<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1997
REGISTRATION NO. 333-20199
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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TENNESSEE GAS PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C>
DELAWARE 74-1056569
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
EL PASO ENERGY BUILDING BRITTON WHITE, JR.
1001 LOUISIANA EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
HOUSTON, TEXAS 77002 EL PASO NATURAL GAS COMPANY
(713) 757-2131 1001 LOUISIANA
(Address, including zip code, and telephone number, HOUSTON, TEXAS 77002
including (713) 757-2131
area code, of registrant's principal executive (Name, address, including zip code, and telephone
offices) number,
including area code, of agent for service)
</TABLE>
---------------------
Copies to:
GARY PAUL COOPERSTEIN, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
(212) 859-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
in light of market conditions and other factors.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 27, 1997
PROSPECTUS
TENNESSEE GAS PIPELINE COMPANY
$1,000,000,000
DEBT SECURITIES
---------------------
Tennessee Gas Pipeline Company ("TGP") may offer and sell from time to time
in one or more series its unsecured debt securities consisting of notes,
debentures or other evidences of indebtedness (the "Debt Securities"). The Debt
Securities will be limited to an aggregate initial public offering price not to
exceed $1,000,000,000, or the equivalent thereof in one or more foreign
currencies, including composite currencies. The Debt Securities may be offered,
separately or together, in separate series, in amounts, at prices and on terms
to be determined at the time of sale and set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
Certain specific terms of the particular Debt Securities in respect of
which this Prospectus is being delivered will be set forth in a related
Prospectus Supplement, including, where applicable, the specific designation,
aggregate principal amount, authorized denominations, maturities, interest rate
or rates (which may be fixed or variable), the date or dates on which interest,
if any, shall be payable, the place or places where principal of and premium, if
any, and interest, if any, on such Debt Securities of the series will be
payable, terms of optional or mandatory redemption or any sinking fund or
analogous provisions, currency or currencies, or currency unit or currency units
of denomination and payment if other than U.S. dollars, the initial public
offering price, terms relating to temporary or permanent global securities,
provisions regarding convertibility, if any, provisions regarding registration
of transfer or exchange, the proceeds to TGP and other special terms.
The Debt Securities may be offered and sold to or through underwriters,
dealers or agents as designated from time to time, or through a combination of
such methods, and also may be offered and sold directly to one or more other
purchasers. See "Plan of Distribution". The names of, and the principal amounts
to be purchased by, underwriters, dealers or agents, and the compensation of
such underwriters, dealers or agents, including any applicable fees,
commissions, and discounts, will be set forth in the related Prospectus
Supplement. No Debt Securities may be sold without delivery of a Prospectus
Supplement describing such series or issue of Debt Securities and the method and
terms of offering thereof.
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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 date of this Prospectus is , 1997.
<PAGE> 3
AVAILABLE INFORMATION
TGP 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"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also may be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material also may be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov. As
long as securities of the Company are listed on the New York Stock Exchange,
such reports and other information can also be inspected at the offices of such
exchange, 20 Broad Street, New York, New York.
This Prospectus does not contain all of the information set forth in TGP's
Registration Statement, of which this Prospectus is a part, filed with the
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"). Reference is made to such Registration Statement
for further information with respect to TGP and the Debt Securities offered
hereby. Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by TGP
pursuant to the Exchange Act are incorporated herein by reference:
1. TGP's Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
as amended pursuant to a Form 10-K/A dated October 30, 1996 (collectively,
the "Form 10-K") (pursuant to Rule 412 under the Securities Act, the
financial information and management's discussion and analysis of financial
condition and results of operations included in the Form 10-K have been
modified and superceded by the financial information and management's
discussion and analysis of results of operations ("MD&A") included in the
January Form 8-K (as defined) and such modified and superceded financial
information and management's discussion and analysis of financial condition
and results of operations therefore do not constitute a part of the
Registration Statement);
2. TGP's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1996, June 30, 1996 and September 30, 1996 (collectively, the "Form
10-Qs") (pursuant to Rule 412 under the Securities Act, the financial
information and management's discussion and analysis of financial condition
and results of operations included in the Form 10-Qs have been modified and
superceded by the financial information and MD&A included in the January Form
8-K and such modified and superceded financial information and management's
discussion and analysis of financial condition and results of operations
therefore do not constitute a part of the Registration Statement);
3. TGP's Current Report on Form 8-K filed December 26, 1996, as amended pursuant
to a Form 8-K/A filed January 22, 1997 (the "December Form 8-K"); and
4. TGP's Current Report on Form 8-K filed January 22, 1997 (the "January Form
8-K").
All documents filed by TGP pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained therein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so
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<PAGE> 4
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
TGP will provide without charge to each person, including any beneficial
owner of a Debt Security, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all documents
incorporated by reference in this Prospectus (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Written requests for such copies should be directed to Stacy J.
James, Secretary, Tennessee Gas Pipeline Company, 1001 Louisiana, Houston, Texas
77002.
FORWARD-LOOKING STATEMENTS
This Prospectus and the accompanying Prospectus Supplement contain or
incorporate by reference forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Where any such forward-looking
statement includes a statement of the assumptions or bases underlying such
forward-looking statement, TGP cautions that assumed facts or bases almost
always vary from actual results, and the differences between assumed facts or
bases and actual results can be material, depending upon the circumstances.
Where, in any forward-looking statement, TGP or its management expresses an
expectation or belief as to future results, there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
The words "believe", "expect", "estimate", "anticipate", "seek", "project" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of their dates. TGP undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
3
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THE COMPANY
GENERAL
TGP is a wholly owned subsidiary of El Paso Tennessee Pipeline Co. ("El
Paso Tennessee"), which in turn is an indirect subsidiary of El Paso Natural Gas
Company ("El Paso"). Unless the context otherwise requires, references herein to
the "Company" shall mean TGP and all of its subsidiaries.
The major businesses of the Company consist of the interstate
transportation of natural gas, gas marketing, intrastate pipeline operations,
international pipelines and power generation and domestic power generation
operations. Prior to the Distributions and Merger described below, the Company
also was engaged in the manufacture and sale of automotive exhaust system parts
and ride control products; the manufacture and sale of packaging materials,
cartons, containers and specialty packaging products for consumer and commercial
markets; and the construction and repair of ships.
TGP is a Delaware corporation with its principal executive offices located
at 1001 Louisiana, Houston, Texas 77002. Its telephone number at that address is
713-757-2131.
ACQUISITION BY EL PASO
On December 12, 1996 (the "Merger Effective Time"), El Paso Merger Company,
an indirect subsidiary of El Paso ("El Paso Merger Sub"), and Tenneco Inc. ("Old
Tenneco"), completed a merger (the "Merger") in which El Paso Merger Sub merged
with and into Old Tenneco, which became an indirect subsidiary of El Paso. In
the Merger, Old Tenneco changed its name to "El Paso Tennessee Pipeline Co."
(referred to herein as "El Paso Tennessee"). Prior to the Merger, Old Tenneco
and its subsidiaries, including TGP, effected various intercompany transfers and
distributions which restructured, divided and separated their businesses, assets
and liabilities so that all the assets, liabilities and operations related to
their automotive parts, packaging and administrative services businesses
(collectively, the "Industrial Business") and their shipbuilding business (the
"Shipbuilding Business") were spun-off to Old Tenneco's then existing common
stockholders (the "Distributions"). The entity consisting of the Shipbuilding
Business was subsequently renamed "Newport News Shipbuilding Inc." ("Newport
News") and the entity consisting of the Industrial Business was subsequently
renamed "Tenneco Inc." ("New Tenneco"). Following the Distributions, the
remaining operations of Old Tenneco, including those of TGP, consisted primarily
of those operations related to the transmission and marketing of natural gas. As
a result of the Merger, El Paso indirectly owns 100% of the common stock of El
Paso Tennessee, representing at the effective time of the Merger approximately
75% of the equity value of El Paso Tennessee; the balance of the equity value of
El Paso Tennessee is held by the holders of its 8 1/4% Cumulative Preferred
Stock, Series A, which was originally issued in a registered public offering in
November 1996 and remained outstanding after the Merger.
El Paso is engaged in a comprehensive review of the business and operations
of the Company. Following completion of such review, El Paso intends to
integrate, for the most part, the operations of the Company to increase
operating and administrative efficiency through consolidation and reengineering
of facilities, workforce reductions and coordination of purchasing, sales and
marketing activities. El Paso anticipates that the complementary interstate and
intrastate pipeline operations and gas marketing activities of El Paso and the
Company should provide the combined company with increased operating flexibility
and access to additional customers and markets, although the amount and timing
of realization of such benefits will depend upon the ability of El Paso to
integrate successfully the business and operations of the companies, and the
time period over which such integration is effected.
INTERSTATE PIPELINE OPERATIONS
The interstate pipeline operations of the Company include the pipeline
systems of TGP and its wholly owned subsidiaries Midwestern Gas Transmission
Company ("Midwestern") and East Tennessee Natural Gas Company ("East
Tennessee"), as well as certain joint ventures, which are primarily engaged in
the transportation and storage of natural gas for producers, marketers,
end-users and other gas transmission and distribution companies. TGP's
multiple-line system begins in the gas-producing regions of Texas and
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Louisiana, including the continental shelf of the Gulf of Mexico, and extends
into the northeastern section of the United States, including the New York City
and Boston metropolitan areas. Midwestern's pipeline system extends from
Portland, Tennessee, to Chicago, and principally serves the Chicago metropolitan
area. East Tennessee's pipeline system serves the states of Tennessee, Virginia
and Georgia. Net revenues from the interstate gas sales and transportation
operations of the Company accounted for approximately 40%, 39% and 45% of total
revenues of the Company for 1995, 1994 and 1993, respectively.
The interstate gas transmission systems of the Company include
approximately 16,300 miles of pipeline, gathering lines and sales laterals (with
14,800 miles operated by TGP, 400 miles operated by Midwestern and 1,100 miles
operated by East Tennessee), together with related facilities that include 90
compressor stations with an aggregate of approximately 1.5 million horsepower.
The Company also has interests in or contractual rights to six underground and
above-ground gas storage facilities to permit increased deliveries of gas during
peak demand periods. The total design delivery capacity of the Company's
interstate systems as of December 31, 1995 was approximately 4.8 billion cubic
feet ("BCF") of gas per day, and approximately 5.6 BCF on peak demand days,
which includes gas withdrawn from storage.
Gas Sales and Transportation
The following table sets forth the volumes of gas, stated in billions of
British thermal units ("BBtu"), sold and transported by the interstate pipeline
systems of the Company for the periods shown.
<TABLE>
<CAPTION>
BBTUS
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Sales*.................................... 95,397 131,097 213,210
Transportation*........................... 2,139,169 2,183,944 2,118,936
--------- --------- ---------
Total................................ 2,234,566 2,315,041 2,332,146
========= ========= =========
</TABLE>
- ---------------
* Sales and transportation volumes include all natural gas sold or transported
by the Company's interstate pipeline systems (including the proportionate
share of transportation volumes of the joint ventures in which the Company
had interests) and have not been adjusted to reflect the sale of (i) its 50%
interest in Kern River Gas Transmission Company ("Kern River") in December
1995, (ii) its 13.2% general partnership interest in Iroquois Gas
Transmission System, L.P. ("Iroquois") in June 1996, and (iii) a 100%
interest in Viking Gas Transmission Company ("Viking") in 1993. Kern River
owns a 904-mile pipeline system extending from Wyoming to California,
Iroquois owns a 370-mile pipeline extending from the Canadian border at
Waddington, New York to Long Island, New York and Viking owns a 549-mile
pipeline extending from the Canadian border near Emerson, Manitoba to
Marshfield, Wisconsin. Of the total transportation volumes shown, Kern River
transported approximately 135,827 BBtu, 129,964 BBtu and 127,624 BBtu during
1995, 1994 and 1993, respectively, Iroquois transported approximately 45,272
BBtu, 32,489 BBtu and 32,721 BBtu during 1995, 1994 and 1993, respectively,
and Viking transported approximately 58,579 BBtu during 1993.
Customers of the interstate pipeline operations of the Company include
natural gas producers, marketers and end-users, as well as other gas
transmission and distribution companies. Substantially all of the revenues of
these operations are generated under long-term gas transmission contracts
entered into between the Company and its customers. Contracts representing
approximately 70% of the firm transportation capacity of the interstate pipeline
operations of the Company will be expiring over the next five years, principally
in the year 2000. Although the Company presently intends to pursue the
renegotiation, extension and/or replacement of these contracts, there can be no
assurance as to whether the Company will be able to extend or replace these
contracts (or a substantial portion thereof) or that the terms of any
renegotiated contracts will be as favorable to the Company as the existing
contracts. Accordingly, the Company presently is unable to ascertain whether or
not the expiration and renegotiation, extension and/or replacement of these
transportation contracts will have a material adverse effect on the Company's
combined financial position or results of operations.
5
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Federal Regulation
TGP and its interstate natural gas pipeline subsidiaries are "natural gas
companies" as defined in the Natural Gas Act of 1938, as amended (the "Natural
Gas Act"). As such, these companies are subject to the jurisdiction of the
Federal Energy Regulatory Commission (the "FERC"). The interstate pipeline
operations of the Company are operated pursuant to certificates of public
convenience and necessity and other authorizations issued under the Natural Gas
Act and pursuant to the Natural Gas Policy Act of 1978. The FERC regulates the
interstate transportation and certain sales of natural gas, including, among
other things, rates and charges allowed natural gas companies, extensions and
abandonments of facilities and service, rates of depreciation and amortization
and the accounting system utilized by the companies.
Prior to the FERC's industry restructuring initiatives in the 1980's, TGP
and its interstate pipeline subsidiaries operated primarily as merchants,
purchasing natural gas under long-term contracts and reselling the gas to
customers, also under long-term contracts. On April 8, 1992, the FERC issued
Order 636 ("Order 636"), which restructured the natural gas industry by
requiring mandatory unbundling of pipeline sales and transportation services.
Numerous parties appealed to the U.S. Court of Appeals for the D.C. Circuit
challenging the legality of Order 636 generally, as well as the legality of
specific provisions of Order 636. On July 16, 1996, the court issued its
decision upholding, in large part, Order 636. The court remanded to the FERC
several issues for further explanation, including further explanation of the
FERC's decision to allow pipelines to recover 100% of their gas supply
realignment costs and the FERC's requirement that pipelines allocate 10% of
their gas supply realignment costs to interruptible transportation customers. On
February 26, 1997, the FERC reaffirmed its decision to allow pipelines to
recover 100% of their gas supply realignment costs. In addition, the FERC
modified the requirement that pipelines allocate 10% of their gas supply
realignment costs to interruptible customers to permit pipelines to propose an
allocation of any percentage of such costs to their interruptible customers.
TGP implemented revisions to its tariff, effective on September 1, 1993,
which restructured its transportation, storage and sales services to convert TGP
from primarily a merchant to primarily a transporter of gas as required by Order
636. As a result of this restructuring, TGP's gas sales declined while certain
obligations to producers under long-term gas supply contracts continued, causing
TGP to incur significant restructuring transition costs. See "-- Order 636
Transition Matters" for information concerning costs incurred by TGP to comply
with Order 636, the recovery of such costs by TGP from its customers and a
proposed settlement with TGP's customers.
On December 30, 1994, TGP filed for a general rate increase (the "1995 Rate
Case"). On January 25, 1995, the FERC accepted the filing, suspended its
effectiveness for the maximum period of five months pursuant to normal
regulatory process, and set the matter for hearing. On July 1, 1995, TGP began
collecting rates, subject to refund, reflecting an $87 million increase in TGP's
annual revenue requirement. A Stipulation and Agreement was filed with an
administrative law judge in this proceeding on April 5, 1996. This Stipulation
proposed to resolve the rates that are the subject of the 1995 Rate Case,
including structural rate design and increased revenue requirements. Under the
Stipulation, TGP is required to refund, upon final approval of the Stipulation,
the difference between the revenues collected under the rates in effect since
July 1, 1995 and the rates set forth in the Stipulation. TGP is reserving
revenues it believes adequate to cover the income impact of the Stipulation. On
October 30, 1996, the FERC approved the Stipulation resolving the 1995 Rate
Case, with certain modifications and clarifications which are not material and
which should not cause changes adverse to the Company. In January 1997, the FERC
issued an order denying a request for rehearing of the order approving the
Stipulation. One party to the rate proceedings, a competitor of TGP, filed with
the U.S. Court of Appeals for the D.C. Circuit in February 1996 a petition for
review of the FERC orders approving the Stipulation.
For a discussion of recent FERC proceedings relating to the recovery by the
Company of certain environmental costs as a component of the rates charged by
its interstate pipeline operations see "-- Environmental Matters."
TGP, as with all interstate pipelines, is subject to FERC audit review of
its books and records. An audit covering the years 1991-1994 is currently
ongoing. The FERC audit staff is expected to issue an audit report in early
1997.
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Competition
The regulated natural gas pipeline industry is experiencing increasing
competition, which results from actions taken by the FERC to strengthen market
forces throughout the industry. In a number of key markets, the interstate
pipelines of the Company face competitive pressure from other major pipeline
systems, enabling local distribution companies and end-users to choose a
supplier or switch suppliers based on the short-term price of gas and the cost
of transportation. The Company also faces varying degrees of competition from
alternative energy sources, such as electricity, coal and oil. Competition
between pipelines is particularly intense in Midwestern's Chicago and Northern
Indiana markets, in East Tennessee's Roanoke, Chattanooga and Atlanta markets,
and in TGP's supply area, Louisiana and Texas. In some instances, the Company's
pipelines have been required to discount their transportation rates in order to
maintain their market share. As noted above, transportation contracts
representing approximately 70% of firm interstate transportation capacity will
be expiring over the next five years, principally in the year 2000. Future
renegotiations of the Company's existing transportation contracts and
negotiations with potential new customers could be adversely impacted by the
foregoing or other competitive factors. In addition, there can be no assurance
that the Company's existing contracts (or a substantial portion thereof) will be
renegotiated or that the terms of any renegotiated contracts will be as
favorable to the Company as the existing contracts. Accordingly, the Company
presently is unable to ascertain whether or not the expiration and renegotiation
of these transportation contracts will have a material adverse effect on the
Company's combined financial position or results of operations.
Gas Supply
With full implementation of Order 636, TGP's firm sales obligations
requiring maintenance of long-term gas purchase contracts have declined from
over a 1.4 billion Dekatherms or millions of British thermal units ("MMBtus")
maximum daily delivery obligation to less than a 200 million MMBtu maximum daily
delivery obligation at September 30, 1996. TGP has substantially reduced its
natural gas purchase portfolio in line with these requirements through
termination and assignment to third parties. Although TGP's requirements for
purchased gas are substantially less than prior to its implementation of Order
636, TGP is pursuing the attachment of gas supplies to its pipeline system for
transportation by others. Current gas supply activities include development of
offshore and onshore pipeline gathering projects.
GAS MARKETING, INTRASTATE PIPELINES AND RELATED SERVICES
Certain subsidiaries of TGP are engaged in the businesses of marketing
natural gas and owning and operating approximately 1,300 miles of gathering and
intrastate pipelines that serve the Texas Gulf Coast and West Texas markets.
During the nine months ended September 30, 1996, the Company's marketing
operations bought, sold and contracted for the transportation of approximately
1.4 BCF of natural gas per day from approximately 200 suppliers, through 40
pipelines to about 400 customers, marketers and end-users. The Company offers a
portfolio of products and services which are intended to help distributors,
end-users and producers manage their entire gas sales and purchasing processes,
from budget control and risk management to flexible takes and daily balances.
The Company also owns and manages gas gathering systems and natural gas
processing plants in Pennsylvania, Texas, Louisiana and Tennessee. Additionally,
the Company owns and operates, either directly or through joint ventures,
approximately 1,300 miles of intrastate pipelines in the Texas Gulf Coast and
West Texas markets. In addition to offering transportation capacity, these
intrastate pipeline operations offer buying, selling and transportation services
for 1.3 BCF of natural gas per day, serving approximately 150 suppliers and 50
customers and shippers. The intrastate pipeline operations also provide swing
storage services and access to major intrastate and interstate pipelines in
Texas. Net revenues from the foregoing operations accounted for approximately
60%, 61% and 55% of the total revenues of the Company for 1995, 1994 and 1993,
respectively.
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<PAGE> 9
The following table sets forth the volumes of gas, stated in BBtu, sold and
transported by the Company's marketing and intrastate pipeline subsidiaries for
the periods indicated:
<TABLE>
<CAPTION>
BBTUS
-----------------------------
1995 1994 1993
------- --------- -------
<S> <C> <C> <C>
Sales......................................... 642,096 739,432 741,800
Transportation................................ 229,415 273,587 235,940
------- --------- -------
Total............................... 871,511 1,013,019 977,740
======= ========= =======
</TABLE>
INTERNATIONAL AND POWER GENERATION OPERATIONS
The Company has recently undertaken various activities to extend its
traditional activities in North American pipelines to international pipeline,
power and energy-related projects, with a current focus on activities in Latin
America, Southeast Asia, Australia and Europe. The Company's power unit is
involved in developing, building, owning, operating and acquiring energy-related
infrastructure, domestically and internationally, by capitalizing on the
experience of the Company in major project development and gas technologies,
transportation and supply.
International Pipeline Operations. In 1995, the Company was selected to
construct, own and operate a 470-mile natural gas pipeline in Queensland,
Australia at a total cost of $170 million. Construction of the pipeline
commenced in late 1995 and was completed in December 1996. Additionally, in June
1995 the Company acquired the natural gas pipeline assets of the Pipeline
Authority of South Australia ("PASA"), which includes a 488-mile pipeline, for
$225 million. In December 1996, the Company realized approximately $400 million
through a debt financing involving these projects and a sale of 70% of its
equity interest in these projects.
The Company has interests in a consortium pursuing the development of a
natural gas pipeline from Bolivia to Brazil and related gas-fired electric
generation plants. Furthermore, in December 1995, the Company was selected by
the Beijing Natural Gas Transportation Company ("BGTC") to serve as a paid
technical advisor for the construction of China's first major onshore natural
gas pipeline. BGTC, a joint venture between the Chinese National Petroleum
Corporation and the city of Beijing, is building a 600-mile line linking the
Jingbian gas field in central China's Eerdous Basin with Beijing. Construction
commenced in March 1996, with an in-service date scheduled for October 1997.
Power Generation Operations. In May 1996, EPEC Power Generation Company
("EPEC Power"), a subsidiary of TGP previously named Tenneco Power Generation
Company, acquired from Energy Equity Corp., Ltd., an Australian company, a 50%
interest in two of its subsidiaries which participate in a joint venture which
is constructing a 135 megawatt gas-fired power plant in Indonesia. EPEC Power
has a 17.5% interest in a 240 megawatt power plant in Springfield,
Massachusetts, and 50% interests in two additional cogeneration projects in
Florida which have a combined capacity of 220 megawatts. The Company is seeking
to monetize its interest in one of these Florida cogeneration projects.
DISCONTINUED AND OTHER OPERATIONS
The Company holds certain limited assets and is responsible for certain
liabilities of the existing and discontinued operations and businesses other
than those relating to the Industrial Business or the Shipbuilding Business.
These assets and liabilities consist primarily of the Company's remaining
interests in various discontinued operations which were engaged in (i) natural
gas pipeline transmission, gathering and processing, (ii) chemicals production,
(iii) the manufacture of farm and construction equipment through Case
Corporation and related companies, (iv) the extraction of minerals and other
natural resources, (v) oil and gas exploration, production and marketing through
Tenneco Oil Company and other companies, (vi) agricultural and urban
development, and (vii) insurance. The Company has established reserves which it
believes are adequate to cover these liabilities. However, the ultimate amount
of these liabilities may vary significantly from the amount estimated.
8
<PAGE> 10
MANAGEMENT
In connection with the Merger, the directors and most of the executive
officers of TGP prior to the Merger resigned effective as of the Merger
Effective Time. The following individuals have served as directors and executive
officers (holding the offices indicated below) of TGP since that time:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William A. Wise........................... 51 Chairman of the Board and Director
John W. Somerhalder II.................... 41 President and Director
Gilmer R. Abel............................ 59 Senior Vice President
H. Brent Austin........................... 42 Senior Vice President and Director
E. Jay Holm............................... 52 Senior Vice President
</TABLE>
Directors and Executive Officers
WILLIAM A. WISE -- Following the Merger, Mr. Wise became the Chairman of
the Board and a Director of TGP. Mr. Wise has been Chairman of the Board of El
Paso since January 1994 and the President and Chief Executive Officer of El Paso
since January 1990. He was President and Chief Operating Officer of El Paso from
April 1989 to December 1989. From March 1987 until April 1989, Mr. Wise was an
Executive Vice President of El Paso. From January 1984 to February 1987, he was
a Senior Vice President of El Paso. He is a member of the Board of Directors of
Battle Mountain Gold Company.
JOHN W. SOMERHALDER II -- Mr. Somerhalder became President and a Director
of TGP following the Merger. He is also serving as Senior Vice President of El
Paso, which position he has held since November 1996. From January 1990 to
November 1996, Mr. Somerhalder served as Vice President of El Paso.
GILMER R. ABEL -- Mr. Abel has served as Senior Vice President of TGP since
April 1995. From November 1985 to April 1995, he served as Vice President of
TGP.
H. BRENT AUSTIN -- Following the Merger, Mr. Austin became the Senior Vice
President and a Director of TGP. Mr. Austin has been Executive Vice President of
El Paso since May 1995 and he has been Chief Financial Officer of El Paso since
April 1992. He was Senior Vice President of El Paso from April 1992 to April
1995. He was Vice President, Planning and Treasurer of Burlington Resources,
Inc. ("BR") from November 1990 to March 1992 and Assistant Vice President,
Planning of BR from January 1989 to October 1990.
E. JAY HOLM -- Mr. Holm has served as Senior Vice President of TGP since
1995. From 1990 to 1995 he served as President of Kern River, in which the
Company owned a 50% interest.
EMPLOYEES
As of December 31, 1996, the Company had approximately 2,800 full-time
employees. Since that date, the Company's workforce has been reduced by 340
employees due to early retirements, attrition and lay-offs. Further reductions
in the Company's workforce are planned, but the timing and size of such
reductions have not been determined.
PROPERTIES
The Company believes that substantially all of its facilities and equipment
are, in general, well maintained and in good operating condition. They are
considered adequate for present needs and, as supplemented by planned
construction, are expected to remain adequate for the near future. The Company
also believes that it has generally satisfactory title to the properties owned
and used in its businesses, subject to liens for current taxes and easements,
restrictions and other liens which do not materially detract from the value of
such properties or the interests therein or the use of such properties in its
businesses.
9
<PAGE> 11
ORDER 636 TRANSITION MATTERS
Pursuant to the provisions of Order 636 allowing for the recovery of
transition costs related to the restructuring, TGP has made filings to recover
gas supply realignment ("GSR") costs resulting from remaining gas purchase
obligations, costs related to its Bastian Bay facilities, the remaining
unrecovered balance of purchased gas ("PGA") costs and the "stranded" costs of
TGP's continuing contractual obligations to pay for capacity on other pipeline
systems ("TBO costs").
TGP's filings to recover costs related to its Bastian Bay facilities have
been rejected by the FERC based on the continued use of the gas production from
the field; however, the FERC recognized the ability of TGP to file for the
recovery of any loss on the facilities upon disposition of these assets. TGP has
filed for appellate review of the FERC actions and is confident that the Bastian
Bay costs will ultimately be recovered as transition costs under Order 636; the
FERC has not contested the ultimate recoverability of these costs.
The filings implementing TGP's recovery mechanisms for the following
transition costs were accepted by the FERC effective September 1, 1993, subject
to refund and pending FERC review and approval for eligibility and prudence: (1)
direct-billing of unrecovered PGA costs to its former sales customers over a
twelve-month period; (2) recovery of TBO costs, which TGP is obligated to pay
under existing contracts, through a surcharge from firm transportation
customers, adjusted annually; and (3) recovery of 90% of GSR costs over a period
of up to 36 months from firm transportation customers and recovery of 10% of
such costs from interruptible transportation customers over a period of up to 60
months.
Following negotiations with its customers, TGP filed in July 1994 with the
FERC a Stipulation and Agreement (the "PGA Stipulation"), which provides for the
recovery of PGA costs of approximately $100 million and the recovery of costs
associated with the transfer of storage gas inventory to new storage customers
in TGP's restructuring proceeding. The PGA Stipulation eliminates all challenges
to the PGA costs, but establishes a cap on the charges that may be imposed upon
former sales customers. On November 15, 1994, the FERC issued an order approving
the PGA Stipulation and resolving all outstanding issues. On April 5, 1995, FERC
orders approving the PGA Stipulation became final. TGP implemented the terms of
the PGA Stipulation and made refunds in May 1995. The refunds had no material
effect on the Company's reported net income. The orders approving the PGA
Stipulation have been appealed to the D.C. Circuit Court of Appeals by certain
customers. TGP believes the FERC orders approving the PGA Stipulation will be
upheld on appeal.
TGP is recovering through a surcharge, subject to refund, TBO costs
formerly incurred to perform its sales function. The FERC issued an order
requiring TGP to refund certain costs from this surcharge and refunds were made
in May 1996. TGP is appealing this decision and believes such appeal will likely
be successful.
In order to resolve litigation concerning purchases made by TGP of
synthetic gas produced from the Great Plains coal gasification plant ("Great
Plains"), TGP, along with three other pipelines, executed four separate
settlement agreements with Dakota Gasification Company ("Dakota") and the U.S.
Department of Energy ("DOE") and initiated four separate proceedings at the FERC
seeking approval to implement the settlement agreements. Among other things, the
settlement requires TGP to pay Dakota over a limited period a premium over the
spot price for Dakota's production. As of December 31, 1996, TGP had paid $86.9
million of this obligation and had a remaining obligation through July 2003 of
$54.6 million (calculated on a non-discounted basis). The FERC previously ruled
that the costs related to the Great Plains project are eligible for recovery
through GSR and other special recovery mechanisms and that the costs are
eligible for recovery for the duration of the term of the original gas purchase
agreements. On October 18, 1994, the FERC consolidated the four proceedings and
set them for hearing before an administrative law judge ("ALJ"). The hearing,
which concluded in July 1995, was limited to the issue of whether the settlement
agreements were prudent. The ALJ concluded, in his initial decision issued in
December 1995, that the settlement was imprudent. In December 1996, the FERC
unanimously reversed that decision and upheld the settlement among the
pipelines. No parties filed for rehearing of the FERC decision. TGP notified
Dakota in December 1996 that it was accepting the settlement.
10
<PAGE> 12
Also related to TGP's GSR costs, on October 14, 1993, TGP was sued in the
State District Court of Ector County, Texas, by ICA Energy, Inc. ("ICA") and
TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and TransTexas
contended that TGP had an obligation to purchase gas production which TransTexas
unilaterally attempted to add to the reserves originally dedicated to a 1979 gas
contract. An amendment to the pleading sought $1.5 billion from TGP for alleged
damages caused by TGP's refusal to purchase gas produced from the TransTexas
leases covering the new production and lands. In June 1996, TGP reached a
settlement with ICA and TransTexas for $125 million wherein ICA and TransTexas
agreed to terminate their contract rights, released TGP from liability under the
contract, and indemnified TGP against future claims, including royalty owner
claims. TGP has filed with the FERC to recover from its customers amounts
previously paid to TransTexas above the market price as well as the $125 million
settlement payment. In connection with that litigation, certain royalty interest
owners filed a claim against TGP alleging that they are sellers entitled to
tender gas to TGP under the settled contract. This claim fell under the
indemnification provisions of TGP's settlement with ICA and TransTexas,
requiring ICA and TransTexas to defend and indemnify TGP. This royalty owner
litigation was settled in December 1996 at no cost to TGP. The royalty owners'
claims against TGP have been dismissed.
TGP has been engaged in other settlement and contract reformation
discussions with other holders of certain gas purchase contracts who have sued
TGP. One of these matters involved a dispute between TGP, as purchaser, and
Lenape Resources Corp., The Coastal Corporation and Tesoro Petroleum
Corporation, as producers. On August 1, 1995, the Texas Supreme Court affirmed a
ruling of the Texas Court of Appeals favorable to TGP in this matter and
indicated that it would remand the case to the trial court. On April 18, 1996,
however, the Texas Supreme Court withdrew its initial opinion and issued an
opinion reversing the Court of Appeals opinion. In June 1996, TGP filed a motion
for rehearing with the Texas Supreme Court which was denied in August 1996. In
December 1996, TGP entered into settlement agreements with each of the parties
to this gas purchase contract. As a result of these settlements, the gas
purchase contract is now terminated. TGP paid a total of approximately $74
million pursuant to the settlement agreements, an amount substantially less than
the sum that has been accrued by TGP on account of this gas contract. In
addition, all related litigation was terminated. During the course of this
action, TGP had either paid, or provided for the payment of, amounts it believes
were appropriate to cover the resolution of its contract reformation litigation,
including providing a bond in the amount of $206 million. On September 30, 1996,
TGP paid approximately $190 million to the producers and the producers agreed to
release all but approximately $2 million of the bonded amount. On October 1,
1996, TGP filed with the FERC to recover this payment from its customers. On
November 1, 1996, a final order was issued which assessed only $456,000 of the
$2 million to TGP and TGP was released from the remaining bond amount. On
December 23, 1996, TGP filed with the FERC to recover this assessment from its
customers.
As of September 30, 1996, TGP had deferred GSR costs yet to be recovered
from its customers of approximately $527 million, net of $414 million previously
recovered from its customers, subject to refund. A phased proceeding is underway
at the FERC with respect to the recovery of TGP's GSR costs. Testimony has been
completed in connection with Phase I of that proceeding relating to the
eligibility of GSR cost recovery; oral argument on eligibility issues was
originally set by a FERC ALJ for late October 1996. The Chief Judge of the FERC
has since issued orders (i) canceling the October 1996 oral argument, (ii)
convening settlement discussions which commenced on October 9, 1996, and (iii)
postponing scheduling oral argument on eligibility issues.
Phase II of the proceeding on the prudency of the costs to be recovered and
on certain contract specific eligibility issues has not yet been scheduled. The
FERC has generally encouraged pipelines to settle such issues through
negotiations with customers. Although the Order 636 transition cost recovery
mechanism provides for complete recovery by pipelines of eligible and prudently
incurred transition costs, certain customers have challenged the prudence and
eligibility of TGP's GSR costs and TGP has engaged in settlement discussions
with its customers concerning the amount of such costs in response to the FERC
statements acknowledging the desirability of such settlements.
On October 23, 1996, in anticipation of consummation of the Merger, El Paso
reached a preliminary understanding with certain of TGP's customers (the "El
Paso Preliminary GSR Understanding"). Under the
11
<PAGE> 13
El Paso Preliminary GSR Understanding, El Paso will settle the customers'
challenges to TGP's GSR and other transition costs and establish a cost recovery
mechanism for a portion of TGP's transition costs, effective January 1, 1997.
TGP expects that the El Paso Preliminary GSR Understanding will be finalized and
filed with the FERC during the first quarter of 1997. The purchase accounting
adjustments in the "Unaudited Pro Forma Financial Statements" contained in the
December Form 8-K incorporated by reference in this Prospectus assume that the
settlement with respect to TGP's GSR costs will be on the terms of the El Paso
Preliminary GSR Understanding.
Assuming the El Paso Preliminary GSR Understanding is finalized and filed
with the FERC, non-consenting customers will have the opportunity to object to
the proposed settlement. Given the uncertainty over whether the FERC will
approve the proposed GSR cost recovery settlement in the form ultimately
presented to it and the uncertainty related to predicting the outcome of its gas
purchase contract reformation efforts and the associated litigation, TGP is
unable to predict the timing or the ultimate impact that the resolution of these
issues will have on its combined financial position or results of operations.
ENVIRONMENTAL MATTERS
Since 1988, TGP has been engaged in an internal project to identify and
deal with the presence of polychlorinated biphenyls ("PCBs") and other
substances of concern, including substances on the U.S. Environmental Protection
Agency ("EPA") List of Hazardous Substances ("HS List") at compressor stations
and other facilities operated by both its interstate and intrastate natural gas
pipeline systems. While conducting this project, TGP has been in frequent
contact with federal and state regulatory agencies, both through informal
negotiation and formal entry of consent orders, in order to ensure that its
efforts meet regulatory requirements.
TGP is a party in proceedings involving federal and state authorities
regarding the past use of a lubricant containing PCBs in TGP's starting air
systems. TGP has executed a consent order with the EPA governing the remediation
of certain of its compressor stations and is working with the Pennsylvania and
New York environmental agencies to specify the remediation requirements at the
Pennsylvania and New York stations. Remediation activities in Pennsylvania are
essentially complete; in addition, pursuant to the Consent Order dated August 1,
1995, between TGP and the Pennsylvania Department of Environmental Protection,
TGP funded an environmentally beneficial project for $450,000 in April 1996 and
paid a $500,000 civil penalty in September 1996. Remediation and
characterization work at the compressor stations under its consent order with
the EPA and the jurisdiction of the New York Department of Environmental
Conservation is ongoing. TGP believes that the ultimate resolution of these
matters will not have a material adverse effect on the combined financial
position or results of operations of the Company.
TGP has established a reserve for environmental expenses, which includes:
(i) expected remediation expense and associated onsite, offsite and groundwater
technical studies; (ii) legal fees; and (iii) settlement of third-party and
governmental litigation, including civil penalties. Through September 30, 1996,
TGP has charged approximately $160 million against the environmental reserve,
excluding recoveries related to TGP's environmental settlement as discussed
below. Of the remaining reserve, $24 million has been recorded on the combined
balance sheet under "Payables -- trade" and $128 million under "Deferred credits
and other liabilities."
Due to the current uncertainty regarding the further activity necessary for
TGP to address the presence of PCBs, substances on the HS List and other
substances of concern on its sites, including the requirements for additional
site characterization, the actual amount of such substances at the sites, and
the final, site-specific cleanup decisions to be made with respect to cleanup
levels and remediation technologies, TGP cannot at this time accurately project
what additional costs, if any, may arise from future characterization and
remediation activities. While there are still many uncertainties relating to the
ultimate costs which may be incurred, based upon TGP's evaluation and experience
to date, TGP continues to believe that the recorded reserve is adequate.
Following negotiations with its customers, TGP in May 1995 filed with the
FERC a separate Stipulation and Agreement (the "Environmental Stipulation") that
establishes a mechanism for recovering a substantial portion of its
environmental costs. In November 1995, the FERC issued an order approving the
Environmen-
12
<PAGE> 14
tal Stipulation. Although one shipper filed for rehearing, the FERC denied
rehearing of its order on February 20, 1996. This shipper filed a Petition for
Review on April 22, 1996 in the D.C. Circuit Court of Appeals; TGP believes the
FERC order approving the Environmental Stipulation will be upheld on appeal. The
effects of the Environmental Stipulation, which was effective as of July 1,
1995, have been recorded with no material effect on the combined financial
position or results of operations of the Company. As of September 30, 1996, the
balance of the regulatory asset is $54 million.
The Company has completed settlements with and has received payments from
the majority of its liability insurance policy carriers for remediation costs
and related claims. The Company believes that additional recoveries from the
remaining carriers in the pending litigation against such carriers are
reasonably possible. In addition, TGP has settled its pending litigation against
and received payment from the manufacturer of the PCB-containing lubricant
previously used in the starting air systems in a portion of TGP's pipeline. The
Company has reduced the amount it is seeking to recover under the Environmental
Stipulation by the amount it has received in these proceedings, and these
recoveries have been considered in TGP's recording on its books of the
Environmental Stipulation.
In Commonwealth of Kentucky, Natural Resources and Environmental Protection
Cabinet v. Tennessee Gas Pipeline Company (Franklin County Circuit Court, Docket
No. 88-C1-1531, November 16, 1988), the Kentucky environmental agency alleged
that TGP discharged pollutants into the waters of the state without a permit and
disposed of PCBs without a permit. The agency sought an injunction against
future discharges, an order to remediate or remove PCBs, and a civil penalty.
TGP has entered into agreed orders with the agency to resolve many of the issues
raised in the original allegations, has received water discharge permits for its
Kentucky stations from the agency, and continues to work to resolve the
remaining issues. Counsel for TGP are unable to express an opinion as to the
ultimate outcome. TGP believes that the resolution of this issue will not have a
material adverse effect on the combined financial position or results of
operations of the Company.
In 1996, TGP sold its subsidiary which owns a 13.2% general partnership
interest in Iroquois to ANR Iroquois Inc., a subsidiary of The Coastal
Corporation. Iroquois owns an interstate gas pipeline from the Canadian border
through the states of New York and Connecticut to Long Island. TGP is still
under contract to provide gas dispatching as well as post-construction field
operation and maintenance services for the operator of Iroquois, but TGP is not
the operator and is not an affiliate of the operator of Iroquois' pipeline
system. In the second quarter of 1996, a global settlement was entered into by
Iroquois and the operator of Iroquois' pipeline system with the Federal and New
York State authorities resolving all criminal, civil and administrative
enforcement actions contemplated by such authorities as a result of their
investigation of alleged environmental violations which occurred during the
construction of the pipeline. No fines or penalties were imposed on TGP, and TGP
believes that any environmental matters relating to the construction and
operation of the pipeline system by Iroquois will not have a material adverse
effect on the combined financial position or results of operations of the
Company.
The Company has identified other sites where environmental remediation
expenses may be required should there be a change in ownership, operations or
applicable regulations. These possibilities cannot be predicted or quantified at
this time and, accordingly, no provision has been recorded. However, provisions
have been made for all instances where it has been determined that the
incurrence of any material remedial expense is reasonably possible. The Company
believes that the provisions recorded for its environmental exposures are
adequate based on current estimates.
TGP and certain of its subsidiaries have been designated, have received
notice that they could be designated or have been asked for information to
determine whether they could be designated as potentially responsible parties
("PRP") with respect to 25 sites under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund) or state equivalents. The
Company has sought to resolve its liability as a PRP with respect to these
Superfund sites through indemnification by third parties and/or settlements
which provide for payment of the Company's allocable share of remediation costs.
As of September 30, 1996, the Company has estimated its share of the remediation
costs at these sites to be between $7 million and $41 million and has provided
reserves that it believes are adequate for such costs. Because the clean-up
costs are estimates and are subject to revision as more information becomes
available about the
13
<PAGE> 15
extent of remediation required, the Company's estimate of its share of
remediation costs could change. Moreover, liability under the federal Superfund
statute is joint and several, meaning that the Company could be required to pay
in excess of its pro rata share of remediation costs. The Company's
understanding of the financial strength of other PRPs has been considered, where
appropriate, in its determination of its estimated liability as described
herein. The Company presently believes that the costs associated with the
current status of such entities as PRPs at the Superfund sites referenced above
will not have a material adverse effect on the combined financial position or
results of operations of the Company.
In addition, the Company's liabilities include liabilities to remediate a
number of formerly owned or leased sites and certain other sites, pursuant to
state and federal laws enacted for the protection of the environment. The
Company estimates that as of September 30, 1996, its share of the remediation
costs at these sites to be between $23 million and $43 million and has provided
reserves that it believes are adequate for such costs. Because the clean-up
costs are estimates and are subject to revision as more information becomes
available about the extent of remediation required, the Company's estimate of
its share of remediation costs could change. The Company presently believes that
the costs to remediate these sites will not have a material adverse effect on
its combined financial position or results of operations.
For a discussion of various regulatory proceedings involving cost recovery
and contract reformation in connection with the interstate pipeline operations
of the Company, see "-- Order 636 Transition Matters."
LEGAL PROCEEDINGS
In July 1996, TGP was served with a complaint in the matter of Jack J.
Grynberg v. Alaska Pipeline Co., et al., filed in the U.S. District Court for
the District of Columbia. The plaintiff filed this action under the False Claims
Act against several interstate pipelines and others alleging that the defendants
mismeasured natural gas produced from Federal and Indian lands, which deprived
the United States of royalties otherwise due it. Among other things, the
plaintiff seeks to recover unspecified treble damages on behalf of the United
States. The plaintiff also seeks to recover his finder's fee and attorneys'
fees. All defendants, most of whom are pursuing a combined defense, have filed
responsive motions. The plaintiff's response to those motions is due in January
1997. TGP believes that there are valid jurisdictional and procedural defenses
to the plaintiff's complaint; however, even if the plaintiff is ultimately
entitled to pursue his claims, TGP believes that it has substantive defenses,
including that TGP's measurement practices are consistent with industry practice
and all applicable standards, regulations, contracts, and tariffs and that TGP
should not be liable in any event. Based on information available at this time,
TGP does not believe that the ultimate resolution of this matter will have a
materially adverse effect on the financial condition of its business.
In addition to the foregoing proceeding and the proceedings described under
"-- Order 636 Transition Matters" and "-- Environmental Matters," TGP and its
subsidiaries are parties to numerous other legal proceedings and arising from
their present and former operations. TGP believes that the outcome of these
other proceedings, individually and in the aggregate, will have no material
adverse effect on the combined financial condition or results of operations of
the Company.
ACQUISITION BY EL PASO
On December 12, 1996 El Paso Merger Sub and Old Tenneco completed the
Merger pursuant to which Old Tenneco became an indirect subsidiary of El Paso.
In the Merger, Old Tenneco changed its name to "El Paso Tennessee Pipeline Co."
Prior to the Merger, Old Tenneco and its subsidiaries, including TGP, effected
various intercompany transfers and distributions which restructured, divided and
separated their businesses, assets and liabilities so that all the assets,
liabilities and operations related to the Industrial Business and the
Shipbuilding Business were spun-off to Old Tenneco's then existing common
stockholders in the Distributions. New Tenneco was subsequently renamed "Tenneco
Inc." Following the Distributions, the remaining operations of Old Tenneco,
including those of TGP, consisted primarily of those operations related to the
transmission and marketing of natural gas. As a result of the Merger, El Paso
indirectly owns 100% of the common stock of El Paso Tennessee, representing at
the Merger Effective Time approximately 75% of the equity value of El Paso
Tennessee; the balance of the equity value of El Paso Tennessee is held by the
holders
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<PAGE> 16
of its 8 1/4% Cumulative Preferred Stock, Series A, which was originally issued
in a registered public offering in November 1996 and remained outstanding after
the Merger. For further information regarding the Merger and related
transactions, see Note 1 to the Company's combined financial statements
contained in the January 1997 Form 8-K incorporated by reference herein.
In preparation for the Merger and Distributions, Old Tenneco initiated a
realignment of its indebtedness. As part of this debt realignment, Old Tenneco
initiated tender offers for certain issues of its consolidated debt and certain
other debt issues were exchanged, defeased or otherwise retired. Upon completion
of the debt realignment transactions, the Company remains responsible for its
remaining debt after giving effect to the debt realignment. At December 31,
1996, the Company had approximately $130 million aggregate principal amount of
such debt outstanding (excluding any debt amount that may be allocated to the
Company in purchase accounting as a result of the Merger). The Company
recognized an after-tax extraordinary charge of approximately $100 million
related to the Company's debt realignment.
Immediately subsequent to the Merger, El Paso Tennessee had approximately
$2.1 billion of borrowings under its $3 billion Revolving Credit and Competitive
Advance Facility Agreement, dated as of November 4, 1996 (the "El Paso Tennessee
Credit Facility"), among El Paso Tennessee, the banks and other financial
institutions party thereto and The Chase Manhattan Bank, as agent. (As of
February 26, 1997, there was $1.4 billion outstanding under the El Paso
Tennessee Credit Facility and the aggregate amount that could be borrowed
thereunder was $1.55 billion.) In addition, El Paso Tennessee had approximately
$300 million of 8 1/4% Cumulative Preferred Stock, Series A, outstanding and
approximately $134 million aggregate principal amount of Old Tenneco debt after
giving effect to the debt realignment which was not redeemed or retired as part
of the debt realignment transactions. Borrowings under the El Paso Tennessee
Credit Facility are guaranteed by El Paso. The primary asset of El Paso
Tennessee is its investment in TGP, and management anticipates that the funds
necessary to service the debt and other securities of El Paso Tennessee will be
provided by El Paso or the operations of the Company. Consequently, the Company
may provide funds from operating activities, as well as proceeds from asset
sales or financing, to El Paso Tennessee to fund its debt and preferred stock
servicing requirements.
Certain aspects of the Merger and the Distributions are subject to review
under Federal and state fraudulent conveyance laws. Under these laws, if a court
in a lawsuit by an unpaid creditor or a representative of creditors (such as a
trustee in bankruptcy of El Paso Tennessee, New Tenneco or Newport News as a
debtor-in-possession) were to determine that Old Tenneco, New Tenneco, Newport
News or any of their subsidiaries, including TGP, did not receive fair
consideration or reasonably equivalent value for incurring indebtedness or
transferring assets in connection with the Merger and the Distributions and
that, at the time of the Distributions or such incurrence of indebtedness or
transfer of assets, Old Tenneco, New Tenneco, Newport News or any of their
subsidiaries, including TGP, (i) was insolvent or would be rendered insolvent,
(ii) had unreasonably small capital with which to carry on its business and all
businesses in which it intended to engage, or (iii) intended to incur, or
believed it would incur, debts beyond its ability to repay such debts as they
would mature, then such court could, among other things, order the Company to
return to New Tenneco or Newport News the value of any distributions made by any
of them to the Company, bar future dividend and redemption payments on TGP's
capital stock, and invalidate, in whole or in part, the transactions in
question, as fraudulent conveyances.
The measure of insolvency for purposes of the fraudulent conveyance laws
will vary depending on which jurisdiction's law is applied. Generally, however,
an entity would be considered insolvent if the present fair saleable value of
its assets is less than (i) the amount of its liabilities (including contingent
liabilities), or (ii) the amount that will be required to pay its probable
liabilities on its existing debts as they become absolute and mature. No
assurance can be given as to what standard a court would apply in determining
insolvency or that a court would not determine that Old Tenneco, New Tenneco,
Newport News or any of their subsidiaries, including TGP, was "insolvent" at the
time of or after giving effect to the Merger and the Distributions.
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<PAGE> 17
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, TGP will loan the
net proceeds from the sale of the Debt Securities to El Paso Tennessee. El Paso
Tennessee has informed TGP that it intends to use such funds to reduce amounts
outstanding under the El Paso Tennessee Credit Facility. As of February 26,
1997, there was $1.4 billion outstanding under the El Paso Tennessee Credit
Facility maturing November 1999 and bearing interest at a floating rate, which
was 5.67% as of February 26, 1997.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratio of earnings to fixed
charges for the Energy Businesses of Tennessee Gas Pipeline Company (see the
Notes to combined financial statements contained in the January 8-K incorporated
by reference in this Prospectus) for each of the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges........................... 3.16 2.03 2.28 2.31 1.35 1.66
=== ==== ==== ==== ==== ====
</TABLE>
The ratio of earnings to fixed charges is based on continuing operations.
"Earnings" represent the sum of (a) pretax income before extraordinary loss,
plus (b) fixed charges (excluding capitalized interest other than (i) allowance
for funds used during construction, and (ii) amortization of interest
capitalized applicable to non-utility companies), minus (c) undistributed
earnings of affiliated companies in which less than a 50% voting interest is
owned. "Fixed charges" consist of interest expense, the portion of rental
expense considered to be representative of the interest factor and capitalized
interest. These ratios are based upon the amount of interest expense included in
the combined statements of income for the Energy Businesses of Tennessee Gas
Pipeline Company, which is net of interest allocated to affiliates (see Note 6
to the combined financial statements contained in the January Form 8-K
incorporated by reference in this Prospectus).
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby will represent unsecured obligations of
TGP. The Debt Securities offered hereby will be issued under an Indenture (the
"Indenture"), between TGP and The Chase Manhattan Bank, as trustee (the
"Trustee"). The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder from time to time in one or more
series.
The terms of the Debt Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Debt Securities are subject to
all such terms, and holders of Debt Securities are referred to the Indenture and
the Trust Indenture Act for a statement of those terms.
The statements set forth below in this section are brief summaries of
certain provisions contained in the Indenture, do not purport to be complete,
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain terms,
a copy of which Indenture is included as an exhibit to the Registration
Statement of which this Prospectus is a part. Capitalized terms used in this
section and not otherwise defined in this section have the respective meanings
assigned to them in the Indenture.
GENERAL
Reference is made to the Prospectus Supplement relating to the particular
series offered thereby for the terms of such Debt Securities, including where
applicable: (a) the form and title of the Debt Securities; (b) the aggregate
principal amount of the Debt Securities; (c) the date or dates on which the Debt
Securities may be issued; (d) the date or dates on which the principal of and
premium, if any, on the Debt Securities shall be payable; (e) the rate or rates
(which may be fixed or variable) at which the Debt Securities shall bear
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interest, if any, and the date or dates from which such interest shall accrue;
(f) the dates on which interest, if any, shall be payable and the record dates
for the interest payment dates; (g) the place or places where the principal of
and premium, if any, and interest, if any, on the Debt Securities of the series
will be payable; (h) the period or periods, if any, within which, the price or
prices at which, and the terms and conditions upon which, the Debt Securities
may be redeemed at the option of TGP or otherwise; (i) any optional or mandatory
redemption or any sinking fund or analogous provisions; (j) if other than
denominations of $1,000 and integral multiples thereof, the denominations in
which the Debt Securities of the series shall be issuable; (k) if other than the
principal amount thereof, the portion of the principal amount of the Debt
Securities which shall be payable upon declaration of the acceleration of the
maturity thereof in accordance with the provisions of the Indenture; (l) the
currency or currencies, or currency unit or currency units, in which the
principal of and premium, if any, and interest, if any, on the Debt Securities
shall be denominated, payable, redeemable or purchasable, as the case may be;
(m) any Events of Default (as defined below) with respect to the Debt Securities
that differ from those set forth in the Indenture; (n) whether the Debt
Securities will be convertible; (o) whether the Debt Securities of such series
shall be issued as a global certificate or certificates and, in such case, the
identity of the depositary for such series; and (p) any other terms not
inconsistent with the Indenture.
If any Debt Securities offered hereby are sold for foreign currencies or
foreign currency units or if the principal of and premium, if any, or interest,
if any, on any series of Debt Securities is payable in foreign currencies or
foreign currency units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of Debt Securities and
such currencies and currency units will be set forth in the Prospectus
Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities offered hereby will be issued only in fully registered form
in denominations of $1,000 or any integral multiple thereof. The Debt Securities
of a series may be issuable in the form of one or more global certificates,
which will be denominated in an amount equal to all or a portion of the
aggregate principal amount of such Debt Securities. See "-- Global Debt
Securities".
One or more series of Debt Securities offered hereby may be sold at a
substantial discount below their stated principal amount, bearing no interest or
interest at a rate that at the time of issuance is below market rates. The
Federal income tax consequences and special considerations applicable to any
such series of Debt Securities will be described generally in the Prospectus
Supplement relating thereto.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with, or on
behalf of, a depositary (the "Depositary") identified in the Prospectus
Supplement relating to such series. Unless and until such global certificate or
certificates are exchanged in whole or in part for Debt Securities in
individually certificated form, a global Debt Security may not be transferred
except as a whole to a nominee of the Depositary for such global Debt Security,
or by a nominee for the Depositary to the Depositary, or to a successor of the
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities and the rights of, and limitations on, owners of beneficial
interests in a global Debt Security representing all or a portion of a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series.
CERTAIN COVENANTS
Limitations on Liens. The Indenture provides that TGP will not, nor will it
permit any Restricted Subsidiary (as defined below) to, create, assume, incur or
suffer to exist any Lien (as defined below) upon any Principal Property (as
defined below), whether owned or leased on the date of the Indenture or
thereafter acquired, to secure any Debt (as defined below) of TGP or any other
Person (as defined below) (other than the Debt Securities issued thereunder),
without in any such case making effective provision whereby all of the
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Debt Securities Outstanding thereunder shall be secured equally and ratably
with, or prior to, such Debt so long as such Debt shall be so secured. There is
excluded from this restriction:
(i) any Lien upon any property or assets of TGP or any Restricted
Subsidiary in existence on the date of the Indenture or created pursuant to
an "after-acquired property" clause or similar term in existence on the
date of the Indenture or any mortgage, pledge agreement, security agreement
or other similar instrument in existence on the date of the Indenture;
(ii) any Lien upon any property or assets created at the time of
acquisition of such property or assets by TGP or any Restricted Subsidiary
or within one year after such time to secure all or a portion of the
purchase price for such property or assets or Debt incurred to finance such
purchase price, whether such Debt was incurred prior to, at the time of or
within one year of such acquisition;
(iii) any Lien upon any property or assets existing thereon at the
time of the acquisition thereof by TGP or any Restricted Subsidiary
(whether or not the obligations secured thereby are assumed by TGP or any
Restricted Subsidiary);
(iv) any Lien upon any property or assets of a Person existing thereon
at the time such Person becomes a Restricted Subsidiary by acquisition,
merger or otherwise;
(v) the assumption by TGP or any Restricted Subsidiary of obligations
secured by any Lien existing at the time of the acquisition by TGP or any
Restricted Subsidiary of the property or assets subject to such Lien or at
the time of the acquisition of the Person which owns such property or
assets;
(vi) any Lien on property to secure all or part of the cost of
construction or improvements thereon or to secure Debt incurred prior to,
at the time of, or within one year after completion of such construction or
making of such improvements, to provide funds for any such purpose;
(vii) any Lien on any oil, gas, mineral and processing and other plant
properties to secure the payment of costs, expenses or liabilities incurred
under any lease or grant or operating or other similar agreement in
connection with or incident to the exploration, development, maintenance or
operation of such properties;
(viii) any Lien arising from or in connection with a conveyance by TGP
or any Restricted Subsidiary of any production payment with respect to oil,
gas, natural gas, carbon dioxide, sulphur, helium, coal, metals, minerals,
steam, timber or other natural resources;
(ix) any Lien in favor of TGP or any Restricted Subsidiary;
(x) any Lien created or assumed by TGP or any Restricted Subsidiary in
connection with the issuance of Debt the interest on which is excludable
from gross income of the holder of such Debt pursuant to the Internal
Revenue Code of 1986, as amended, or any successor statute, for the purpose
of financing, in whole or in part, the acquisition or construction of
property or assets to be used by TGP or any Subsidiary;
(xi) any Lien upon property or assets of any foreign Restricted
Subsidiary to secure Debt of that foreign Restricted Subsidiary;
(xii) Permitted Liens (as defined below);
(xiii) any Lien created by any program providing for the financing,
sale or other disposition of trade or other receivables classified as
current assets in accordance with United States generally accepted
accounting principles entered into by TGP or by a Subsidiary or Restricted
Affiliate (as defined below) of TGP, provided that such program is on terms
customary for similar transactions, or any document executed by any
Subsidiary or Restricted Affiliate in connection therewith, provided that
such Lien is limited to the trade or other receivables in respect of which
such program is created or exists, and the proceeds thereof;
(xiv) any Lien on Margin Stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System);
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(xv) any Lien upon any additions, improvements, replacements, repairs,
fixtures, appurtenances or component parts thereof attaching to or required
to be attached to property or assets pursuant to the terms of any mortgage,
pledge agreement, security agreement or other similar instrument, creating
a Lien upon such property or assets permitted by clauses (i) through (xiv),
inclusive, above; or
(xvi) any extension, renewal, refinancing, refunding or replacement
(or successive extensions, renewals, refinancing, refundings or
replacements) of any Lien, in whole or in part, that is referred to in
clauses (i) through (xv), inclusive, above, or of any Debt secured thereby;
provided, however, that the principal amount of Debt secured thereby shall
not exceed the greater of the principal amount of Debt so secured at the
time of such extension, renewal, refinancing, refunding or replacement and
the original principal amount of Debt so secured (plus in each case the
aggregate amount of premiums, other payments, costs and expenses required
to be paid or incurred in connection with such extension, renewal,
refinancing, refunding or replacement); provided further, however, that
such extension, renewal, refinancing, refunding or replacement shall be
limited to all or a part of the property (including improvements,
alterations and repairs on such property) subject to the encumbrance so
extended, renewed, refinanced, refunded or replaced (plus improvements,
alterations and repairs on such property).
Notwithstanding the foregoing, under the Indenture, TGP may, and may permit
any Restricted Subsidiary to, create, assume, incur, or suffer to exist any Lien
upon any Principal Property to secure Debt of TGP or any Person (other than the
Debt Securities) that is not excepted by clauses (i) through (xvi), inclusive,
above without securing the Debt Securities issued under the Indenture, provided
that the aggregate principal amount of all Debt then outstanding secured by such
Lien and all similar Liens, together with all net sale proceeds from
Sale-Leaseback Transactions (as defined below) (excluding Sale-Leaseback
Transactions permitted by clauses (i) through (iv), inclusive, of the first
paragraph of the restriction on sale-leasebacks covenant described below) does
not exceed 15% of Consolidated Net Tangible Assets (as defined below).
Restriction on Sale-Leasebacks. The Indenture provides that TGP will not,
nor will it permit any Restricted Subsidiary to, engage in a Sale-Leaseback
Transaction, unless: (i) such Sale-Leaseback Transaction occurs within one year
from the date of acquisition of the Principal Property subject thereto or the
date of the completion of construction or commencement of full operations on
such Principal Property, whichever is later; (ii) the Sale-Leaseback Transaction
involves a lease for a period, including renewals, of not more than three years;
(iii) TGP or such Restricted Subsidiary would be entitled to incur Debt secured
by a Lien on the Principal Property subject thereto in a principal amount equal
to or exceeding the net sale proceeds from such Sale-Leaseback Transaction
without securing the Debt Securities; or (iv) TGP or such Restricted Subsidiary,
within a one-year period after such Sale-Leaseback Transaction, applies or
causes to be applied an amount not less than the net sale proceeds from such
Sale-Leaseback Transaction to (A) the repayment, redemption or retirement of
Funded Debt (as defined below) of TGP or any Subsidiary, or (B) investment in
another Principal Property.
Notwithstanding the foregoing, under the Indenture, TGP may, and may permit
any Restricted Subsidiary to, effect any Sale-Leaseback Transaction that is not
excepted by clauses (i) through (iv), inclusive, of the above paragraph,
provided that the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of outstanding Debt (other than the
Debt Securities) secured by Liens upon Principal Properties not excepted by
clauses (i) through (xvi), inclusive, of the first paragraph of the limitation
on liens covenant described above, do not exceed 15% of the Consolidated Net
Tangible Assets.
Certain Defined Terms. As used herein:
"Consolidated Net Tangible Assets" means, at any date of determination, the
total amount of assets after deducting therefrom (i) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (ii) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth on the consolidated balance sheet of TGP and
its consolidated subsidiaries for
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TGP's most recently completed fiscal quarter, prepared in accordance with
generally accepted accounting principles.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed and any purchase money obligation created or assumed
by such Person.
"Funded Debt" means all Debt maturing one year or more from the date of the
creation thereof, all Debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
"Lien" means any mortgage, pledge, security interest, charge, lien or other
encumbrance of any kind, whether or not filed, recorded or perfected under
applicable law.
"Permitted Liens" means: (i) Liens upon rights-of-way for pipeline
purposes; (ii) any governmental Lien, mechanics', materialmen's, carriers' or
similar Lien incurred in the ordinary course of business which is not yet due or
which is being contested in good faith by appropriate proceedings and any
undetermined Lien which is incidental to construction; (iii) the right reserved
to, or vested in, any municipality or public authority by the terms of any
right, power, franchise, grant, license, permit or by any provision of law, to
purchase or recapture or to designate a purchaser of, any property; (iv) Liens
of taxes and assessments which are (A) for the then current year, (B) not at the
time delinquent, or (C) delinquent but the validity of which is being contested
at the time by TGP or any Subsidiary in good faith; (v) Liens of, or to secure
performance of, leases; (vi) any Lien upon, or deposits of, any assets in favor
of any surety company or clerk of court for the purpose of obtaining indemnity
or stay of judicial proceedings; (vii) any Lien upon property or assets acquired
or sold by TGP or any Restricted Subsidiary resulting from the exercise of any
rights arising out of defaults on receivables; (viii) any Lien incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, temporary disability, social security, retiree health or
similar laws or regulations or to secure obligations imposed by statute or
governmental regulations; (ix) any Lien upon any property or assets in
accordance with customary banking practice to secure any Debt incurred by TGP or
any Restricted Subsidiary in connection with the exporting of goods to, or
between, or the marketing of goods in, or the importing of goods from, foreign
countries; or (x) any Lien in favor of the United States of America 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 Lien securing industrial development, pollution
control or similar revenue bonds.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization, or government or any agency or political
subdivision thereof.
"Principal Property" means (a) any pipeline assets of TGP or any
Subsidiary, including any related facilities employed in the transportation,
distribution or marketing of natural gas, that are located in the United States
or Canada, and (b) any processing or manufacturing plant owned or leased by TGP
or any Subsidiary that is located within the United States or Canada, except, in
the case of either clause (a) or (b), any such assets or plant which, in the
opinion of TGP's Board of Directors, is not material in relation to the
activities of TGP and its Subsidiaries as a whole.
"Restricted Affiliate" means any Affiliate of TGP (other than a Subsidiary)
designated by TGP as a "Restricted Affiliate" by written notice to the Trustee;
provided, however, that such Affiliate shall not become a Restricted Affiliate
until such time that (a) such Affiliate executes a guaranty (in form and
substance reasonably satisfactory to the Trustee) in favor of the Trustee, for
the ratable benefit of the Holders, guaranteeing the prompt and complete payment
by TGP when due (whether at the stated maturity, by acceleration or otherwise)
of the Debt Securities, and (b) the Trustee receives an Opinion of Counsel
reasonably acceptable to the Trustee, which shall be in form and substance
satisfactory to the Trustee; provided further, however, that after such time as
such Affiliate becomes a Restricted Affiliate, TGP may thereafter terminate the
designation of such Affiliate as a Restricted Affiliate by written notice to the
Trustee at which time the aforementioned guaranty of such Affiliate shall also
terminate.
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"Restricted Subsidiary" means any Subsidiary of TGP owning or leasing any
Principal Property.
"Sale-Leaseback Transaction" means the sale or transfer by TGP or any
Restricted Subsidiary of any Principal Property to a Person (other than TGP or a
Subsidiary) and the taking back by TGP or any Restricted Subsidiary, as the case
may be, of a lease of such Principal Property.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that TGP may, without the consent of the Trustee or
the holders of any Debt Securities issued thereunder, consolidate or merge with,
or sell, lease or transfer its properties and assets as, or substantially as, an
entirety to, any Person, provided that (i) either TGP is the surviving entity or
such successor Person shall expressly assume the due and punctual payment of the
principal of, and any premium and interest on, all the Debt Securities and the
performance or observance of every covenant and condition of the Indenture on
the part of TGP to be performed or observed, (ii) immediately after giving
effect to the transaction, no Default or Event of Default exists, and (iii) TGP
has delivered any Officer's Certificate and Opinion of Counsel required by the
Indenture. Any such successor Person shall succeed to and be substituted for,
and may exercise every right and power of, TGP under the Indenture with the same
effect as if it had been named a party in the Indenture and TGP shall, except in
the case of a lease, be released and discharged from all its obligations under
the Debt Securities and the Indenture.
EVENTS OF DEFAULT
An "Event of Default" will occur under the Indenture with respect to Debt
Securities of any series issued thereunder upon: (a) default in the payment of
the principal of, or premium, if any, on, any Debt Security of such series at
its maturity; (b) default in the payment of any interest on any Debt Security of
such series when it becomes due and payable and continuance of such default for
a period of 30 days; (c) default in the performance, or breach, of any term,
covenant or warranty contained in the Indenture with respect to such series for
a period of 60 days upon giving written notice as provided in the Indenture; (d)
the occurrence of certain events of bankruptcy; or (e) any other Event of
Default applicable to such series.
The Indenture provides that if an Event of Default described in clauses
(a), (b), (c) or (e) above shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all affected
Debt Securities then outstanding (voting as a single class) may declare the
entire principal amount of all affected Debt Securities to be due and payable
immediately upon giving written notice as provided in the Indenture. In
addition, if an Event of Default described in clause (d) above shall have
occurred and be continuing, either the Trustee or holders of not less than 25%
in principal amount of all Debt Securities then outstanding may declare the
entire principal amount of all Debt Securities outstanding to be due and payable
immediately upon giving written notice as provided in the Indenture. The
Indenture provides that the holders of a majority in principal amount of Debt
Securities of all affected series then outstanding (voting as a single class)
may rescind and annul such declaration and its consequences under certain
circumstances.
The holders of a majority in aggregate principal amount of all affected
Debt Securities then outstanding (voting as a single class) may waive past
defaults under the Indenture with respect to all such Debt Securities and their
consequences (except a continuing default in the payment of principal of or
premium, if any, or interest on any Debt Security or a default in respect of any
covenant or provision of the Indenture which cannot be modified or amended by a
supplemental indenture without the consent of the holder of each outstanding
Debt Security affected thereby).
Pursuant to the Indenture, the holders of a majority in aggregate principal
amount of all affected Debt Securities then outstanding (voting as a single
class) may direct with respect to such series the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that such direction shall
not be in conflict with any rule of law or the Indenture. Before proceeding to
exercise any right or power under the Indenture at the direction of any holders,
the Trustee shall be entitled to receive from such holders reasonable security
or indemnity against the costs, expenses and liabilities which might be incurred
by it in compliance with any such direction.
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Under the terms of the Indenture, TGP is required to furnish to the Trustee
annually an Officer's Certificate to the effect that to the best of such
officer's knowledge, TGP is not in default in the performance and observance of
the terms, provisions and conditions of the Indenture or, if such officer has
knowledge that TGP is in default, specifying such default. The Indenture
requires the Trustee to give to all holders of Debt Securities outstanding
thereunder notice of any default by TGP in the manner provided in the Indenture,
unless such default shall have been cured or waived; however, except in the case
of a default in the payment of principal of and premium, if any, or interest, if
any, on any Debt Securities outstanding thereunder, the Trustee is entitled to
withhold such notice in the event that the board of directors, the executive
committee, or a trust committee of directors or certain officers of the Trustee
in good faith determine that withholding such notice is in the interest of the
holders of such outstanding Debt Securities.
SATISFACTION AND DISCHARGE; LEGAL AND COVENANT DEFEASANCE
Under the terms of the Indenture, TGP may satisfy and discharge certain
obligations to holders of Debt Securities of any series which have not already
been delivered to the Trustee for cancellation and which have either become due
and payable or are by their terms due and payable within one year or are to be
called for redemption within one year by (i) depositing or causing to be
deposited with the Trustee funds in an amount sufficient to pay the principal
and any premium and interest to the date of such deposit (in case of Debt
Securities of such series which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be, (ii) paying or causing to be
paid all other sums payable under the Indenture with respect to such Debt
Securities, and (iii) delivering to the Trustee an Officer's Certificate and
Opinion of Counsel relating to such satisfaction and discharge.
The Indenture also provides that TGP and any other obligor, if any, will be
discharged from any and all obligations in respect of any series of Debt
Securities issued thereunder (excluding, however, certain obligations, such as
the obligation to register the transfer or exchange of such outstanding Debt
Securities of such series, to replace stolen, lost, mutilated or destroyed
certificates, to pay principal and interest on the original stated due dates or
specified redemption date, to make any sinking fund payments, and to maintain
paying agencies) on the 91st day following the deposit referred to in the
following clause (i), subject to the following conditions: (i) the irrevocable
deposit, in trust, of cash or U.S. Government Obligations (or a combination
thereof) which through the payment of interest and principal thereof in
accordance with their terms will provide cash in an amount sufficient to pay the
principal and interest and premium, if any, on the outstanding Debt Securities
of such series and any mandatory sinking fund payments, in each case, on the
stated maturity of such payments in accordance with the terms of the Indenture
and the outstanding Debt Securities of such series or on any Redemption Date
established pursuant to clause (iii) below; (ii) TGP's receipt of an Opinion of
Counsel based on the fact that (A) TGP has received from, or there has been
published by, the Internal Revenue Service a ruling, or (B) since the date of
the Indenture, there has been a change in the applicable federal income tax law,
in either case, to the effect that, and confirming that, the holders of the Debt
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit and defeasance had not
occurred; (iii) if the Debt Securities are to be redeemed prior to Stated
Maturity (other than from mandatory sinking fund payments or analogous
payments), notice of such redemption shall have been duly given pursuant to the
Indenture or provision therefor satisfactory to the Trustee shall have been
made; (iv) no Event of Default or event which with notice or lapse of time or
both would become an Event of Default will have occurred and be continuing on
the date of such deposit; and (v) TGP's delivery to the Trustee of an Officer's
Certificate and an Opinion of Counsel, each stating that the conditions
precedent under the Indenture have been complied with.
Under the Indenture, TGP also may discharge its obligations referred to
above under "-- Certain Covenants" and "-- Consolidation, Merger and Sale of
Assets", as well as certain of its obligations relating to reporting obligations
under the Indenture, in respect of any series of Debt Securities on the 91st day
following the deposit referred to in clause (i) in the immediately preceding
paragraph, subject to satisfaction of the conditions described in clauses (i),
(iii), (iv) and (v) in the immediately preceding paragraph with respect to
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such series of Debt Securities and the delivery of an Opinion of Counsel
confirming that the holders of the Debt Securities will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the same amount
and in the same manner and at the same times, as would have been the case if
such deposit and covenant defeasance had not occurred.
CHANGES IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS
The Indenture does not contain provisions requiring redemption of the Debt
Securities issued thereunder, or adjustment to any terms of such Debt
Securities, upon any change in control of TGP.
Other than the limitations on Liens and the restriction on Sale-Leaseback
Transactions described above under "-- Certain Covenants", the Indenture does
not contain any covenant or other provisions designed to afford holders of the
Debt Securities issued thereunder protection in the event of a highly leveraged
transaction involving TGP.
MODIFICATION OF THE INDENTURE
The Indenture provides that TGP and the Trustee may enter into supplemental
indentures without the consent of the holders of Debt Securities issued
thereunder to: (a) secure any of such Debt Securities; (b) evidence the
succession of another Person to TGP under the Indenture and the Debt Securities
and the assumption by such successor Person of the obligations of TGP
thereunder; (c) add covenants and Events of Default for the benefit of the
holders of all or any series of such Debt Securities or to surrender any right
or power conferred by the Indenture upon TGP; (d) add to, change or eliminate
any of the provisions of the Indenture, provided that any such addition, change
or elimination shall become effective only after there are no such Debt
Securities of any series entitled to the benefit of such provision outstanding;
(e) establish the forms or terms of the Debt Securities of any series issued
thereunder; (f) cure any ambiguity or correct any inconsistency in the
Indenture; (g) evidence the acceptance of appointment by a successor trustee;
and (h) qualify the Indenture under the Trust Indenture Act.
The Indenture also contains provisions permitting TGP and the Trustee, with
the consent of the holders of a majority in aggregate principal amount of all
outstanding Debt Securities affected by such supplemental indenture (voting as a
single class), to add any provisions to, or change in any manner or eliminate
any of the provisions of, the Indenture, or modify in any manner the rights of
the holders of such Debt Securities, provided that TGP and the Trustee may not,
without the consent of the holder of each outstanding Debt Security affected
thereby, (a) change the stated maturity of the principal of or any installment
of principal of or interest, if any, on, any Debt Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon,
(b) reduce the percentage in principal amount of Debt Securities required for
any such supplemental indenture or for any waiver provided for in the Indenture,
(c) change TGP's obligation to maintain an office or agency for payment of Debt
Securities and the other matters specified therein, or (d) modify any of the
provisions of the Indenture relating to the execution of supplemental indentures
with the consent of holders of Debt Securities which are discussed in this
paragraph or modify any provisions relating to the waiver by holders of past
defaults and certain covenants, except to increase any required percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the holder of each outstanding Debt Security
affected thereby.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS
No director, officer, employee or stockholder, as such, of TGP or any of
its affiliates shall have any personal liability in respect of the obligations
of TGP under the Indenture or the Debt Securities by reason of his, her or its
status as such.
APPLICABLE LAW
The Indenture is, and the Debt Securities offered hereby will be, governed
by, and construed in accordance with, the laws of the State of New York.
23
<PAGE> 25
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. If an Event of Default has occurred and is continuing, the
Trustee will use the same degree of care and skill in its exercise of the rights
and powers vested in it by the Indenture as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
The Indenture contains limitations on the rights of the Trustee, should it
become a creditor of TGP, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of such claims, as
security or otherwise. The Trustee is permitted to engage in other transactions;
provided, however, that if it acquires any conflicting interest, it must
eliminate such conflict or resign.
The Chase Manhattan Bank, a New York banking corporation, is the Trustee
under the Indenture. TGP and its affiliates maintain banking and other
commercial relationships with The Chase Manhattan Bank in the ordinary course of
business. In particular, The Chase Manhattan Bank is the agent and a lender
under the revolving credit facilities of El Paso and El Paso Tennessee,
including the El Paso Tennessee Credit Facility.
PLAN OF DISTRIBUTION
TGP may offer or sell Debt Securities to or through one or more
underwriters, dealers or agents as designated from time to time, or through a
combination of such methods, and also may offer or sell the Debt Securities
directly to one or more other purchasers. TGP may sell Debt Securities as soon
as practicable after effectiveness of the Registration Statement of which this
Prospectus is a part.
A Prospectus Supplement will set forth the terms of the offering of the
particular series of Debt Securities offered thereby, including: (i) the name or
names of any underwriters or agents; (ii) the initial public offering or
purchase price of such series of Debt Securities; (iii) any underwriting
discounts, commissions, and other items constituting underwriters' compensation
and any other discount, concessions, or commissions allowed or reallowed or paid
by any underwriters to other dealers; (iv) any commissions paid to any agents;
(v) the net proceeds to TGP from the sales; and (vi) any securities exchanges or
markets on which the Debt Securities may be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such series of Debt Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Debt
Securities will be obligated to purchase all of the Debt Securities of such
series allocated to it if any such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed, reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be offered and sold by TGP directly or through
agents designated by TGP from time to time. Unless otherwise indicated in the
related Prospectus Supplement, each such agent will be acting on a best efforts
basis for the period of its appointment. Any agent participating in the
distribution of Debt Securities may be deemed to be an "underwriter", as that
term is defined in the Securities Act, of the Debt Securities so offered and
sold. The Debt Securities also may be sold to dealers at the applicable price to
the public set forth in the Prospectus Supplement relating to such series of
Debt Securities. Such dealers may be deemed to be "underwriters" within the
meaning of the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with TGP, to indemnification by TGP against
certain civil liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, TGP in the ordinary course of
business.
All Debt Securities offered will be a new issue of securities with no
established trading market. Any underwriter to whom Debt Securities are sold by
TGP for public offering and sale may make a market in such Debt, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Debt Securities may or may not be listed
on a national securities exchange or a foreign
24
<PAGE> 26
securities exchange. No assurance can be given as to the liquidity of or the
trading markets for any Debt Securities.
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for TGP by Fried,
Frank, Harris, Shriver & Jacobson (a partnership including professional
corporations), New York, New York. If the Debt Securities are being distributed
in an underwritten offering, the validity of the Debt Securities will be passed
upon for the underwriters by counsel identified in the related Prospectus
Supplement.
EXPERTS
The audited combined financial statements and schedule of the Energy
Businesses of Tennessee Gas Pipeline Company as of December 31, 1995 and 1994,
and for each of the three years in the period ended December 31, 1995, included
in the January Form 8-K incorporated by reference herein, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
25
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than selling
or underwriting discounts and commissions, to be incurred by TGP in connection
with the issuance and distribution of the Securities being registered.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 303,031
Blue Sky expenses, including legal fees..................... 175,000*
Printing and engraving expenses............................. 400,000*
Legal fees and expenses..................................... 200,000*
Rating agency fees.......................................... 150,000*
Accounting fees and expenses................................ 75,000*
Trustee's fees and expenses................................. 12,500
Miscellaneous............................................... 34,469*
----------
Total............................................. $1,350,000*
==========
</TABLE>
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement in connection with specified actions, rules, or
proceedings, whether civil, criminal, administrative or investigative (other
than action by or in the right of the corporation -- a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise.
Section 17 of the By-laws of TGP provide as follows:
"Each person who is or was a director or officer of the
corporation, or who serves or may have served at the request of the
corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise (including the
heirs, executors, administrators or estate of such person) and who was
or is a party or is threatened to be made a party to any threatened,
pending or completed claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative, including appeals,
shall be indemnified by the corporation as a matter of right to the
full extent permitted or authorized by the Corporation Law of the
state of incorporation of the corporation, as it may from time to time
be amended, against any expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in his capacity as a director or officer,
or arising out of his status as a director or officer. Each person who
is or was an employee or agent of the corporation, or who serves or
may have served at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise (including the heirs, executors, administrators or
estate of such person) may, at the discretion of the Board, be
indemnified by the corporation to the same extent as provided herein
with respect to directors and officers of the corporation.
II-1
<PAGE> 28
The corporation may, but shall not be obligated to, maintain
insurance at its expense, to protect itself and any person who is or
was a director, officer, employee or agent of the corporation, or is
or was serving as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. The corporation
may, but shall not be obligated to, pay expenses incurred in defending
a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding.
The indemnification provided by this Section 17 shall not be
exclusive of any other rights to which those seeking indemnification
may be entitled as a matter of law or under any agreement, vote of
stockholders or disinterested directors or otherwise."
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
payment of unlawful dividends or unlawful stock purchases or redemptions, or
(iv) any transaction from which the director derived an improper, personal
benefit. The Certificate of Incorporation of TGP contains such a provision.
El Paso maintains directors' and officers' liability insurance which
provides for payment, on behalf of the directors and officers of El Paso and its
subsidiaries, including TGP, of certain losses of such persons (other than
matters uninsurable under law) arising from claims, including claims arising
under the Securities Act, for acts or omissions by such persons while acting as
directors or officers of TGP and/or its subsidiaries, including TGP, as the case
may be.
Reference is made to Exhibit 1 hereto, which contains provisions for
indemnification of TGP, and its directors, officers, and any controlling
persons, against certain liabilities for information furnished by the
underwriters and/or agents, as applicable, expressly for use in the Prospectus
Supplements.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
----------- --------
<C> <S>
*1 -- Form of Underwriting Agreement
*4 -- Form of Indenture between TGP and The Chase Manhattan
Bank, as trustee
*5 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson as to
the legality of the Debt Securities
*12 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Arthur Andersen LLP
*23.2 -- Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5)
+24 -- Powers of Attorney
*25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank, as
Trustee
</TABLE>
- ---------------
* Previously filed.
+ Appearing on page II-4 of the Registration Statement originally filed on
January 22, 1997.
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-2
<PAGE> 29
(b) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs A(1)(a) and A(1)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on February 27, 1997.
TENNESSEE GAS PIPELINE COMPANY
By: /s/ H. BRENT AUSTIN
----------------------------------
H. Brent Austin
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates as indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and Director February 27, 1997
- ----------------------------------------------------- (Principal Executive Officer)
William A. Wise
* President and Director February 27, 1997
- -----------------------------------------------------
John W. Somerhalder II
/s/ H. BRENT AUSTIN Senior Vice President and Director February 27, 1997
- ----------------------------------------------------- (Principal Financial Officer)
H. Brent Austin
* Vice President and Controller February 27, 1997
- ----------------------------------------------------- (Principal Accounting Officer)
Jeffrey I. Beason
</TABLE>
*By: /s/ H. BRENT AUSTIN
-------------------------------
H. Brent Austin
Attorney-in-Fact
II-4
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBITS
- ----------- --------
<C> <S> <C>
*1 -- Form of Underwriting Agreement
*4 -- Form of Indenture between TGP and The Chase Manhattan
Bank, as trustee
*5 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson as to
the legality of the Debt Securities
*12 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Arthur Andersen LLP
*23.2 -- Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5)
+24 -- Powers of Attorney
*25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank, as
Trustee
</TABLE>
- ---------------
* Previously filed.
+ Appearing on page II-4 of the Registration Statement originally filed on
January 22, 1997.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 8, 1996
(except with respect to the matters discussed in Notes 1 and 2, as to which the
date is December 12, 1996) included in Tennessee Gas Pipeline Company's Current
Report on Form 8-K dated January 21, 1997 and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Houston, Texas
February 27, 1997
