<PAGE> 1
PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(b)(2)
(To Prospectus Dated September 29, 1997) REGISTRATION NO. 333-27311
$300,000,000
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
$200,000,000 6 1/8% NOTES DUE 2005
$100,000,000 6 1/4% NOTES DUE 2008
------------------
Interest on the 6 1/8% Notes due January 15, 2005, (the "2005 Notes") and
the 6 1/4% Notes due January 15, 2008 (the "2008 Notes" and collectively with
the "2005 Notes," the "Notes") is payable semi-annually on January 15 and July
15 of each year, beginning on July 15, 1998. The Notes are not subject to
redemption and have no sinking fund provisions. The 2005 Notes mature on January
15, 2005, and the 2008 Notes mature on January 15, 2008.
The 2005 Notes and 2008 Notes will each be represented by a Global Note
registered in the name of the nominee of the Depository Trust Company ("DTC"),
which will act as the Depository (the "Depository"). Beneficial interests in
each Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and, with respect to the
beneficial owners' interests, by the Depository's participants. Except as
described in the Prospectus, Notes in definitive form will not be issued.
Settlement for the Notes will be in same-day funds. See "Description of
Notes -- Book-Entry System."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==============================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2005 Note............................ 99.439% 0.625% 98.814%
Total.................................... $198,878,000 $1,250,000 $197,628,000
- --------------------------------------------------------------------------------------------------------------
Per 2008 Note............................ 99.465% 0.650% 98.815%
Total.................................... $99,465,000 $650,000 $98,815,000
==============================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from January 16, 1998.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $500,000.
------------------
The Notes are being offered by Salomon Brothers, Inc, Chase Securities
Inc., CIBC Oppenheimer and Citicorp Securities, Inc. (collectively the
"Underwriters"), subject to prior sale, when, as and if delivered to and
accepted by the Underwriters, subject to approval of certain legal matters by
counsel for the Underwriters and certain other conditions. The Underwriters
reserve the right to withdraw, cancel or modify such offer and reject orders in
whole or in part. It is expected that delivery of the Notes will be made in New
York, New York on or about January 16, 1998.
SALOMON SMITH BARNEY
CHASE SECURITIES INC.
CIBC OPPENHEIMER
CITICORP SECURITIES, INC.
The date of this Prospectus Supplement is January 13, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents incorporated by reference in the Prospectus
dated September 29, 1997, the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, is incorporated by reference herein.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
are estimated at $295,943,000 after the deduction of the underwriting discount
and of the estimated expenses payable by the Company. The Company intends to use
the net proceeds of this offering for general corporate purposes and in
connection with the repayment of outstanding debt, including bank loans under
its revolving credit facility (the "Credit Agreement") under which commercial
banking affiliates of Chase Securities Inc., CIBC Oppenheimer, and Citicorp
Securities, Inc. are lenders. Loans outstanding under the Credit Agreement
(approximately $160,000,000 in principal amount) bear interest at variable rates
(current rate of 5.90%), and mature on February 12, 1998.
RATIO OF EARNINGS TO FIXED CHARGES
The following table represents the Company's ratio of earnings to fixed
charges for the periods shown.
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
- ------------------------------------------- --------------------------------------
PERIOD PERIOD
NINE MONTHS JANUARY 18, JANUARY 1,
ENDED YEAR ENDED 1995 TO 1995 TO YEAR ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, JANUARY 17, ------------------------
1997 1996 1995 1995 1994 1993 1992
- ------------- ------------ ------------ ----------- ------ ------ ------
<C> <C> <C> <C> <C> <C> <C>
3.22 3.13 3.19 (a) 3.26 2.89 2.24
</TABLE>
- ---------------
(a) Earnings were inadequate to cover fixed charges for the period January 1,
1995, to January 17, 1995, by $7,434,000.
For the purpose of this ratio: (i) earnings consist of income or loss
before fixed charges and income taxes for the Company and (ii) fixed charges
consist of interest and debt expense on all indebtedness (without reduction for
interest capitalized) and that portion of rental payments on operating leases
estimated to represent an interest factor for the Company.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to herein as the "Notes" and in the Prospectus as the "Debt
Securities") supplements, and to the extent inconsistent therewith, replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made. The
following summary of the Notes is qualified in its entirety by reference to the
Indenture referred to in the Prospectus.
GENERAL
The 2005 Notes will be limited to $200,000,000 in aggregate principal
amount. The 2008 Notes will be limited to $100,000,000 in aggregate principal
amount. The Notes will be issued in denominations of $1,000 and integral
multiples of $1,000, will bear interest from January 16, 1998, at the annual
rate set forth on the cover page of this Prospectus Supplement, and will mature
in the case of the 2005 Notes on January 15, 2005,
S-2
<PAGE> 3
and in the case of the 2008 Notes on January 15, 2008. Interest will be payable
semi-annually on January 15 and July 15, commencing July 15, 1998 to the holders
of record of the Notes on the preceding January 1 and July 1 respectively. Each
series of Notes will be issued in book-entry form. See "Description of Debt
Securities -- Registered Global Securities" in the Prospectus.
The Notes are not subject to redemption and have no sinking fund
provisions.
BOOK-ENTRY SYSTEMS
Each of the 2005 Notes and the 2008 Notes will be issued in fully
registered form in the name of Cede & Co., as nominee of DTC. One or more fully
registered certificates will be issued as Global Notes for the 2005 Notes in the
aggregate principal amount of the 2005 Notes, and one or more fully registered
certificates will be issued as Global Notes for the 2008 Notes in the aggregate
principal amount of the 2008 Notes. Such Global Notes will be deposited with DTC
and may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee to a
successor of DTC or a nominee of such successor.
DTC has advised the Company and the Underwriters as follows:
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" under 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 Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities,
through electronic computerized book-entry changes in 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 New York Stock Exchange, Inc., 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"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Notes
on DTC's records. The ownership of interest of each actual purchaser
of Notes ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from
the Direct and Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the
Notes 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 Notes, except in the event that use of the book-entry system
for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Notes 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
Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Notes 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
Direct Participants and Indirect Participants to
S-3
<PAGE> 4
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 Global Notes. Under its usual procedures DTC mails an Omnibus
Proxy to Issuer 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 Securities are credited on the
record date (identified in the listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Notes will be made
to DTC. The Company expects that DTC, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit
immediately Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such Global Note as shown on DTC's records. The
Company also expects that 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, the Company or
the Trustee, subject to any statutory or regulatory requirements as
may be in effect from time to time.
DTC may discontinue providing its service as securities
depositary with respect to the Notes at any time by giving reasonable
notice to the Company or the Trustee. In addition, the Company may
decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). Under such
circumstances, if a successor securities depositary is not obtained,
Note certificates in fully registered form are required to be printed
and delivered to Beneficial Owners of the Global Notes representing
such Notes.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable
(including DTC), but the Company takes no responsibility for the accuracy
thereof.
Neither the Company, 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 Notes, or payments
to, or the providing of notice to Participants or Beneficial Owners.
The Notes will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in the Notes will, therefore, settle in
immediately available funds. All applicable payments of principal and interest
on the Notes issued as Global Notes will be made by the Company in immediately
available funds.
For other terms of the Notes, see "Description of Debt Securities" in the
accompanying Prospectus.
DEFEASANCE
The Notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Securities -- Defeasance"
in the Prospectus.
S-4
<PAGE> 5
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), dated January 13, 1998, among the Company and
the several Underwriters named below (the "Underwriters"), the Company has
agreed to sell to the Underwriters and the Underwriters have severally agreed to
purchase from the Company, the following respective principal amounts of Notes:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITER THE 2005 NOTES THE 2008 NOTES
----------- -------------- --------------
<S> <C> <C>
Salomon Brothers, Inc................................... $ 50,000,000 $ 25,000,000
Chase Securities Inc.................................... 50,000,000 25,000,000
CIBC Oppenheimer........................................ 50,000,000 25,000,000
Citicorp Securities, Inc................................ 50,000,000 25,000,000
------------ ------------
Total......................................... $200,000,000 $100,000,000
============ ============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any of the Notes are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers
initially at such price less a discount not in excess of 0.375% of the principal
amount of the 2005 Notes and 0.400% of the principal amount of the 2008 Notes.
The Underwriters may allow, and such dealers may reallow, a concession to
certain other dealers not in excess of 0.250% of the principal amount of the
2005 Notes and 0.250% of the principal amount of the 2008 Notes. After the
initial offering of the Notes to the public, the public offering price and such
concessions may be changed.
The Underwriters and their affiliates have in the past and may in the
future provide investment banking, general financing and banking or other
services to the Company and its affiliates. In particular, The Chase Manhattan
Bank, an affiliate of Chase Securities Inc., Canadian Imperial Bank of Commerce,
an affiliate of CIBC Oppenheimer and Citibank, N.A., an affiliate of Citicorp
Securities, Inc. are currently lenders to the Company under the Company's
revolving credit agreement (the "Credit Agreement"). The Company intends to
repay all amounts currently outstanding under the Credit Agreement. See "Use of
Proceeds." Because more than 10% of the net offering proceeds will be paid to
affiliates of members of the National Association of Securities Dealers (the
"NASD"), the offering is being made pursuant to Rule 2710(c)(8) of the Conduct
Rules of the NASD.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
and to contribute to payments which the Underwriters might be required to make
in respect thereof.
In connection with the offering and sale of the Notes, Salomon Brothers
Inc, on behalf of the Underwriters, may engage in overallotment, stabilizing
transactions and syndicate covering transactions in accordance with Regulation M
under the Exchange Act. Overallotment involves sales in excess of the offering
size, which creates a short position for the Underwriters. Stabilizing
transactions permit bids to purchase the Notes in the open market for the
purpose of pegging, fixing or maintaining the price of the Notes. Syndicate
covering transactions involve purchases of the Notes in the open market after
the distribution has been completed in order to cover short positions. Such
stabilizing transactions and syndicate covering transactions may cause the price
of the Notes to be higher than it would otherwise be in the absence of such
transactions. Such activities, if commenced, may be discontinued at any time.
Each of the 2005 Notes and the 2008 Notes is a new series of securities
with no established trading market. The Underwriters have advised the Company
that they intend to make a market in each series of Notes, but are under no
obligation to do so and such market making may be terminated at any time without
notice. Therefore, no assurance can be given as to the liquidity of, or the
trading market for, the Notes.
S-5
<PAGE> 6
LEGAL MATTERS
Certain legal matters in connection with the Notes will be passed upon for
the Company by William G. von Glahn, Senior Vice President and General Counsel
of The Williams Companies, Inc., and for the Underwriters by Davis Polk &
Wardwell, New York, New York. Mr. von Glahn beneficially owns approximately
58,065 shares of Williams' Common Stock and also has exercisable options to
purchase an additional 109,024 shares of Williams' Common Stock. Pursuant to its
By-laws and an indemnity agreement, Williams is required to indemnify Mr. von
Glahn to the fullest extent permitted by Delaware law against any expenses
actually and reasonably incurred by him in connection with any action, suit or
proceeding in which he is made party by reason of his being an officer of
Williams. Williams also maintains directors' and officers' liability insurance
under which Mr. von Glahn is insured against certain expenses and liabilities.
S-6
<PAGE> 7
PROSPECTUS
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
DEBT SECURITIES
---------------------
Transcontinental Gas Pipe Line Corporation (the "Company") may offer and
sell from time to time in one or more series unsecured debentures, notes, or
other evidences of indebtedness ("Debt Securities") with an initial offering
price not to exceed $500,000,000 in the aggregate (or the equivalent in foreign
denominated currency or units based on or related to currencies, including
European Currency Units). All specific terms of the offering and sale of the
Debt Securities, including the (a) specific designation, rights and restrictions
and the currencies or composite currencies in which the Debt Securities are
denominated, the aggregate principal amount, the maturity, rate and time of
payment of interest, and any conversion, exchange, redemption or sinking fund
provisions, and (b) initial public offering price, listing on any securities
exchange, any other specific terms in connection with the offering of the Debt
Securities, and the agents, dealers or underwriters, if any, to be utilized in
connection with the sale of the Debt Securities, will be set forth in an
accompanying Prospectus Supplement (the "Prospectus Supplement"). The Debt
Securities may be sold for U.S. dollars, foreign denominated currency or
currency units; principal of and any interest on the Debt Securities may
likewise be payable in U.S. dollars, foreign denominated currency or currency
units -- in each case, as the Company specifically designates. The managing
underwriters with respect to each series sold to or through underwriters will be
named in the Prospectus Supplement.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The Debt Securities may be offered through dealers, through underwriters,
or through agents designated from time to time as set forth in the Prospectus
Supplement. Net proceeds to the Company will be the purchase price in the case
of a dealer, the public offering price less discount in the case of an
underwriter, or the purchase price less commission in the case of an agent -- in
each case, less other expenses attributable to issuance and distribution. See
"Plan of Distribution" for possible indemnification arrangements for dealers,
underwriters, and agents.
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy any of the Debt Securities other than the Debt Securities
described in the accompanying Prospectus Supplement.
---------------------
The date of this Prospectus is September 29, 1997.
<PAGE> 8
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Debt Securities offered hereby. Certain portions of the Registration
Statement have not been included in this Prospectus as permitted by the
Commission's rules and regulations. For further information, reference is made
to the Registration Statement and the exhibits thereto. The Company is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports and
other information with the Commission. The Registration Statement (with
exhibits), as well as such reports and other information filed by the Company
with the Commission, can be inspected and copied at the public reference
facilities maintained by the Commission at its principal offices at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and its
regional offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New York, New
York 10048; or from the Commission's worldwide web site at http://www.sec.gov.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549.
---------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER, OR AGENT. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE DEBT SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1997, and June 30, 1997, ("Form 10-Q"), and the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, ("Form 10-K"),
filed by the Company with the Commission under the Exchange Act are incorporated
herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement in
this Prospectus or in any subsequently filed document that also is or is deemed
to be incorporated by reference modifies or replaces such statement.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
herein, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
Transcontinental Gas Pipe Line Corporation, P.O. Box 1396, Houston, Texas 77251,
Attention: General Counsel, (713) 215-2000.
REPORTS TO HOLDERS OF DEBT SECURITIES
The Company is not required to publish annual and quarterly reports to
holders of Debt Securities. The Company's quarterly report on Form 10-Q and
annual report on Form 10-K, which contains audited financial statements, will be
provided to holders of Debt Securities upon request.
1
<PAGE> 9
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE MARKET PRICE OF THE DEBT
SECURITIES. SPECIFICALLY, THE UNDERWRITERS, IF ANY, MAY OVERALLOT IN CONNECTION
WITH THE OFFERING AND MAY BID FOR AND PURCHASE DEBT SECURITIES IN THE OPEN
MARKET.
THE COMPANY
The Company is an interstate natural gas transmission company that owns and
operates a natural gas pipeline system extending from Texas, Louisiana,
Mississippi, and the Gulf of Mexico through the States of Alabama, Georgia,
South Carolina, North Carolina, Virginia, Maryland, Pennsylvania, and New Jersey
to the New York City metropolitan area. The Company's transmission activities
are subject to regulation by the Federal Energy Regulatory Commission ("FERC")
under the Natural Gas Act of 1938 and under the Natural Gas Policy Act of 1978.
The Company was formerly a wholly owned subsidiary of Transco Energy
Company, which The Williams Companies, Inc. ("Williams") acquired on January 18,
1995. Following the acquisition, direct ownership of the Company was transferred
to Williams.
The Company was incorporated in Delaware in 1948. The principal executive
offices of the Company are located at the Transco Tower, 2800 Post Oak
Boulevard, Houston, Texas 77056 (telephone: (713) 215-2000).
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used for general corporate
purposes, including repayment of outstanding debt. The Company anticipates that
it will raise additional funds from time to time through debt financings,
including sale of additional Debt Securities and further borrowings under its
uncommitted short-term debt facilities and bank credit agreement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table represents the Company's ratio of earnings to fixed
charges for the periods shown.
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
---------------------------------------- --------------------------------------
PERIOD PERIOD
SIX MONTHS JANUARY 18, JANUARY 1,
ENDED YEAR ENDED 1995 TO 1995 TO YEAR ENDED DECEMBER 31,
JUNE 30, DECEMBER 31, DECEMBER 31, JANUARY 17, ------------------------
1997 1996 1995 1995 1994 1993 1992
---------- ------------ ------------ ----------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
3.28 3.13 3.19 (a) 3.26 2.89 2.24
</TABLE>
- ---------------
(a) Earnings were inadequate to cover fixed charges for the period January 1,
1995, to January 17, 1995, by $7,434,000.
For the purpose of this ratio: (i) earnings consist of income or loss
before fixed charges and income taxes for the Company and (ii) fixed charges
consist of interest and debt expense on all indebtedness (without reduction for
interest capitalized) and that portion of rental payments on operating leases
estimated to represent an interest factor for the Company.
2
<PAGE> 10
SELECTED FINANCIAL DATA
The following income statement and cash flow data for the six months ended
June 30, 1997, and the balance sheet data at June 30, 1997, have been derived
from the Company's unaudited financial statements included in the Company's
Quarterly Report on Form 10-Q for the six months ended June 30, 1997,
incorporated herein by reference. The following income statement and cash flow
data for the years 1994 through 1996 and the balance sheet data for 1995 and
1996 have been derived from the Company's audited financial statements included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996, incorporated herein by reference. The income statement and cash flow data
for 1993 and 1992 and the balance sheet data for 1994, 1993, and 1992 set forth
below have been derived from audited financial statements of the Company
previously filed with the Commission but not incorporated by reference. The
acquisition of Transco Energy Company and its subsidiaries, including the
Company, by Williams was accounted for by using the purchase method of
accounting. Accordingly, the purchase price was "pushed down" and recorded in
the following selected data which affects the comparability of the
post-acquisition and pre-acquisition financial data. The selected financial data
should be read in conjunction with such financial statements, the notes thereto
and the related management's discussion and analysis of financial condition and
results of operations.
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
---------------------------------------- --------------------------------------
PERIOD PERIOD
SIX MONTHS JANUARY 18, JANUARY 1,
ENDED YEAR ENDED 1995 TO 1995 TO YEAR ENDED DECEMBER 31,
JUNE 30, DECEMBER 31, DECEMBER 31, JANUARY 17, ------------------------
1997 1996 1995 1995 1994 1993 1992
---------- ------------ ------------ ----------- ------ ------ ------
(MILLIONS OF DOLLARS) (MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Operating revenues.................... $695 $1,595 $1,405 $ 72 $1,591 $1,522 $1,257
Operating income (loss)............... $113 $ 209 $ 188 $ (5) $ 223 $ 202 $ 178
Common stock equity in net income
(loss)............................. $ 51 $ 96 $ 86 $(10) $ 105 $ 86 $ 65
Net cash provided by (used in)
operating activities............... $ 86 $ 201 $ 303 $(32) $ 162 $ 259 $ 4
</TABLE>
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
-------------------------- ------------------------
DECEMBER 31, DECEMBER 31,
JUNE 30, --------------- ------------------------
1997 1996 1995 1994 1993 1992
-------- ------ ------ ------ ------ ------
(MILLIONS OF DOLLARS) (MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Property, plant and
equipment -- net................... $3,425 $3,420 $3,285 $1,763 $1,743 $1,764
Total assets.......................... $3,941 $4,060 $3,922 $2,271 $2,304 $2,302
Long-term debt, less current
maturities......................... $ 673 $ 681 $ 382 $ 644 $ 644 $ 519
Common stockholder's equity........... $1,868 $1,819 $1,737 $ 815 $ 707 $ 619
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior debt of the Company and will be
issued under an indenture dated as of July 15, 1996 (the "Indenture"), between
the Company and Citibank, N.A., as Trustee (the "Trustee"). The form of the
Indenture is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The following summaries of certain provisions of the
Indenture and the Debt Securities do not purport to be complete, and such
summaries are subject to the detailed provisions of the Indenture to which
reference is hereby made for a full description of such provisions, including
the definition of certain terms used herein, and for other information regarding
the Debt Securities. Numerical references in parentheses below are to sections
in the Indenture. Wherever particular sections or defined terms of the Indenture
are referred to, such sections or defined terms are incorporated herein by
reference as part of the statement made, and the statement is qualified in its
entirety by such reference. The Debt Securities offered by this Prospectus and
the accompanying Prospectus Supplement are referred to herein as "Offered Debt
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<PAGE> 11
Securities." The Indenture does not contain any covenants or provisions that
affords debt holders protection in the event of a highly leveraged transaction.
CERTAIN DEFINITIONS
Certain terms defined in the Indenture are summarized as follows:
"Attributable Debt" means, with respect to any sale and lease-back
transaction as of any particular time, the present value discounted at a
rate of interest implicit in the terms of the lease of the obligations of
the lessee under such lease for net rental payments during the remaining
term of the lease (including any period for which such lease has been
extended or may, at the option of the Company, be extended).
"Consolidated Funded Indebtedness" means the aggregate of all
outstanding Funded Indebtedness of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" means the total assets appearing on
a consolidated balance sheet of the Company and its consolidated
Subsidiaries less, in general: (i) intangible assets; (ii) current and
accrued liabilities (other than Consolidated Funded Indebtedness and
capitalized rentals or leases), deferred credits, deferred gains and
deferred income; and (iii) reserves.
"Funded Indebtedness" means any Indebtedness that matures more than
one year after the date as of which Funded Indebtedness is being determined
less any such Indebtedness as will be retired through or by means of any
deposit or payment required to be made within one year from such date under
any prepayment provision, sinking fund, purchase fund or otherwise.
"Holder" means, in general, a Person in whose name the Debt Securities
are registered, or, if not registered, the bearer thereof.
"Indebtedness" means indebtedness that is for money borrowed from
others.
"Person" means any individual, corporation, limited liability company,
limited partnership, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Principal Property" means any natural gas pipeline gathering
property, or natural gas processing plant located in the United States,
except any such property that in the opinion of the Board of Directors is
not of material importance to the total business conducted by the Company
and its consolidated Subsidiaries; provided that "Principal Property" shall
not include (i) production and proceeds from production from gas processing
plants or oil or natural gas or petroleum products in any pipeline or
storage field and (ii) any property acquired or constructed by any
Subsidiary of the Company after December 31, 1995.
"Subsidiary" means any corporation at least a majority of the
outstanding securities of which having ordinary voting power shall be owned
by the Company and/or another Subsidiary or Subsidiaries.
GENERAL
The Indenture does not limit the amount of Debt Securities, debentures,
notes, or other evidences of indebtedness that may be issued by the Company or
any of its Subsidiaries. The Debt Securities will be unsecured senior
obligations of the Company and will rank pari passu with all existing and future
unsubordinated and unsecured obligations of the Company.
The Indenture provides that Debt Securities may be issued from time to time
in one or more series and may be denominated and payable in foreign currencies
or units based on or relating to foreign currencies, including European Currency
Units. Special United States federal income tax considerations applicable to any
Debt Securities so denominated are described in the relevant Prospectus
Supplement.
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<PAGE> 12
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Debt Securities): (i) the specific designation,
aggregate principal amount, purchase price, and denomination; (ii) currency or
units based on or relating to currencies in which such Debt Securities are
denominated and/or in which principal, premium, if any, and/or any interest will
or may be payable; (iii) any date of maturity; (iv) interest rate or rates (or
method by which such rate will be determined), if any; (v) the dates on which
any such interest will be payable; (vi) the place or places where the principal
of and interest, if any, on the Offered Debt Securities will be payable; (vii)
any redemption or sinking fund provisions; (viii) whether the Offered Debt
Securities will be issuable in registered or bearer form or both and, if Offered
Debt Securities in bearer form are issuable, restrictions applicable to the
exchange of one form for another and to the offer, sale, and delivery of Offered
Debt Securities in bearer form; (ix) any applicable United States federal income
tax consequences, including whether and under what circumstances the Company
will pay additional amounts on Offered Debt Securities held by a Person who is
not a U.S. Person (as defined in the Prospectus Supplement) in respect of any
tax, assessment, or governmental charge withheld or deducted, and if so, whether
the Company will have the option to redeem such Debt Securities rather than pay
such additional amounts; and (x) any other specific terms of the Offered Debt
Securities, including any additional events of default or covenants provided for
with respect to such Debt Securities, and any terms that may be required by or
advisable under United States laws or regulations.
Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer in the manner, at the places, and
subject to the restrictions set forth in the Debt Securities and the Prospectus
Supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Debt Securities in bearer form
and the coupons, if any, appertaining thereto will be transferable by delivery.
Debt Securities that bear interest will do so at a fixed rate or a floating
rate. Debt Securities bearing no interest or interest at a rate that at the time
of issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par that are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
relevant Prospectus Supplement.
REGISTERED GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series. In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole or in part for Debt Securities in definitive registered
form, a Registered Global Security may not be transferred except as a whole by
the Depositary for such Registered Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
The Company anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of Persons that
have accounts with such Depositary ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in a
5
<PAGE> 13
Registered Global Security will be limited to participants or Persons that may
hold interests through participants. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) or by
participants or Persons that hold through participants (with respect to
interests of Persons other than participants). So long as the Depositary for a
Registered Global Security, or its nominee, is the registered owner of such
Registered Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the Debt Securities represented
by such Registered Global Security for all purposes under the Indenture. Except
as set forth below, owners of beneficial interests in a Registered Global
Security will not be entitled to have the Debt Securities represented by such
Registered Global Security registered in their names, will not receive or be
entitled to receive physical delivery of such Debt Securities in definitive form
and will not be considered the owners or Holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustee or any paying agent for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Registered
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names" and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary and
a successor Depositary is not appointed by the Company within ninety days, the
Company will issue such Debt Securities in definitive form in exchange for such
Registered Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Registered Global Security or Securities representing such Debt Securities.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Liens. The Indenture provides that, subject to certain
exceptions, the Company will not, nor will it permit any Subsidiary to, issue,
assume, or guarantee any Indebtedness secured by a mortgage, pledge, lien,
security interest, or encumbrance ("mortgage"), upon any property of the Company
or any subsidiary without effectively providing that the Debt Securities issued
thereunder shall be equally and ratably secured with such Indebtedness. Among
the exceptions are purchase money mortgages; preexisting mortgages on any
property acquired or constructed by the Company or a Subsidiary and mortgages
created within one year after completion of such acquisition or construction;
mortgages created on any contract for the sale of products or services related
to the operation or use of any property acquired or constructed within one year
after completion of such acquisition or construction; mortgages on property of a
Subsidiary existing at the time it became a Subsidiary of the Company or
existing on property at the time acquired by the Company; and other mortgages in
an aggregate amount which, at the time of the incurrence, does not exceed 5
percent of the Consolidated Net Tangible Assets. (Section 3.6).
Limitation on Sale and Lease-Back Transactions. The Indenture provides that
the Company will not, nor will it permit any Subsidiary to, sell and lease back
for more than three years any Principal Property acquired
6
<PAGE> 14
or placed into service more than 180 days before such lease arrangement, unless
the Company retires Funded Indebtedness or causes Funded Indebtedness to be
retired within 90 days of the effective date of such sale and lease-back
transaction equal to the net proceeds of such sale. This limitation does not
apply to sale and lease-back transactions (i) relating to industrial development
or pollution control financing or (ii) involving only the Company and any
Subsidiary or Subsidiaries, nor are such transactions included in any
computation of Attributable Debt. Notwithstanding the foregoing, the Company and
its Subsidiaries may enter into sale and lease-back transactions so long as the
total consolidated Attributable Debt in respect of such transactions does not
exceed 5% of Consolidated Net Tangible Assets. (Section 3.7).
Consolidation, Merger, Conveyance of Assets. The Indenture provides, in
general, that the Company will not consolidate with or merge into any other
entity or convey, transfer, or lease its properties and assets substantially as
an entirety to any Person, unless the corporation, limited liability company,
limited partnership, joint stock company, or trust formed by such consolidation
or into which the Company is merged or the Person that acquires such assets
shall expressly assume the Company's obligations under the Indenture and the
Debt Securities issued thereunder and immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing. (Section 8.1)
Event Risk. Except for the limitations on Liens and Sale and Leaseback
Transactions described above, the Indenture and Debt Securities do not contain
any covenants or other provisions designed to afford holders of the Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
EVENTS OF DEFAULT
In general, an Event of Default is defined under the Indenture with respect
to Debt Securities of any series issued under the Indenture as being: (a)
default in payment of any principal of the Debt Securities of such series,
either at maturity, upon any redemption, by declaration, or otherwise; (b)
default for 30 days in payment of any interest on any Debt Securities of such
series unless otherwise provided; (c) default for 90 days after written notice
in the observance or performance of any covenant or warranty in the Debt
Securities of such series (other than a covenant a default in whose performance,
or whose breach, is dealt with otherwise below); provided, however, that the
occurrence of any of the events described in this clause (c) shall not
constitute an event of Default if such occurrence is the result of changes in
generally accepted accounting principles; or (d) certain events of bankruptcy,
insolvency, or reorganization of the Company. (Section 4.1)
In general, the Indenture provides that, (a) if an Event of Default
described in clauses (a), (b) or (c) above (if the Event of Default under clause
(c) is with respect to less than all series of Debt Securities then outstanding)
occurs, the Trustee or the Holders of not less than 25 percent in principal
amount of the Debt Securities of each affected series (voting as one class)
issued under the Indenture and then outstanding may then declare the entire
principal of all Debt Securities of each such affected series and interest
accrued thereon to be due and payable immediately and (b) if an Event of Default
due to a default described in clause (c) above which is applicable to all series
of Debt Securities then outstanding or due to certain events of bankruptcy,
insolvency, and reorganization of the Company shall have occurred and be
continuing, the Trustee or the Holders of not less than 25 percent in principal
amount of all Debt Securities issued under the Indenture and then outstanding
(treated as one class) may declare the entire principal of all such Debt
Securities and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal of, premium, if
any, or interest on such Debt Securities) by the Holders of a majority in
aggregate principal amount of the Debt Securities of all such affected series
then outstanding (voting as one class). (Sections 4.1 and 4.10)
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the Holders of Debt Securities (treated as one class)
issued under the Indenture before proceeding, at the request of such Holders, to
exercise any right or power under the Indenture. (Section 5.2) Subject to such
provisions in the Indenture for the indemnification of the Trustee and certain
other limitations, the Holders of a majority in aggregate principal
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<PAGE> 15
amount of the outstanding Debt Securities of each series affected (treated as
one class) issued under the Indenture may direct 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. (Section 4.9)
In general, the Indenture provides that no Holder of Debt Securities issued
under the Indenture may institute any action against the Company under the
Indenture (except actions for payment of principal or interest on or after the
due date provided) unless such Holder previously shall have given to the Trustee
written notice of default and continuance thereof and unless the Holders of not
less than 25 percent in principal amount of the Debt Securities of each affected
series (treated as one class) issued under the Indenture and then outstanding
shall have requested the Trustee to institute such action and shall have offered
the Trustee reasonable indemnity and the Trustee shall not have instituted such
action within 60 days of such request and the Trustee shall not have received
direction inconsistent with such written request by the Holders of a majority in
principal amount of the Debt Securities of each affected series (treated as one
class) issued under the Indenture and then outstanding. (Sections 4.6, 4.7 and
4.9)
The Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any default
that exists. (Section 3.5)
DISCHARGE, DEFEASANCE, AND COVENANT DEFEASANCE
The Company can discharge or defease its obligations under the Indenture as
set forth below. (Section 9.1)
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to Holders of any series of Debt Securities issued under the
Indenture 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 scheduled for redemption within one year) by
irrevocably depositing with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations (as defined in the
Indenture) as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on such Debt
Securities.
The Company may also, upon satisfaction of the conditions listed below,
discharge certain obligations to Holders of any series of Debt Securities issued
under the Indenture at any time ("defeasance"). Under terms satisfactory to the
Trustee, the Company may instead be released with respect to any outstanding
series of Debt Securities issued under the Indenture from the obligations
imposed by Sections 3.6, 3.7, and 8.1, (which contain the covenants described
above limiting liens, sale and lease-back transactions, and consolidations,
mergers, and conveyances of assets), and omit to comply with such Sections
without creating an Event of Default ("covenant defeasance"). Defeasance or
covenant defeasance may be effected only if, among other things: (i) the Company
irrevocably deposits with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations, as trust funds in an
amount certified to be sufficient to pay at maturity (or upon redemption) the
principal of and interest on all outstanding Debt Securities of such series
issued under such Indenture; (ii) the Company delivers to the Trustee an opinion
of counsel to the effect that the Holders of such series of Debt Securities will
not recognize income, gain, or loss for United States federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to United States federal income tax on the same amounts, in the same
manner, and at the same times as would have been the case if defeasance or
covenant defeasance had not occurred (in the case of a defeasance, such opinion
must be based on a ruling of the Internal Revenue Service or a change in United
States federal income tax law occurring after the date of such Indenture, since
such a result would not occur under current tax law).
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures (which conform to the provisions of the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act of 1939")) without the consent
of the Holders to, in general: (a) secure any Debt Securities; (b) evidence the
assumption by a successor Person of the obligations of the Company; (c) add
further covenants for the
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<PAGE> 16
protection of the Holders; (d) cure any ambiguity or correct any inconsistency
in such Indenture, so long as such action will not adversely affect the
interests of the Holders; (e) establish the form or terms of Debt Securities of
any series; and (f) evidence the acceptance of appointment by a successor
trustee. (Section 7.1)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than the majority in
principal amount of Debt Securities of all series issued under such Indenture
then outstanding and affected (voting as one class) to, in general, 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 the Debt
Securities of each series so affected; provided that such changes conform to
provisions of the Trust Indenture Act of 1939 and provided that the Company and
the Trustee may not, without the consent of each Holder of outstanding Debt
Securities affected thereby, (a) extend the final maturity of the principal of
any Debt Securities, or reduce the principal amount thereof or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof or change the currency in which the principal thereof
(including any amount in respect of original issue discount) or interest thereon
is payable, or reduce the amount of any original issue discount security payable
upon acceleration or provable in bankruptcy or alter certain provisions of the
Indenture relating to Debt Securities not denominated in U.S. dollars or for
which conversion to another currency is required to satisfy the judgment of any
court, or impair the right to institute suit for the enforcement of any payment
on any Debt Securities when due or (b) reduce the aforesaid percentage in
principal amount of Debt Securities of any series issued under such Indenture,
the consent of the Holders of which is required for any such modification.
(Section 7.2)
CONCERNING THE TRUSTEE
The Trustee is one of a number of banks with which the Company and its
affiliates maintain ordinary banking relationships and with which the Company
and its affiliates maintain credit facilities. An affiliate of the Trustee has
also underwritten securities offerings for affiliates of the Company and may
underwrite future offerings for the Company and its affiliates. The Trustee also
serves as the trustee under the Company's Senior Indenture dated July 15, 1996.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
Except as may otherwise be provided in the Prospectus Supplement applicable
thereto, in compliance with United States federal income tax laws and
regulations, Bearer Debt Securities (including Bearer Debt Securities in global
form) will not be offered, sold, resold or delivered, directly or indirectly, in
the United States or its possessions or to United States persons (as defined
below), except as permitted by United States Treasury Regulations Section
1.163-5(c)(2)(i)(D). Any underwriters, agents and dealers participating in the
offerings of Bearer Debt Securities, directly or indirectly, must agree that (i)
they will not, in connection with the original issuance of any bearer Debt
Securities or during the restricted period, as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7) (the "restricted period"), offer,
sell, resell or deliver, directly or indirectly, any Bearer Debt Securities in
the United States or its possessions or to United States persons (other than as
permitted by the applicable Treasury Regulations described above). In addition,
any such underwriters, agents and dealers must have procedures reasonably
designed to ensure that its employees or agents who are directly engaged in
selling Bearer Debt Securities are aware of the above restrictions on the
offering, sale, resale or delivery of Bearer Debt Securities. Moreover, Bearer
Debt Securities (other than temporary global Debt Securities and Bearer Debt
Securities that satisfy the requirements of United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(iii)) and any coupons appertaining thereto will
not be delivered in definitive form nor will any interest be paid on any Bearer
Debt Securities, unless the Company has received a signed certificate in writing
(or an electronic certificate described in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(iii)) stating that on such date such Bearer Debt
Security (i) is owned by a person that is not a United States person, (ii) is
owned by a United States person that (a) is a foreign branch of a United States
financial institution (as defined in United States Treasury Regulations Section
1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own account or
for resale, or (b) is acquiring such Bearer Debt Securities through a foreign
branch of a United States financial institution and who holds the Bearer Debt
Security through such financial institution through such date (and in either
case
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<PAGE> 17
(a) or (b), each such United States financial institution agrees, on its own
behalf or through its agent, that the Company may be advised that it will comply
with the requirements of Section 165(j)(3)(A), (B), or (C) of the United States
Internal Revenue Code, and the regulations thereunder) or (iii) is owned by a
United States or foreign financial institution for the purposes of resale during
the restricted period and such financial institution certifies that it has not
acquired the Bearer Debt Security for purposes of resale directly or indirectly
to a United States person or to a person within the United States or its
possessions.
Bearer Securities (other than temporary global Debt Securities) and any
Coupons appertaining thereto will bear a legend substantially to the following
effect: "Any United States person who holds this obligation will be subject to
limitations under the United States federal income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code." The sections referred to in such legend provide that a
United States person (other than a United States financial institution described
above or United States person holding through such a financial institution) who
holds a Bearer Security or coupon will not be allowed to deduct any loss
realized on the sale, exchange or redemption of such Bearer Security and will
not be eligible for capital gain treatment with respect to any gain recognized
on such sale, exchange or redemption.
As used herein, "United States person" means any person who is, for United
States federal income tax purposes, a citizen, national, or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust the income of which is subject to United States federal
income taxation regardless of its source.
PLAN OF DISTRIBUTION
The Company may sell the Offered Debt Securities in the following ways: (i)
through agents; (ii) through underwriters; (iii) through dealers; and (iv)
directly to purchasers.
Offers to purchase the Offered Debt Securities may be solicited by agents
designated by the Company from time to time. Any such agent, who may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of the Offered Debt Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If any underwriters are utilized in the sale, the Company will enter into
an underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement, which will be used by the underwriters to make
resales to the public of the Offered Debt Securities in respect of which this
Prospectus is delivered.
If a dealer is utilized in the sale of the Offered Debt Securities in
respect of which this Prospectus is delivered, the Company will sell such
Offered Debt Securities to the dealer, as principal. The dealer may then resell
such Offered Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale.
Agents, dealers, and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers, or underwriters may be
required to make in respect thereof. Agents, dealers, and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The Offered Debt Securities may also be offered and sold, if so indicated
in the Prospectus Supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for the Company. Any remarketing firm will
be identified and the terms of its agreement, if any, with the Company and its
compensation will be described in the Prospectus Supplement. Remarketing firms
may be deemed to be underwriters in connection with the Offered Debt Securities
remarketed thereby.
10
<PAGE> 18
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company in
the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase the Offered Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject to only those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such offers.
Each series of Offered Debt Securities will be a new issue of securities
and will have no established trading market. Such Offered Debt Securities may or
may not be listed on a national securities exchange. No assurance can be given
as to the liquidity of or the existence of trading markets for any Offered Debt
Securities.
EXPERTS
The financial statements of the Company at December 31, 1996, and 1995, and
for the year ended December 31, 1996, and for the periods from January 1, 1995,
to January 17, 1995, and from January 18, 1995, to December 31, 1995, appearing
in the Company's Annual Report (Form 10-K) for the year ended December 31, 1996,
have been audited by Ernst & Young LLP, independent auditors, and the financial
statements of the Company for the year ended December 31, 1994, have been
audited by Arthur Andersen LLP, independent public accountants, as set forth in
their respective reports thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firms as experts in
accounting and auditing.
The financial statements of the Company included in or incorporated by
reference in any documents filed pursuant to Section 13, 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
the offering will be so included or incorporated by reference in reliance upon
the reports of independent auditors or public accountants pertaining to such
financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such independent
auditors or public accountants as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the Debt Securities offered hereby
will be passed upon for the Company by William G. von Glahn, Senior Vice
President and General Counsel of Williams, and for the Underwriters by Davis
Polk & Wardwell, New York, New York. Mr. von Glahn beneficially owns
approximately 28,331 shares of Williams' Common Stock and also has exercisable
options to purchase an additional 29,260 shares of Williams' Common Stock.
Pursuant to its By-laws and an indemnity agreement, Williams is required to
indemnify Mr. von Glahn to the fullest extent permitted by Delaware law against
any expenses actually and reasonably incurred by him in connection with any
action, suit, or proceeding in which he is made party by reason of his being an
officer of the Williams. Williams also maintains directors' and officers'
liability insurance under which Mr. von Glahn is insured against certain
expenses and liabilities.
11
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NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference........................... S-2
Use of Proceeds....................... S-2
Ratio of Earnings to Fixed Charges.... S-2
Description of Notes.................. S-2
Underwriting.......................... S-5
Legal Matters......................... S-6
PROSPECTUS
Available Information................. 1
Incorporation of Certain Documents by
Reference........................... 1
Reports to Holders of Debt
Securities.......................... 1
The Company........................... 2
Use of Proceeds....................... 2
Ratio of Earnings to Fixed Charges.... 2
Selected Financial Data............... 3
Description of Debt Securities........ 3
Limitations on Issuance of Bearer Debt
Securities.......................... 9
Plan of Distribution.................. 10
Experts............................... 11
Legal Matters......................... 11
</TABLE>
======================================================
======================================================
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
$200,000,000
6 1/8% NOTES DUE 2005
$100,000,000
6 1/4% NOTES DUE 2008
------------
PROSPECTUS SUPPLEMENT
DATED JANUARY 13, 1998
------------
SALOMON SMITH BARNEY
CHASE SECURITIES INC.
CIBC OPPENHEIMER
CITICORP SECURITIES, INC.
======================================================
