Capital Stock of the Company,
including the conversion price per share and the circumstances, if any, under
which any such conversion right shall expire, (vii) the terms and conditions, if
any, upon which the related series of the applicable Subordinated Debt
Securities may be distributed to holders of Trust Preferred Securities of such
UPRG Trust, (ix) the obligation, if any, of such UPRG Trust to purchase or
redeem Trust Preferred Securities issued by such UPRG Trust and the price or
prices at which, the period or periods within which and the terms and conditions
upon which Trust Preferred Securities issued by such UPRG Trust shall be
purchased or redeemed, in whole or in part, pursuant to such obligation,
(x) the voting rights, if any, of Trust Preferred Securities issued by such UPRG
Trust in addition to those required by law, including the number of votes per
Trust Preferred Security and any requirement for the approval by the holders of
Trust Preferred Securities, or of Trust Preferred Securities issued by such UPRG
Trust, as a condition to specified action or amendments to the Declaration of
such UPRG Trust, and (xi) any other relevant rights, preferences, privileges,
limitations or restrictions of Trust Preferred Securities issued by such UPRG
Trust consistent with the Declaration of such UPRG Trust or with applicable law.
Pursuant to each Declaration, the Property Trustee will own the Subordinated
Debt Securities purchased by the applicable UPRG Trust for the benefit of the
holders of the Trust Preferred Securities. The payment of dividends out of money
held by the UPRG Trusts, and payments upon redemption of Trust Preferred
Securities or liquidation of any UPRG Trust, will be guaranteed by the Company
to the extent described under "--Trust Guarantees."
Certain federal income tax considerations applicable to an investment in
Trust Preferred Securities will be described in the Prospectus Supplement
relating thereto.
In connection with the issuance of Trust Preferred Securities, each UPRG
Trust will also issue one series of Trust Common Securities. Each Amended
Declaration will authorize the Regular Trustee of a UPRG Trust to issue on
behalf of such UPRG Trust one series of Trust Common Securities having such
terms, including dividends, conversion, redemption, voting, liquidation rights
or such restrictions as shall be set forth therein. Except as otherwise provided
in the Prospectus Supplement relating to the Trust Preferred Securities, the
terms of the Trust Common Securities issued by such UPRG Trust will be
substantially identical to the terms of the Trust Preferred Securities issued by
such UPRG Trust, and the Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata with the Trust Preferred Securities
except that, upon an event of default under the applicable Declaration, the
rights of the holders of the Trust Common Securities to payment in respect of
dividends and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Trust Preferred Securities.
Except in certain limited circumstances, the Trust Common Securities will also
carry the right to vote and appoint, remove or replace any of the Trustees of
the related UPRG Trust which issued such Trust Common Securities. All of the
Trust Common Securities of each UPRG Trust will be directly or indirectly owned
by the Company.
The Property Trustee and its affiliates provide customary commercial
banking services to the Company and certain of its subsidiaries and participate
in various financing agreements of the Company in the ordinary course of their
business. The Property Trustee acts as the administrative agent under (i) the
Revolving Credit Agreement dated as of October 5, 1995, (ii) the Competitive
Advance/Revolving Credit Agreement dated as of April 16, 1996, as amended
August 9, 1996, September 13, 1996 and March 2, 1998 and (iii) the 364 Day
Competitive Advance/Revolving Credit Agreement dated as of November 25, 1997, as
amended March 2, 1998, each among the Company and the Property Trustee. The
Chase Manhattan Bank, an affiliate of the Property Trustee ("Chase") acts as the
administrative agent under the 364 Day Competitive Advance/Revolving Credit
Agreement dated as of March 2, 1998 among the Company and Chase.
TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
which will be executed and delivered by the Company, from time to time, for the
benefit of the holders of Trust Preferred Securities. The accompanying
Prospectus Supplement will describe any significant differences between the
actual terms of the Trust Guarantees and the summary below. The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Trust
Guarantee, which will
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be filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus forms a part.
General. The Company will irrevocably and unconditionally agree, to the
extent set forth in the Trust Guarantees, to pay in full, to the holders of
Trust Preferred Securities of each series, the Trust Guarantee Payments (as
defined below) (except to the extent paid by such UPRG Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which such UPRG
Trust may have or assert. The following payments with respect to any series of
Trust Preferred Securities to the extent not paid by the applicable UPRG Trust
(the "Trust Guarantee Payments") will be subject to the Trust Guarantees
(without duplication): (i) any accrued and unpaid dividends which are required
to be paid on the Trust Preferred Securities of such series, to the extent such
UPRG Trust shall have funds legally available therefor, (ii) the redemption
price, including all accrued and unpaid dividends (the "Redemption Price"),
payable out of funds legally available therefor, with respect to any Trust
Preferred Securities called for redemption by such UPRG Trust and (iii) upon a
liquidation of such UPRG Trust (other than in connection with the distribution
of Subordinated Debt Securities to the holders of Trust Preferred Securities or
the redemption of all of the Trust Preferred Securities issued by such UPRG
Trust), the lesser of (a) the aggregate of the liquidation preference and all
accrued and unpaid dividends on the Trust Preferred Securities of such series to
the date of payment and (b) the amount of assets of such UPRG Trust remaining
available for distribution to holders of Trust Preferred Securities of such
series in liquidation of such UPRG Trust. The Company's obligation to make a
Trust Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Trust Preferred Securities or by
causing the applicable UPRG Trust to pay such amounts to such holders.
Covenants of the Company. In each Trust Guarantee, the Company will
covenant that, so long as any Trust Preferred Securities issued by the
applicable UPRG Trust remain outstanding, if there shall have occurred any event
that would constitute an event of default under such Trust Guarantee or the
Declaration of such UPRG Trust, then (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its Common Stock (other than
(i) purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plan,
(ii) as a result of a reclassification of the Company's Common Stock or the
exchange or conversion of one class or series of the Company's Common Stock for
another class or series of the Company's Common Stock, (iii) the purchase of
fractional interests in shares of the Company's Common Stock pursuant to the
conversion or exchange provisions of such Common Stock of the Company or the
security being converted or exchanged or (iv) purchases or acquisitions of
shares of Common Stock to be used in connection with acquisitions of Common
Stock by shareholders pursuant to the Company's dividend reinvestment plan) or
make any guarantee payments with respect to the foregoing and (b) the Company
shall not make any payment of principal or premium, if any, on or repurchase any
debt securities (including guarantees) other than at stated maturity issued by
the Company which rank pari passu with or junior to such Subordinated Debt
Securities.
Amendment and Assignment. Except with respect to any changes which do not
adversely affect the rights of holders of Trust Preferred Securities of any
series (in which case no vote will be required), each Trust Guarantee with
respect to any series of Trust Preferred Securities may be changed only with the
prior approval of the holders of not less than a majority in liquidation
preference of the outstanding Trust Preferred Securities of such series. The
manner of obtaining any such approval of holders of the Trust Preferred
Securities of each series will be as set forth in an accompanying Prospectus
Supplement. All guarantees and agreements contained in each Trust Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the applicable
series of Trust Preferred Securities then outstanding.
Termination of the Trust Guarantees. Each Trust Guarantee will terminate
as to the Trust Preferred Securities issued by the applicable UPRG Trust (a)
upon full payment of the redemption price of all Trust Preferred Securities of
such UPRG Trust, (b) upon distribution of the Subordinated Debt Securities held
by such UPRG Trust to the holders of the Trust Preferred Securities of such UPRG
Trust or (c) upon full payment of the amounts payable in accordance with the
Declaration of such UPRG Trust upon liquidation of such UPRG Trust. Each Trust
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities issued by the
applicable UPRG Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Trust Guarantee. The subordination provisions of
the Subordinated
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Debt Securities and the Trust Guarantees, respectively, will provide that in the
event payment is made on the Subordinated Debt Securities or the Trust
Guarantees in contravention of such provisions, such payments will be paid over
to the holders of Senior Indebtedness.
Ranking of the Trust Guarantees. Each Trust Guarantee will constitute an
unsecured obligation of the Company and will rank (i) subordinate and junior in
right of payment to all other liabilities of the Company, (ii) pari passu with
the most senior preferred or preference stock, if any, hereafter issued by the
Company and with any guarantee hereafter entered into by the Company in respect
of any preferred or preference stock or interests of any affiliate of the
Company and (iii) senior to the Company's Common Stock. Each Declaration will
provide that each holder of Trust Preferred Securities by acceptance thereof
agrees to the subordination provisions and other terms of the applicable Trust
Guarantee.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection. The Trust Guarantees will be deposited with the Property Trustee to
be held for the benefit of any series of Trust Preferred Securities. The
Property Trustee will have the right to enforce the Trust Guarantees on behalf
of the holders of any series of Trust Preferred Securities. The holders of not
less than 10% in aggregate liquidation preference of a series of Trust Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the Trust
Guarantee applicable to such series of Trust Preferred Securities, including the
giving of directions to the Property Trustee. If the Property Trustee fails to
enforce a Trust Guarantee as above provided, any holder of Trust Preferred
Securities of a series to which such Trust Guarantee pertains may institute a
legal proceeding directly against the Company to enforce its rights under such
Trust Guarantee, without first instituting a legal proceeding against the
applicable UPRG Trust, or any other person or entity. Each Trust Guarantee will
not be discharged except by payment of the Trust Guarantee Payments in full to
the extent not paid by the applicable UPRG Trust, and by complete performance of
all obligations under such Trust Guarantee.
Governing Law. Each Trust Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company, the Subsidiary Issuers or the UPRG Trusts may sell the Offered
Securities offered hereby (i) through underwriters or dealers, (ii) through
agents, (iii) directly to purchasers, or (iv) through a combination of any such
methods of sale. Any such underwriter, dealer or agent may be deemed to be an
underwriter within the meaning of the Securities Act. The Prospectus Supplement
relating to the Offered Securities will set forth their offering terms,
including the name or names of any underwriters, dealers or agents, the purchase
price of the Offered Securities and the proceeds to the Company, the Subsidiary
Issuers or the UPRG Trusts from such sale, any underwriting discounts,
commissions and other items constituting compensation to underwriters, dealers
or agents, any initial public offering price, any discounts or concessions
allowed or reallowed or paid by underwriters or dealers to other dealers, and
any securities exchanges on which the Offered Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities
will be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such prevailing market prices, or at negotiated
prices. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of underwriters or dealers to purchase
the Offered Securities will be subject to certain conditions precedent and the
underwriters or dealers will be obligated to purchase all the Offered Securities
if any are purchased. Any public offering price and any discounts or concessions
allowed or reallowed or paid by underwriters or dealers to other dealers may be
changed from time to time.
Offered Securities may be sold directly by the Company, the Subsidiary
Issuers or the UPRG Trusts or through agents designated by the Company, the
Subsidiary Issuers or the UPRG Trusts from time to time. The Offered Securities
may be sold from time to time at market prices in ordinary broker's transactions
by agents of
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the Company, the Subsidiary Issuers or the UPRG Trusts. Any agent involved in
the offer or sale of the Offered Securities in respect of which this Prospectus
is delivered will be named, and any commissions payable by the Company, the
Subsidiary Issuers or the UPRG Trusts to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company, the Subsidiary
Issuers or the UPRG Trusts will authorize underwriters, dealers or agents to
solicit offers by certain specified institutions to purchase Offered Securities
from the Company, the Subsidiary Issuers or the UPRG Trusts at the public
offering price set forth in the Prospectus pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject to any conditions set forth in the Prospectus
Supplement and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts. The underwriters and other persons
soliciting such contracts will have no responsibility for the validity or
performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company, the Subsidiary Issuers or the UPRG Trusts to
indemnification by the Company, the Subsidiary Issuers or the UPRG Trusts
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution by the Company, the Subsidiary Issuers or the UPRG
Trusts to payments they may be required to make in respect thereof. The terms
and conditions of such indemnification will be described in an applicable
Prospectus Supplement. Underwriters, dealers and agents may be customers of,
engage in transactions with, or perform services for, the Company, the
Subsidiary Issuers or the UPRG Trusts in the ordinary course of business.
Each series of Offered Securities may be a new issue of securities with no
established trading market. Any underwriters to whom Offered Securities are sold
by the Company, the Subsidiary Issuers or the UPRG Trusts for public offering
and sale may make a market in such Offered Securities, but such underwriters
will not be obligated to do so and may discontinue any market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for any Offered Securities.
LEGAL OPINIONS
The validity of the Company Securities and Subsidiary Debt Securities will
be passed upon for the Company and the Subsidiary Issuers by Mark L. Jones,
Managing Senior Counsel of the Company. The due authorization, execution and
delivery of the Subsidiary Debt Securities to be offered by UPRI will be passed
upon for UPRI by Bennett Jones Verchere, special Canadian counsel for UPRI. The
due authorization, execution and delivery of the Subsidiary Debt Securities to
be offered by UPR Capital Company will be passed upon for UPR Capital Company by
McInnes Cooper & Robertson, special Canadian counsel for UPR Capital Company.
The validity of the Trust Preferred Securities will be passed upon for the
Company and the UPRG Trusts by Richards, Layton & Finger, Wilmington, Delaware,
special Delaware counsel to the Company and the UPRG Trusts. The validity of the
Offered Securities will be passed upon for the underwriters, dealers or agents,
if any, by Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore
has from time to time acted as counsel for the Company and may do so in the
future.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for periods
ended June 30, 1998 and 1997, which is incorporated herein by reference, Arthur
Andersen LLP, with respect to the June 30, 1998 period and Deloitte & Touche
LLP, with respect to the June 30, 1997 period, have applied limited procedures
in accordance with professional standards for a review of such information.
However, as stated in Arthur Andersen LLP's report included in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 and
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incorporated by reference herein, and as stated in Deloitte & Touche LLP's
report in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, neither auditor audited and neither auditor expresses an opinion
on that interim financial information. Accordingly, the degree of reliance on
their reports on such information should be restricted in light of the limited
nature of the review procedures applied. Neither Arthur Andersen LLP nor
Deloitte & Touche LLP are subject to the liability provisions of Section 11 of
the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
The consolidated financial statements incorporated by reference in this
Registration Statement from Norcen's Annual Report of Form 40-F for the years
ended December 31, 1997, and December 31, 1996, have been audited by Deloitte &
Touche, independent auditors as stated in their reports, which are incorporated
in the Norcen 8-K by reference. Such consolidated financial statements have been
incorporated by reference in this Registration Statement in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
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