<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-63429
SUBJECT TO COMPLETION - OCTOBER 6, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
, 1998
(TO PROSPECTUS DATED OCTOBER 6, 1998)
TENNESSEE GAS PIPELINE COMPANY
$300,000,000
% DEBENTURES DUE 20
- --------------------------------------------------------------------------------
THE COMPANY:
- - Our major businesses include interstate natural gas transmission, natural gas
and power marketing, domestic and international pipeline operations, and
domestic and international power generation.
- - Tennessee Gas Pipeline Company
1001 Louisiana Street
Houston, Texas 77002
(713) 420-2131
THE DEBENTURES AND THE OFFERING:
- - Maturity: , 20
- - Interest Payments: semi-annually on and , commencing
on , 1999.
- - Ranking: equal with any other unsecured indebtedness of the Company that is
not specifically subordinated to the Debentures.
- - Use of Proceeds: repay short-term indebtedness.
- - Closing: , 1998.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------
Per Debenture Total
- -----------------------------------------------------------------------------
Public offering price: % $
Underwriting fees:
Proceeds to Company:
- -----------------------------------------------------------------------------
</TABLE>
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE S-9.
- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE PART OF AN EFFECTIVE REGISTRATION
STATEMENT FILED WITH THE SEC. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE NOT OFFERS TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
- --------------------- ----
<S> <C>
Prospectus Supplement Summary.... S-3
Risk Factors..................... S-9
Use of Proceeds.................. S-9
Capitalization................... S-10
Description of the Debentures.... S-11
Underwriting..................... S-15
Legal Matters.................... S-16
PROSPECTUS PAGE
- --------------------------------- ----
Certain Forward-Looking Statements.. 2
The Company...................... 3
Use of Proceeds.................. 4
Ratio of Earnings to Fixed
Charges........................ 4
Description of Debt Securities... 5
Plan of Distribution............. 13
Legal Matters.................... 13
Experts.......................... 13
Where to Find More Information... 14
</TABLE>
---------------------
As used in this Prospectus Supplement and the accompanying Prospectus, (a)
the "COMPANY" or "TGP" means Tennessee Gas Pipeline Company and, unless the
context requires otherwise, all of its subsidiaries, (b) "EL PASO ENERGY" means
El Paso Energy Corporation, and (c) "EPMSC" means El Paso Marketing Services
Company.
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere in this Prospectus
Supplement or in the accompanying Prospectus. It is not complete and may not
contain all of the information that you should consider before investing in the
Debentures. You should read the entire Prospectus Supplement and the
accompanying Prospectus carefully, including the "Risk Factors" section and the
financial statements and the footnotes to those statements incorporated by
reference in the accompanying Prospectus.
THE COMPANY
The Company is a wholly owned subsidiary of El Paso Tennessee Pipeline Co.,
which in turn is an indirect subsidiary of El Paso Energy. The major businesses
of the Company include the interstate transportation of natural gas, which
generally is subject to regulation by the Federal Energy Regulatory Commission,
as well as certain other non-regulated business operations, such as natural gas
and power marketing, intrastate pipeline operations, international pipelines and
power generation, and domestic power generation operations.
RECENT DEVELOPMENTS
As described under the caption "The Company -- Recent Developments" in the
accompanying Prospectus, El Paso Energy, the indirect corporate parent of TGP,
has recently received a ruling from the Internal Revenue Service that would
allow El Paso Energy to reorganize its subsidiaries into a business structure in
which TGP would transfer a substantial number of its subsidiaries (and their
assets and operations) to El Paso Energy or other entities owned by El Paso
Energy. As a result, if El Paso Energy completes this internal reorganization
(the "REORGANIZATION") TGP's primary asset will be an interstate pipeline system
known as the "TGP SYSTEM," which consists of approximately 14,800 miles of
pipeline beginning in the gas-producing regions of Louisiana and Texas
(including the Gulf of Mexico) and serving the northeast section of the United
States, including the New York City and Boston metropolitan areas. Completion of
the Reorganization will cause TGP to dispose of, and eliminate from its
consolidated financial statements, the following: (i) East Tennessee Natural Gas
Company; (ii) Midwestern Gas Transmission Company; (iii) all international
subsidiaries; (iv) all field services operations; (v) all merchant services
operations; and (vi) all subsidiaries with corporate or discontinued operations.
If the Reorganization occurs, we anticipate that it will not occur before late
1998 or early 1999.
You should refer to the "Summary Historical and Pro Forma Financial Data"
included in this Prospectus Supplement for a financial presentation giving pro
forma effect to such proposed Reorganization. If the Reorganization had occurred
on January 1, 1997, operating revenues for the year ended December 31, 1997 and
the six months ended June 30, 1998 would have been $726 million and $353
million, respectively, operating income would have been $269 million and $142
million, respectively, and net income would have been $150 million and $65
million, respectively. El Paso Energy's Board of Directors has not decided on
the timing or whether to proceed with such Reorganization. We cannot give you
any assurance that such decision will be made or, even if made, that our results
of operations or financial position will be as reflected in the referenced pro
forma presentation. See "Risk Factors -- Possible Change in Corporate Structure"
in this Prospectus Supplement for a discussion of the risks associated with the
proposed Reorganization.
S-3
<PAGE> 4
THE OFFERING
Issuer....................... Tennessee Gas Pipeline Company. Our principal
executive office is located at 1001 Louisiana
Street, Houston, Texas 77002, and our telephone
number at that address is (713) 420-2131.
Securities Offered........... $300,000,000 aggregate principal amount of %
Debentures due 20 .
Maturity..................... The Debentures will mature on ,
20 (the "MATURITY DATE").
Interest Payment Dates....... The Company will pay interest on the Debentures
semi-annually on and ,
beginning , 1999.
Optional Redemption.......... The Company may redeem all or any portion of the
Debentures at any time at a redemption price
equal to the "MAKE-WHOLE PRICE." The Make-Whole
Price is the greater of (i) 100% of the
principal amount of such Debentures and (ii) as
determined by an Independent Investment Banker,
the sum of the present values of the remaining
scheduled payments of principal and interest on
such Debentures discounted to the redemption
date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in each case,
accrued and unpaid interest to the redemption
date.
Ranking...................... The Debentures will rank equally with any other
unsecured indebtedness of the Company that is
not specifically subordinated to the Debentures.
Sinking Fund................. None.
Certain Covenants............ The indenture under which the Debentures will be
issued contains covenants relating to
limitations on liens, sale-leaseback
transactions and consolidations, mergers and
sales of assets. These are described in detail
under the headings "Description of Debt
Securities -- Certain Covenants" and
"-- Consolidation, Merger and Sale of Assets" in
the accompanying Prospectus.
Use of Proceeds.............. We will use the net proceeds from the sale of
the Debentures to repay outstanding short-term
indebtedness of TGP.
Certain Definitions.......... "ADJUSTED TREASURY RATE" means, with respect to
any redemption date, the rate per annum equal to
the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) that is
the same as the Comparable Treasury Price for
such redemption date, plus %.
S-4
<PAGE> 5
"COMPARABLE TREASURY ISSUE" means the United
States Treasury security selected by an
Independent Investment Banker that (i) has a
maturity comparable to the remaining term of the
Debentures to be redeemed and (ii) that would be
used, at the time of selection and in accordance
with customary financial practice, to price new
issues of corporate debt securities with a
maturity comparable to the remaining term of the
Debentures to be redeemed.
"COMPARABLE TREASURY PRICE" means, with respect
to any redemption date, (i) the average of the
bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of
its principal amount) on the third business day
prior to such redemption date, as set forth in
the daily statistical release (or any successor
release) published by the Federal Reserve Bank
of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities," or
(ii) if the daily statistical release is not
published or does not contain such prices on
that business day, (A) the average of the
Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than three
Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer
Quotations.
"INDEPENDENT INVESTMENT BANKER" means one of the
Reference Treasury Dealers appointed by the
Trustee after consultation with TGP.
"REFERENCE TREASURY DEALER" means each of
Donaldson, Lufkin & Jenrette Securities
Corporation, Chase Securities Inc. and
NationsBanc Montgomery Securities LLC, and their
respective successors; provided, however, that
if any of them ceases to be a primary U.S.
Government securities dealer in New York City (A
"PRIMARY TREASURY DEALER"), TGP will substitute
another Primary Treasury Dealer.
"REFERENCE TREASURY DEALER QUOTATIONS" means,
with respect to a Reference Treasury Dealer and
any redemption date, the average, as determined
by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount)
quoted in writing to the Trustee by the
Reference Treasury Dealer at 5:00 p.m. on the
third business day prior to such redemption
date.
RISK FACTORS................. YOU SHOULD READ THE "RISK FACTORS" SECTION,
BEGINNING ON PAGE S-9, AS WELL AS THE OTHER
CAUTIONARY STATEMENTS THROUGHOUT THE PROSPECTUS
SUPPLEMENT AND PROSPECTUS, TO ENSURE YOU
UNDERSTAND THE RISKS ASSOCIATED WITH AN
INVESTMENT IN THE DEBENTURES.
S-5
<PAGE> 6
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
HISTORICAL
We have derived the summary historical combined and consolidated financial
data set forth below for each of the three fiscal years ended December 31, 1997
from the Company's financial statements. PricewaterhouseCoopers LLP, independent
public accountants, have audited the financial statements for each of the three
fiscal years in the period ended December 31, 1997. We have derived the summary
historical combined and consolidated financial data below, as of and for each of
the interim six month periods ended June 30, 1998 and 1997, from the unaudited
interim financial statements of TGP and its subsidiaries for those periods. The
financial information of TGP and subsidiaries as of December 31, 1996 and dates
thereafter reflect the purchase price recorded by El Paso Energy effective as of
December 31, 1996 related to its merger with the parent corporation of TGP. The
financial information for periods prior to December 31, 1996 have been prepared
on a combined basis. In March 1998, El Paso Tennessee Pipeline Co. contributed
the common stock of EPMSC to TGP. Operating results data for the interim periods
ended June 30, 1998 and 1997 include the results of EPMSC. Due to the change in
the basis of accounting resulting from the aforementioned merger and
contribution, the combined financial statements for periods prior to the
acquisition and contribution are not comparable to the consolidated financial
statements for the post-acquisition or post-contribution period. In the opinion
of the Company's management, the Company's summary unaudited interim historical
combined and consolidated financial data, as of and for the six months ended
June 30, 1998 and 1997, include all adjusting entries (consisting only of normal
recurring adjustments) necessary to present fairly the information set forth
therein.
You should read the information presented below in conjunction with the
historical financial statements and notes thereto contained in the Company's
1997 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1998, which are incorporated by reference in the
accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------ -----------------
(UNAUDITED)
-----------------
1997 1996 1995 1998 1997
------ ------ ------ ------- -------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
Operating Results Data(a)(e):
Operating revenues................... $3,602 $2,708 $1,986 $2,579 $2,383
Depreciation, depletion and
amortization...................... 143 164 170 77 78
Operating income..................... 263 183 125 138 108
Income before income taxes........... 254 223 176 114 106
Income tax expense................... 88 68 12 37 41
Income before extraordinary loss..... 166 155 164 77 65
Extraordinary loss, net of income
taxes(b).......................... -- (108) -- -- --
Net income........................... 166 47 164 77 65
Ratio of earnings to fixed charges... 4.11 3.29 3.34 2.80(c) 3.94
Adjusted ratio of earnings to fixed
charges(f)........................ 3.87 3.53 3.20 2.80 3.94
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ ---------------
(UNAUDITED)
---------------
1997 1996 1995 1998 1997
------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Financial Position Data(a)(e):
Total assets......................... $6,695 $5,731 $5,702 $6,633 $6,210
Short-term debt (including current
maturities of long-term
debt)(d).......................... 425 15 275 308 15
Long-term debt(d).................... 976 1,005 702 976 984
Minority interest.................... 25 -- 19 25 --
Stockholders' equity(d).............. 1,819 2,057 2,243 1,937 2,190
</TABLE>
S-6
<PAGE> 7
- ---------------
(a) During 1996, subsequent to the merger, TGP sold 70 percent of its interest
in the Company's two Australian pipelines and completed the sale of its oil
and gas exploration, production and financing unit. During 1995, TGP
completed several acquisitions and dispositions, the most significant of
which was the acquisition of the natural gas pipeline assets of Pipeline
Authority of South Australia and the disposition of its 50 percent interest
in Kern River Gas Transmission Company.
(b) Reflects extraordinary losses as a result of the retirement of long-term
debt in the debt realignment preceding the merger during 1996.
(c) Because of the seasonal nature of TGP's business, the ratio for the
six-month period may not necessarily indicate the ratio that will result
for the full year 1998.
(d) Amounts for the pre-acquisition periods are net of allocations from TGP to
its former non-energy operations. The allocation is based on the portion of
TGP's investment in its former non-energy operations that is deemed to be
debt, generally based on the ratio of the former non-energy operations' net
assets to TGP's consolidated net assets plus debt. TGP's historical
practice has been to incur indebtedness for its consolidated group at the
parent company level or at a limited number of subsidiaries, rather than at
the operating company level, and to centrally manage various cash
functions. Management believes that the historical allocation of corporate
debt and interest expense is reasonable; however, it does not necessarily
indicate debt and interest expense which TGP may incur in the future.
(e) In March 1998, El Paso Tennessee Pipeline Co. contributed the common stock
of EPMSC to TGP for a total value of $47 million. The selected financial
information as of and for the years ended December 31, 1997, 1996 and 1995
and the Financial Position Data as of June 30, 1997 do not reflect this
contribution. Including the significant effects of the contribution of
EPMSC, assuming the transaction had occurred January 1, 1995, operating
revenues for the years ended 1997, 1996, and 1995 would have been $4,804
million, $4,738 million and $2,388 million, respectively; and net income
for years ended 1997, 1996, and 1995 would have been $154 million, $52
million and $160 million, respectively.
(f) Adjusted to reflect the effects of the contribution of EPMSC to TGP,
assuming the transaction had occurred January 1, 1995.
S-7
<PAGE> 8
PRO FORMA
El Paso Energy, the indirect corporate parent of TGP, has recently received
a ruling from the Internal Revenue Service that would allow El Paso Energy to
reorganize its subsidiaries into a business structure in which TGP would
transfer a substantial number of its subsidiaries (and their assets and
operations) to El Paso Energy or other entities owned by El Paso Energy. As a
result, if El Paso Energy completes the Reorganization, TGP's primary asset will
be the TGP System. Completion of the Reorganization will cause TGP to dispose
of, and to eliminate from its consolidated financial statements, the following:
(i) East Tennessee Natural Gas Company; (ii) Midwestern Gas Transmission
Company; (iii) all international subsidiaries; (iv) all field services
operations; (v) all merchant services operations; and (vi) all subsidiaries with
corporate or discontinued operations. If the Reorganization occurs, we
anticipate that it will not occur before late 1998 or early 1999.
The following unaudited Pro Forma Data has been prepared to reflect the
Reorganization as if it had occurred as of January 1, 1997:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1997 1998
(IN MILLIONS, EXCEPT RATIOS) ------------ ----------------
<S> <C> <C>
Operating Results Data:
Operating revenues................................... $ 726 $ 353
Depreciation, depletion and amortization............. 126 66
Operating income..................................... 269 142
Income before income taxes........................... 230 97
Income tax expense................................... 80 32
Net income........................................... 150 65
Ratio of earnings to fixed charges................... 3.63 2.65
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1998
(IN MILLIONS) ----------------
<S> <C> <C>
Financial Position Data:
Total assets......................................... $6,831
Short-term debt (including current maturities of
long-term debt)................................... 301
Long-term debt....................................... 961
Minority interest.................................... --
Stockholders' equity................................. 1,529
</TABLE>
S-8
<PAGE> 9
RISK FACTORS
BEFORE YOU INVEST IN THE DEBENTURES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THE RISK DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
SUCH RISK FACTOR TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS BEFORE YOU DECIDE TO
PURCHASE DEBENTURES.
POSSIBLE CHANGE IN CORPORATE STRUCTURE
El Paso Energy, the indirect corporate parent of TGP, has recently received
a ruling from the Internal Revenue Service that would allow El Paso Energy to
reorganize its subsidiaries into a business structure in which TGP would
transfer a substantial number of its subsidiaries (and their assets and
operations) to El Paso Energy or other entities owned by El Paso Energy. As a
result, if El Paso Energy completes the Reorganization, TGP's primary asset will
be the TGP System. Completion of the Reorganization will cause TGP to dispose
of, and to eliminate from its consolidated financial statements, the following:
(i) East Tennessee Natural Gas Company; (ii) Midwestern Gas Transmission
Company; (iii) all international subsidiaries; (iv) all field services
operations; (v) all merchant services operations; and (vi) all subsidiaries with
corporate or discontinued operations. If the Reorganization occurs, we
anticipate that it will not occur before late 1998 or early 1999.
USE OF PROCEEDS
The net proceeds from the sale of the Debentures, estimated to be
approximately $297 million (after underwriting discounts and estimated offering
expenses), will be used by the Company to repay short-term indebtedness. The
short-term indebtedness constitutes TGP borrowings under its $1.5 billion credit
facility (under which El Paso Natural Gas Company is a co-borrower and El Paso
Energy is a guarantor, the "Revolving Credit Facility"). As of the date of this
Prospectus Supplement the average interest rate on such short-term indebtedness
was 5.9%.
The Company intends to utilize future borrowings under the Revolving Credit
Facility to fund its working capital obligations. Such obligations include any
obligations under a $1.0 billion commercial paper program that the Company
intends to establish. Borrowings under the commercial paper program may also be
used to fund the Company's working capital requirements. In addition, from time
to time the Company may advance borrowings under such program to El Paso Energy
to fund a portion of its working capital requirements.
S-9
<PAGE> 10
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 1998, and adjusted to reflect the issuance and sale of the Debentures and
the application of the net proceeds therefrom. This table is unaudited and
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 and Quarterly Report on Form 10-Q for the
period ended June 30, 1998, each of which is incorporated by reference in the
accompanying Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1998
------------------------
ACTUAL AS ADJUSTED(a)
------ --------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt:
Current maturities of long-term debt...................... $ 8 $ 8
Revolving Credit Facility................................. 300 --
------ ------
Total short-term debt............................. 308 8
------ ------
Long-term debt:
Tennessee Gas Pipeline Company
6.0% Debentures due 2011............................... 75 75
7.5% Debentures due 2017............................... 295 295
7.0% Debentures due 2027............................... 296 296
7.625% Debentures due 2037............................. 293 293
% Debentures due 20 ................................ -- 300
El Paso Energy Credit Corporation
9.625%-10.125% Senior notes due 1998 through 2001...... 15 15
9.47%-10.05% Subordinated notes due 1998............... 7 7
Other debt................................................ 3 3
------ ------
984 1,284
Less current maturities................................ 8 8
------ ------
Total long-term debt.............................. 976 1,276(b)
------ ------
Minority interest........................................... 25 25
------ ------
Stockholders' equity:
Common Stock, par value $5 per share; authorized 300
shares; issued 208 shares.............................. -- --
Additional paid-in capital................................ 1,873 1,873
Retained earnings......................................... 76 76
Accumulated other comprehensive income.................... (12) (12)
------ ------
Total stockholders' equity........................ 1,937 1,937(b)
------ ------
Total capitalization.............................. $3,246 $3,246(b)
====== ======
</TABLE>
- ---------------
(a) Adjusted to reflect the application of $297 million of the estimated net
proceeds from the sale by TGP of the Debentures and $3 million of cash on
hand.
(b) If El Paso Energy and the Company complete the Reorganization as described
in "Prospectus Supplement Summary -- Recent Developments," Total long-term
debt, Total stockholders' equity and Total capitalization would be $1,261
million, $1,529 million and $2,791 million, respectively.
S-10
<PAGE> 11
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the Debentures
supplements, and to the extent inconsistent therewith replaces, the description
in the accompanying Prospectus of the general terms and provisions of the Debt
Securities (as defined in the accompanying Prospectus), to which description
reference is hereby made.
GENERAL
The Debentures will mature on , 20 and will be limited
to $300 million aggregate principal amount. The Debentures will constitute
unsubordinated and unsecured indebtedness of TGP, ranking pari passu in right of
payment with all other unsubordinated and unsecured indebtedness of TGP. As of
June 30, 1998, TGP had approximately $1,277 million principal amount of
unsubordinated and unsecured indebtedness outstanding. The Debentures will
constitute a series of Debt Securities (as defined in the accompanying
Prospectus) to be issued under an indenture dated as of March 4, 1997 (as
amended and supplemented from time to time, the "Indenture"), between TGP and
The Chase Manhattan Bank, as trustee (the "Trustee"), the terms of which are
more fully described in the accompanying Prospectus. The statements herein
concerning the Debentures and the Indenture do not purport to be complete and
are qualified in their entirety by reference to the provisions of the Indenture
and the Trust Indenture Act of 1939, as amended, including the definitions
therein of certain terms. Capitalized terms used in this section and not
otherwise defined in this section have the respective meanings assigned to them
in the Indenture.
INTEREST
The Debentures will bear interest at the rate per annum set forth on the
front cover of this Prospectus Supplement. Interest on the Debentures will be
payable semi-annually on each and ,
commencing , 1999 (each date on which interest is so payable
being an "Interest Payment Date"). Interest payable on each Interest Payment
Date will include interest accrued from , 1998, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for. Subject to certain exceptions set forth in the Indenture, interest
payable on any Interest Payment Date will be payable to the person in whose name
a Debenture (or any predecessor Debenture) is registered at the close of
business on the and the , as the case
may be, next preceding such Interest Payment Date. Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.
REDEMPTION
The Debentures are redeemable, in whole or in part, at the option of TGP at
any time at a redemption price equal to the Make-Whole Price. "Make-Whole Price"
means an amount equal to the greater of (i) 100% of the principal amount of such
Debentures and (ii) as determined by an Independent Investment Banker, the sum
of the present values of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, accrued and unpaid interest thereon to the
date of redemption. Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the date of redemption to each registered holder of
the Debentures to be redeemed. Unless TGP defaults in payment of the redemption
price, on and after the date of redemption, interest will cease to accrue on the
Debentures or portions thereof called for redemption. The Debentures do not
provide for any sinking fund.
"Adjusted Treasury Rate" means, with respect to any date of redemption, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming
S-11
<PAGE> 12
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such date of
redemption, plus %.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures.
"Comparable Treasury Price" means, with respect to any date of redemption,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such date of redemption, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities", or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such date of redemption,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with TGP.
"Reference Treasury Dealer" means each of Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and NationsBanc Montgomery
Securities LLC and their respective successors; provided, however, that if any
of the foregoing shall not be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), TGP shall substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any date of redemption, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such date of redemption.
TGP may purchase Debentures in the open market, by tender or otherwise.
Debentures so purchased may be held, resold or surrendered to the Trustee for
cancellation. If applicable, TGP will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
other securities laws and regulations in connection with any such purchase. The
Debentures may be defeased in the manner provided in the Indenture.
BOOK-ENTRY SYSTEM
DTC will act as securities depositary for the Debentures. The Debentures
will be issued in fully registered form in the name of Cede & Co. (DTC's
nominee). One or more fully registered certificates will be issued as Global
Securities for the aggregate principal amount of the Debentures. Such Debentures
will be deposited with DTC.
DTC has advised TGP and the Underwriters that it intends to follow the
procedures described below:
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Direct Participants") deposit
S-12
<PAGE> 13
with DTC. DTC also facilitates the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Direct Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants" and, together with Direct Participants, "Participants"). The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Purchases of Debentures under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debentures on DTC's
records. The ownership interest of each actual purchaser of Debentures
("Beneficial Owner") is in turn to be recorded on the Participants' records.
Beneficial Owners will not receive written confirmation from DTC on their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Debentures are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Debentures except in the event that use of the
book-entry system for the Debentures is discontinued.
To facilitate subsequent transfers, all Debentures deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debentures with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Debentures. DTC's records reflect only the
identity of the Direct Participants to whose accounts such Debentures are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Debentures. Under its usual procedures, DTC would mail an Omnibus Proxy to TGP
as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Debentures are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Principal and interest payments on the Debentures will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payment date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, TGP or the Trustee, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of TGP or
the Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursements of such payments to the Beneficial
Owners shall be the responsibility of Participants.
S-13
<PAGE> 14
Settlement for the Debentures will be made by the Underwriters in
immediately available funds and all applicable payments of principal and
interest on the Debentures issued as Global Securities will be made by TGP in
immediately available funds. The Global Securities will be in the Same-Day Funds
Settlement System at DTC and, to the extent that secondary market trading in
beneficial interests in the Global Securities is effected through the facilities
of DTC, such trades will be settled in immediately available funds.
So long as DTC or its nominee is the registered owner of the Global
Securities, DTC or its nominee, as the case may be, will be considered the sole
owner or Holder (as defined in the Indenture) of the Debentures represented by
such Global Securities for all purposes under the Indenture. Except as set forth
below, Beneficial Owners of interests in a Global Security will not be entitled
to have Debentures represented by a Global Security registered in their names,
will not receive or be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the owners or Holders thereof under
the Indenture. Accordingly, each Beneficial Owner of an interest in a Global
Security must rely on the procedures of DTC and, if such person is not a
Participant, those of the Participants through which such Beneficial Owner owns
its interest, in order to exercise any rights of a Holder under the Indenture.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in the Global
Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Debentures at any time by giving reasonable notice to TGP or the
Trustee. Under such circumstances, if a successor securities depositary is not
obtained, certificates representing Debentures, in fully registered form, are
required to be printed and delivered.
TGP may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, certificates
representing the Debentures, in fully registered form, will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that TGP believes to be reliable (including DTC),
but TGP takes no responsibility for the accuracy thereof.
Neither TGP, the Trustee nor the Underwriters will have any responsibility
or obligation to Participants, or the persons for whom they act as nominees,
with respect to the accuracy of the records of DTC, its nominee or any
Participant with respect to any ownership interest in the Debentures, or
payments to, or the providing of notice for Participants or Beneficial Owners.
CERTAIN COVENANTS
The Indenture contains those covenants described under "Description of the
Debt Securities -- Certain Covenants and -- Consolidation, Merger and Sale of
Assets" in the accompanying Prospectus. The Company believes that the
Reorganization will be allowed under such covenants.
For other terms of the Debentures, see "Description of Debt Securities" in
the accompanying Prospectus.
S-14
<PAGE> 15
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
relating to the Debentures, the Company has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc.
and NationsBanc Montgomery Securities LLC are acting as representatives (the
"Representatives"), has severally agreed to purchase from the Company, the
respective principal amount of Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER DEBENTURES
- ----------- ------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation......... $
Chase Securities Inc........................................
NationsBanc Montgomery Securities LLC.......................
------------
Total............................................. $300,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Debentures offered hereby are
subject to the approval of certain legal matters by counsel and to certain other
conditions. If any of the Debentures are purchased by the Underwriters pursuant
to the Underwriting Agreement, all such Debentures must be so purchased.
The Company has been advised that the Underwriters propose to offer the
Debentures to the public initially at the price to the public set forth on the
cover page of this Prospectus Supplement and to certain dealers (who may include
the Underwriters) at such price less a concession not to exceed per
Debenture. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of per Debenture to any other Underwriter and certain other
dealers. After the completion of the offering of the Debentures, the offering
price and other selling terms may be changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that the Underwriters may be required to make in
respect thereof. Such indemnification provisions would require the Company to
hold the Underwriters harmless from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement contained in
this Prospectus Supplement or by any omission to state a material fact herein,
except for untrue statements or omissions based upon information relating to any
Underwriter furnished in writing to the Company by such Underwriter expressly
for use in this Prospectus Supplement and subject to certain other limitations.
Other than in the United States, no action has been taken in any
jurisdiction by the Company or the Underwriters that would permit a public
offering of the Debentures offered hereby in any jurisdiction where action for
that purpose is required. The distribution of this Prospectus Supplement and the
offering or sale of the Debentures offered hereby in certain jurisdictions may
be restricted by law. Accordingly, the Debentures offered hereby may not be
offered or sold, directly or indirectly, and neither this Prospectus Supplement
nor any other offering material or advertisements in connection with the
Debentures may be distributed or published, in or from any jurisdiction, except
under circumstances that will result in compliance with applicable rules and
regulations of any such jurisdiction. Persons into whose possession this
Prospectus Supplement comes are required by Company and the Underwriters to
inform themselves about and to observe any applicable restrictions. This
Prospectus Supplement does not constitute an offer of, or an invitation to
subscribe for purchase of, any Debentures and may not be used for the purpose of
an offer to, or solicitation by, anyone in any jurisdiction or in any
circumstances in which such offer or solicitation is not authorized or is
unlawful.
S-15
<PAGE> 16
The Representatives have advised the Company that the Underwriters will not
confirm sales of Debentures to accounts over which they exercise discretionary
authority.
In connection with the offering of the Debentures, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Debentures. Specifically, the Underwriters may overallot the offering,
creating a syndicate short position. Underwriters may bid for and purchase
Debentures in the open market to cover syndicate short positions. In addition,
the Underwriters may bid for and purchase Debentures in the open market to
stabilize the price of the Debentures. These activities may stabilize or
maintain the market price of the Debentures above independent market levels. The
Underwriters are not required to engage in these activities and may end these
activities at any time.
Prior to this offering, there has been no public market for the Debentures.
The Company has been advised by the Underwriters that from time to time one or
more of the Underwriters may make a market in the Debentures; however, they are
not obligated to do so, and they may discontinue any such market making at any
time without notice. Therefore, no assurance can be given as to the liquidity of
the trading market for the Debentures or that an active public market will
develop. The Company does not intend to apply for the listing of the Debentures
on any national securities exchange or national securities quotation system.
In the ordinary course of their respective businesses, certain of the
Underwriters and their affiliates have engaged, and may in the future engage, in
investment banking or commercial banking transactions with El Paso Energy and
its subsidiaries, including TGP. Donaldson, Lufkin & Jenrette Securities
Corporation received customary underwriting fees in connection with the March
1998 offering of Trust Preferred Securities of El Paso Energy Capital Trust I.
Affiliates of Chase Securities Inc. and NationsBanc Montgomery Securities LLC
are lenders under the Revolving Credit Facility. An affiliate of Chase
Securities Inc. serves as the agent under the Revolving Credit Facility. The
offering of the Debentures will be conducted in accordance with Conduct Rule
2710(c)(8) of the National Association of Securities Dealers, Inc. An affiliate
of Chase Securities Inc. is the Trustee under the Indenture.
LEGAL MATTERS
The validity of the Debentures are being passed upon for the Company by
Andrews & Kurth L.L.P., Houston, Texas, and for the Underwriters by Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., Houston, Texas.
S-16
<PAGE> 17
TENNESSEE GAS PIPELINE COMPANY
DEBT SECURITIES
---------------------
Tennessee Gas Pipeline Company may use this prospectus periodically to
offer and sell one or more series of unsecured debt securities consisting of
notes, debentures or other evidences of indebtedness. The aggregate initial
public offering price of these debt securities will not exceed $600,000,000. We
may offer these securities either separately or together, in separate series,
all at prices and on terms to be determined at the time of sale and set forth in
a supplement to this prospectus.
We have included certain specific terms of the particular series of debt
securities for which this prospectus is being delivered in an accompanying
prospectus supplement. These terms include: the specific designation, aggregate
principal amount, denomination, maturity, interest rate (which may be fixed or
variable), the date or dates on which interest, if any, will be payable, the
place or places where principal, premium, if any, and interest, if any, on the
series of debt securities will be payable, any terms of redemption or
conversion, any sinking fund or analogous provisions, the currency or currency
units in which principal, premium, if any, and interest, if any, on the series
of debt securities will be payable, the purchase price, terms relating to global
securities, any listing on a national securities exchange, provisions regarding
registration of transfer or exchange, the proceeds to us and other special
terms.
We may sell the debt securities to or through underwriters, dealers or
agents or directly to purchasers, or through a combination of these methods. The
accompanying prospectus supplement sets forth the names of any underwriters,
dealers or agents and any applicable fees, commissions, and discounts. This
prospectus may be used to offer and sell any series of debt securities only if
accompanied by the prospectus supplement for that series.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
OCTOBER 6, 1998.
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Certain Forward-Looking Statements.......................... 2
The Company................................................. 3
General................................................... 3
Interstate Systems........................................ 3
Field Services............................................ 3
Merchant Service.......................................... 3
International............................................. 4
Recent Developments....................................... 4
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 5
General................................................... 5
Global Debt Securities.................................... 6
Certain Covenants......................................... 6
Consolidation, Merger and Sale of Assets.................. 9
Events of Default......................................... 9
Satisfaction and Discharge; Legal and Covenant
Defeasance............................................. 10
Changes in Control and Highly Leveraged Transactions...... 11
Modification of the Indenture............................. 11
No Personal Liability of Officers, Directors, Employees or
Stockholders........................................... 12
Applicable Law............................................ 12
Concerning the Trustees................................... 12
Plan of Distribution........................................ 13
Legal Matters............................................... 13
Experts..................................................... 13
Where To Find More Information.............................. 14
</TABLE>
CERTAIN FORWARD-LOOKING STATEMENTS
This prospectus and the accompanying prospectus supplement (including the
documents incorporated by reference herein) contain 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, the Company cautions that,
while such assumptions or bases are believed to be reasonable and are made in
good faith, assumed facts or bases almost always vary from the 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, the Company, including its subsidiaries, or its management expresses
an expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but 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" and similar expressions may identify forward-looking statements.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include increasing competition
within the Company's industry, the timing and extent of changes in commodity
prices for natural gas and power, uncertainties associated with acquisitions and
joint ventures, potential environmental liabilities, potential contingent
liabilities and tax liabilities related to acquisitions, political and economic
risks associated with current and future operations in foreign countries,
conditions of the equity and other capital markets during the periods covered by
the forward-looking statements, and other risks, uncertainties and factors,
including the effect of the year 2000 date change, discussed more completely in
the Company's other filings with the Securities and Exchange Commission,
including the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
2
<PAGE> 19
THE COMPANY
GENERAL
Tennessee Gas Pipeline Company ("TGP" or the "Company") is a wholly owned
subsidiary of El Paso Tennessee Pipeline Co., which in turn is an indirect
subsidiary of El Paso Energy Corporation ("El Paso Energy"). 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, which generally is subject to regulation by the
Federal Energy Regulatory Commission, as well as certain other non-regulated
business operations, such as natural gas and power marketing, intrastate
pipeline operations, international pipelines and power generation, and domestic
power generation operations.
INTERSTATE SYSTEMS
The Company's interstate natural gas transmission operations include three
interstate pipeline systems: the TGP System, the Midwestern System, and the East
Tennessee System, collectively referred to as the Interstate Systems.
The TGP System. The TGP System consists of approximately 14,800 miles of
pipeline. The TGP System serves the northeast section of the United States,
including the New York City and Boston metropolitan areas. The multiple-line
system begins in the gas-producing regions of Texas and Louisiana, including the
Gulf of Mexico.
The Midwestern System. The Midwestern System consists of approximately 400
miles of pipeline and extends from a connection with the TGP System at Portland,
Tennessee to Chicago. The Midwestern System principally serves the Chicago
metropolitan area.
The East Tennessee System. The East Tennessee System consists of
approximately 1,100 miles of pipeline. The East Tennessee System serves the
states of Tennessee, Virginia and Georgia and connects with the TGP System in
Springfield and Lobelville, Tennessee.
Other. The Company owns a 19 percent interest in Portland Natural Gas
Transmission ("Portland") System which is developing a 292-mile interstate
natural gas pipeline with a projected capacity of 178 million cubic feet per day
extending from the Canadian border near Pittsburg, New Hampshire to Dracut,
Massachusetts. In April 1998, Portland secured $256 million in non-recourse
project financing. Construction started in June 1998 and targeted completion for
the project is year-end 1998.
FIELD SERVICES
The Company's natural gas gathering and processing business provides
natural gas gathering, products extraction, dehydration, compression and
intrastate transmission services. The Company owns or has interest in
approximately 200 miles of gathering systems and approximately 1,300 miles of
intrastate transmission pipeline. In addition, the Company owns or has interest
in 6 natural gas processing facilities.
MERCHANT SERVICES
The Company provides a broad range of energy products and services to its
customers, including the purchasing, marketing and trading of natural gas,
natural gas liquids, power, crude oil and refined products, as well as providing
integrated price risk management services associated with these commodities, and
the participation in the development and ownership of domestic power generating
facilities. With headquarters in Houston, Texas and 8 sales offices throughout
the United States and Canada, the Company is one of the industry's leading
natural gas and power services providers.
3
<PAGE> 20
INTERNATIONAL
The Company has 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.
TGP is a Delaware corporation with its principal executive offices located
at 1001 Louisiana Street, Houston, Texas 77002. Its telephone number at that
address is (713) 420-2131.
RECENT DEVELOPMENTS
El Paso Energy, the indirect corporate parent of TGP, has recently received
a ruling from the Internal Revenue Service that would allow El Paso Energy to
reorganize its subsidiaries into a business structure in which TGP would
transfer a substantial number of its subsidiaries (and their assets and
operations) to El Paso Energy or other entities owned by El Paso Energy. As a
result, if El Paso Energy completes such internal reorganization ("the
Reorganization"), TGP's primary asset will consist of the TGP System. Completion
of the Reorganization will cause TGP to dispose of, and to eliminate from its
consolidated financial statements, the following: (i) East Tennessee Natural Gas
Company (which owns the East Tennessee System); (ii) Midwestern Gas Transmission
Company (which owns the Midwestern System); (iii) all international
subsidiaries; (iv) all field services operations; (v) all merchant services
operations; and (vi) all subsidiaries with corporate or discontinued operations.
If the Reorganization occurs, it is not anticipated that it will occur before
late 1998 or early 1999.
USE OF PROCEEDS
Unless otherwise specified in a supplement to this Prospectus, the net
proceeds received by TGP from the sale of the debt securities offered hereby
will be used to reduce indebtedness of TGP and for general corporate purposes.
Funds not required immediately for such purposes may be invested in marketable
securities and short-term investments.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------
1998(1) 1997 1996 1995 1994 1993
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(2)............. 2.80 3.87 3.53 3.20 3.61 3.21
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) Because of the seasonal nature of TGP's business, the ratio for the
six-month period may not necessarily be indicative of the ratio that will
result for the full year 1998.
(2) In March 1998, El Paso Tennessee Pipeline Co. contributed the common stock
of El Paso Marketing Services Company to TGP for a total value of $47
million. The ratio of earnings to fixed charges includes the effects of the
contribution of El Paso Marketing Services Company, assuming the transaction
had occurred January 1, 1993.
For purposes of calculating these ratios: (i) "fixed charges" represent
interest cost (exclusive of interest on rate refunds), amortization of debt
costs, the estimated portion of rental expense representing the interest
factors; and (ii) "earnings" represent the aggregate of income from continuing
operations before income taxes, interest expense (exclusive of interest on rate
refunds), amortization of debt costs, and the estimated portion of rental
expense representing the interest factor, adjusted to reflect actual
distributions from equity investments.
4
<PAGE> 21
DESCRIPTION OF DEBT SECURITIES
The notes, debentures or other evidences of indebtedness (the "Debt
Securities") offered hereby will represent unsecured obligations of TGP. The
Debt Securities offered hereby will be issued under one or more supplemental
indentures to an Indenture dated as of March 4, 1997 (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 accompanying this Prospectus
(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 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."
5
<PAGE> 22
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 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;
6
<PAGE> 23
(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);
(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,
7
<PAGE> 24
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 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
8
<PAGE> 25
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.
"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.
9
<PAGE> 26
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 aggregate 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.
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
10
<PAGE> 27
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 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.
11
<PAGE> 28
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.
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 Energy and TGP credit
facilities.
12
<PAGE> 29
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 of
1933, as amended.
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 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 Andrews
& Kurth L.L.P., Houston, Texas. 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 consolidated and combined financial statements and financial statement
schedule of TGP as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996, and 1995, incorporated by reference in this Prospectus,
have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
13
<PAGE> 30
WHERE TO FIND MORE INFORMATION
We have filed a registration statement on Form S-3 to register with the SEC
the debt securities that may be offered by us using this prospectus and the
prospectus supplement. This prospectus is a part of that registration statement.
As allowed by SEC rules, this prospectus does not contain all of the information
contained in the registration statement or the exhibits to the registration
statement.
We are subject to the informational requirements of the Securities Exchange
Act of 1934. Accordingly, we file annual, quarterly and current reports, proxy
statements, and other information with the SEC. The public may read and copy any
reports, statements, or other information that we file at the SEC's public
reference room at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C.
20549. The public may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov." You may also access
additional information about us at our web site, "http://www.epenergy.com."
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information by referring
to another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus, except for any information
superseded by information in this prospectus or a prospectus supplement. This
prospectus incorporates by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important information
about us and our finances.
<TABLE>
<CAPTION>
TGP SEC FILINGS (FILE NO. 1-4101) PERIOD
<S> <C>
- Annual Report on Form 10-K Year ended December 31, 1997
- Quarterly Reports on Form 10-Q Quarters ended March 31, 1998 and
June 30, 1998
- Amended Quarterly Report on Quarter ended March 31, 1998
Form 10-Q/A
- Current Report on Form 8-K October 5, 1998
</TABLE>
The documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14,
and 15 of the Exchange Act after the date of this prospectus and before the
termination of any offering of debt securities made by this prospectus are also
incorporated by reference into this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Tennessee Gas Pipeline Company
Attention: David L. Siddall, Corporate Secretary
1001 Louisiana Street
Houston, Texas 77002
(713) 420-2131
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. We have not
authorized anyone to provide you with information that is different from what is
contained in this prospectus.
You should not assume that the information contained in this prospectus or
any prospectus supplement is accurate as of any date other than the date on the
front of those documents, and neither the delivery of this prospectus or any
prospectus supplement to you nor the issuance of debt securities under them will
create any implication to the contrary.
14
<PAGE> 31
TENNESSEE GAS PIPELINE COMPANY
$300,000,000
% DEBENTURES DUE 20
-------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus supplement and the prospectus or
to make representations as to matters not stated in this prospectus supplement
and the prospectus. You must not rely on unauthorized information. This
prospectus supplement and the prospectus are not an offer to sell these
securities or our solicitation of your offer to buy these securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery of
this prospectus supplement or the prospectus nor any sales made hereunder after
the date of this prospectus supplement and the prospectus shall create an
implication that the information contained herein or the affairs of the company
have not changed since the date thereof.
- --------------------------------------------------------------------------------
