AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NORAM ENERGY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0511406
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1111 LOUISIANA HUGH RICE KELLY
HOUSTON, TEXAS 77002 EXECUTIVE VICE PRESIDENT, GENERAL
(713) 207-3000 COUNSEL AND
(ADDRESS, INCLUDING ZIP CODE, AND CORPORATE SECRETARY
TELEPHONE NUMBER, 1111 LOUISIANA
INCLUDING AREA CODE, HOUSTON, TEXAS 77002
OF REGISTRANT'S PRINCIPAL EXECUTIVE (713) 207-3000
OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
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Copies to:
MARGO S. SCHOLIN STEVEN R. LOESHELLE
BAKER & BOTTS, L.L.P. DEWEY BALLANTINE LLP
910 LOUISIANA 1301 AVENUE OF THE AMERICAS
ONE SHELL PLAZA NEW YORK, NEW YORK 10019-6092
HOUSTON, TEXAS 77002-4995 (212) 259-8000
(713) 229-1234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
REGISTERED REGISTERED (1) PER UNIT (1) (2) FEE(3)
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Debt Securities......... $200,000,000 100% $200,000,000 $59,000
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(1) Or, if any Debt Securities are issued (i) with a principal amount
denominated in a foreign currency (including composite currency), such
principal amount as shall result in an aggregate initial public offering
price the equivalent of $200,000,000 or (ii) at an original issue
discount, such greater principal amount as shall result in an aggregate
initial offering price of $200,000,000.
(2) Estimated in accordance with Rule 457(o) promulgated under the Securities
Act of 1933, as amended, solely for the purpose of calculating the
registration fee.
(3) Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission promulgated under the Securities Act of 1933, as
amended, this Registration Statement contains a Prospectus that also
relates to Debt Securities with an aggregate maximum initial public
offering price of $200,000,000 (the "Previously Registered Debt
Securities") registered by the Registrant's Registration Statement on Form
S-3 (No. 333-41017) previously filed on November 25, 1997. A filing fee of
$60,606.06 was previously paid by the Registrant in connection with the
registration of the Previously Registered Debt Securities.
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Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission promulgated under the Securities Act of 1933, as amended,
the Prospectus included in this Registration Statement (which Prospectus
relates to Debt Securities with an aggregate maximum initial offering price of
$400,000,000) is a combined Prospectus and also relates to the Registrant's
Registration Statement on Form S-3 (No. 333-41017).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 27, 1998
PROSPECTUS
NORAM ENERGY CORP.
$400,000,000
DEBT SECURITIES
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NorAm Energy Corp. ("NorAm" or the "Company") may from time to time offer
debt securities consisting of bonds, debentures, notes (including notes
commonly known as medium-term notes), or other evidences of indebtedness in one
or more series at an aggregate initial offering price not to exceed
$400,000,000 or its equivalent in any other currency or composite currency (the
"Debt Securities"). The Debt Securities may be offered as separate series in
amounts, at prices and on terms to be determined at the time of sale. The
accompanying Prospectus Supplement will set forth with regard to the series of
Debt Securities in respect of which this Prospectus is being delivered the
title, aggregate principal amount, denominations (which may be in United States
dollars, in any other currency or in a composite currency), maturity, rate, if
any (which may be fixed or variable), and time of payment of any interest, any
terms for redemption at the option of the Company or the holder, any terms for
sinking fund payments, any listing on a securities exchange, and the initial
public offering price and any other terms in connection with the offering and
sale of such Debt Securities.
The Company may sell Debt Securities to or through one or more underwriters
or dealers, and also may sell Debt Securities directly to other purchasers or
through agents. The accompanying Prospectus Supplement will set forth the names
of any underwriters or agents involved in the sale of the Debt Securities in
respect of which this Prospectus is being delivered, the principal amounts, if
any, to be purchased by underwriters and the compensation, if any, of such
underwriters or agents. See "Plan of Distribution" for possible indemnification
arrangements for underwriters, agents and their controlling persons.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF DEBT SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBT SECURITIES
OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON THE
DEBT SECURITIES INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THIS OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"PLAN OF DISTRIBUTION" IN THIS PROSPECTUS AND "PLAN OF DISTRIBUTION" OR
"UNDERWRITING" IN THE RELEVANT PROSPECTUS SUPPLEMENT.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, any
accompanying Prospectus Supplement or the documents incorporated or deemed
incorporated by reference herein or therein, and any information or
representations not contained herein or therein must not be relied upon as
having been authorized by NorAm or by any agent, dealer or underwriter. This
Prospectus and any accompanying Prospectus Supplement do not constitute an
offer to sell or a solicitation of an offer to buy the Debt Securities in any
circumstances in which such offer or solicitation is unlawful. The delivery of
this Prospectus or any Prospectus Supplement at any time does not imply that
the information herein or therein is correct as of any time subsequent to the
date of such information.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information can
be inspected and copied at the public reference facilities of the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at 7 World Trade Center, 13th
Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center,
14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates by writing the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov. The
Company's 6% Convertible Subordinated Debentures due 2012 and NorAm Financing
I's 6 1/4% Convertible Trust Originated Preferred Securities/SM/ are listed on
the New York Stock Exchange (the "NYSE"). Reports and other information
concerning the Company can be inspected and copied at the offices of the NYSE
at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Debt Securities offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Debt Securities offered hereby, reference is made to the
Registration Statement and the exhibits and the financial statements, notes
and schedules filed as a part thereof or incorporated by reference therein,
which may be inspected at the public reference facilities of the Commission at
the addresses set forth above or through the Commission's home page on the
Internet. Statements made in this Prospectus concerning the contents of any
documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement.
2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-13265) with the
Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for its quarterly
periods ended March 31, 1998 and June 30, 1998; and
(c) the Company's Current Report on Form 8-K dated February 5, 1998.
Each document or report filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of the Debt Securities made by this Prospectus
shall be deemed to be incorporated by reference into this Prospectus and to be
a part of this Prospectus from the date of filing of such document. Any
statement contained herein, or in any document all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein
(other than exhibits not specifically incorporated by reference into the texts
of such documents). Requests for such documents should be directed to:
Corporate Secretary, NorAm Energy Corp., 1111 Louisiana, Houston, Texas 77002,
telephone number (713) 207-3000.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus, including the documents that are
incorporated by reference as set forth in "Incorporation of Certain Documents
by Reference," that are not historical facts are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Forward-
looking statements are based on management's beliefs as well as assumptions
made by and information currently available to management. Because such
statements are based on expectations as to future economic performance and are
not statements of fact, actual results may differ materially from those
projected. Important factors that could cause future results to differ include
(a) the effects of competition, (b) legislative and regulatory changes, (c)
fluctuations in the weather, (d) fluctuations in energy commodity prices, (e)
environmental liabilities, (f) changes in the economy and (g) other factors
discussed in this and other filings by NorAm with the Commission. When used in
NorAm's documents or oral presentations, the words "anticipate," "estimate,"
"expect," "objective," "projection," "forecast," "goal" or similar words are
intended to identify forward-looking statements.
3
THE COMPANY
NorAm conducts operations primarily in the natural gas industry, including
gathering, transmission, marketing, storage and distribution. Collectively,
those operations accounted for in excess of 90% of NorAm's total revenues,
income or loss and identifiable assets during 1997. NorAm also makes sales of
electricity, makes non-energy sales and provides certain non-energy services
primarily to certain of its retail gas distribution customers. NorAm is
currently organized into three operating units: (a) natural gas distribution;
(b) interstate pipeline; and (c) energy marketing. NorAm is a wholly owned
subsidiary of Houston Industries Incorporated ("Houston Industries").
Natural Gas Distribution. NorAm's natural gas distribution operations are
conducted through three of its unincorporated divisions, Arkla, Entex and
Minnegasco, which, as of June 30, 1998, collectively formed the nation's third
largest natural gas distribution operation in terms of customers served.
Through these divisions, NorAm purchases, transports, stores and distributes
natural gas and provides natural gas utility services to over 2.8 million
residential, commercial and industrial customers in six states, including the
metropolitan areas of Minneapolis, Minnesota; Houston, Texas; Little Rock,
Arkansas; and Shreveport, Louisiana.
Interstate Pipeline. NorAm's interstate natural gas pipeline operations
("Interstate Pipeline") are conducted through two of its wholly owned
subsidiaries, NorAm Gas Transmission Company and Mississippi River
Transmission Corporation. As of June 30, 1998, Interstate Pipeline owned and
operated approximately 8,200 miles of transmission lines and six natural gas
storage facilities located across the following eight states in the south-
central United States: Arkansas, Kansas, Louisiana, Mississippi, Missouri,
Oklahoma, Tennessee and Texas. Interstate Pipeline transports and delivers
natural gas on behalf of various shippers primarily to utilities, industrial
customers and third party pipeline interconnects.
Energy Marketing. NorAm's Energy Marketing and Gathering division ("Energy
Marketing") markets natural gas and electric power and provides price risk
management services to various energy sector customers. In addition, Energy
Marketing provides natural gas gathering services and retail energy marketing
services. The division's energy marketing and risk management services are
conducted by NorAm Energy Services, Inc. ("NES"). NES supplies, markets and
trades natural gas and electricity. In addition it offers physical and
financial wholesale energy marketing products and services to a variety of
customers, including natural gas distribution companies, municipalities, power
plants, marketers, aggregators and large volume industrial customers. The
division's natural gas gathering operations, including related liquids
extraction and marketing activities, are conducted by NorAm Field Services
Corp. ("NFS"). As of June 30, 1998, NFS operated approximately 4,000 miles of
gathering pipelines which collected natural gas from more than 200 separate
systems located in major producing fields in Arkansas, Louisiana, Oklahoma and
Texas. The division's retail energy marketing services are conducted by NorAm
Energy Management, Inc. ("NEM"). NEM markets natural gas and related energy
services to industrial customers served by large local distribution companies
and connected to interstate and intrastate pipelines offering unbundled
transportation services.
The principal executive offices of NorAm are located at Houston Industries
Plaza, 1111 Louisiana Street, Houston, Texas 77002, and its telephone number
is (713) 207-3000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratios of earnings from
continuing operations to fixed charges for each of the periods indicated:
SIX
MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
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1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
Ratio of earnings from continuing operations
to fixed charges(1)........................ 2.97 2.59 1.89 2.12 1.69 1.47 1.47
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(1) The Company believes that the ratios for the six-month periods are not
necessarily indicative of the ratios for the twelve-month periods due to
the seasonal nature of the Company's business and adjustments to the
Company's financial statements resulting from its merger with and into a
wholly owned subsidiary of Houston Industries on August 6, 1997.
4
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company anticipates that any net proceeds from the sale of Debt Securities
will be used for general corporate purposes, which may include, but are not
limited to, working capital, capital expenditures, acquisitions and the
repayment or refinancing of the Company's indebtedness, including the
Company's outstanding long-term public debt securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of
February 1, 1998 (as the same may be amended from time to time, the
"Indenture"), between the Company and Chase Bank of Texas, National
Association (formerly known as Texas Commerce Bank National Association), as
Trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Debt Securities
may be issued from time to time in one or more series. The particular terms of
each series, or of Debt Securities forming a part of a series which are
offered by a Prospectus Supplement, will be described in such Prospectus
Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
The covenants in the Indenture would not necessarily afford the holders of
the Debt Securities protection in the event of a decline in the Company's
credit quality resulting from highly leveraged or other transactions involving
the Company.
GENERAL
The Indenture provides that separate series of Debt Securities may be issued
under the Indenture from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series, provided, however, such specified
maximum aggregate principal amount may be increased by resolution of the Board
of Directors of the Company. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indenture,
including as to maturity, principal and interest, as the Company may
determine. The Debt Securities will be unsecured obligations of the Company
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: (a) the title of such Debt
Securities; (b) any limit on the aggregate principal amount of the particular
series of Debt Securities; (c) the date or dates on which the principal of any
of such Debt Securities will be payable or the method by which such date or
dates will be determined or extended; (d) the rate or rates at which any of
such Debt Securities will bear interest, if any, or the method by which such
rate or rates shall be determined, the date or dates from which any such
interest will accrue, or the method by which such date or dates shall be
determined, the Interest Payment Dates on which any such interest will be
payable and the Regular Record Date, if any, for any such interest payable on
any Interest Payment Date, or the method by which such date or dates shall be
determined, and the basis upon which interest shall be calculated if other
than that of a 360-day year of twelve 30-day months; (e) the place or places
where the principal of and any premium and interest on any of such Debt
Securities will be payable, the place or places where such Debt Securities may
be presented for registration of transfer or exchange, and the place or places
where notices and demands to or upon the Company in respect of such Debt
Securities
5
may be made; (f) the period or periods within which or the date or dates on
which, the price or prices at which and the terms and conditions upon which
any of such Debt Securities may be redeemed, in whole or in part, at the
option of the Company and the manner in which any election by the Company to
redeem such Debt Securities shall be evidenced (if other than by a Board
Resolution); (g) the obligation or the right, if any, of the Company to redeem
or purchase any of such Debt Securities pursuant to any sinking fund,
amortization or analogous provisions or the option of the Holder thereof to
require any such redemption or purchase, and the period or periods within
which, the price or prices at which, the currency or currencies (including
currency unit or units) in which and the other terms and conditions on which
any of such Debt Securities will be redeemed or purchased, in whole or in
part, pursuant to any such obligation; (h) the denominations in which any of
such Debt Securities will be issuable, if other than denominations of $1,000
and any integral multiple thereof; (i) if the amount of principal of or any
premium or interest on any of such Debt Securities may be determined with
reference to an index or pursuant to a formula, the manner in which such
amounts will be determined; (j) if other than the currency of the United
States of America, the currency, currencies or currency units, including
composite currencies, in which the principal of or any premium or interest on
any of such Debt Securities will be payable (and the manner in which the
equivalent of the principal amount thereof in the currency of the United
States of America is to be determined for any purpose, including for the
purpose of determining the principal amount deemed to be Outstanding at any
time); (k) if the principal of or any premium or interest on any of such Debt
Securities is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than those in which
such Debt Securities are stated to be payable, the currency, currencies or
currency units in which payment of any such amount as to which such election
is made will be payable, the period or periods within which or the date or
dates on which and the terms and conditions upon which such election is to be
made and the amount so payable (or the manner in which such amount is to be
determined); (l) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the entire principal amount
thereof, the portion of the principal amount of any of such Debt Securities
which will be payable upon declaration of acceleration of the Maturity thereof
or the method by which such portion shall be determined; (m) if the principal
amount payable at the Stated Maturity of any of such Debt Securities will not
be determinable as of any one or more dates prior to the Stated Maturity, the
amount which will be deemed to be such principal amount as of any such date
for any purpose, including the principal amount thereof which will be due and
payable upon any Maturity other than the Stated Maturity or which will be
deemed to be Outstanding as of any such date (or, in any such case, the manner
in which such deemed principal amount is to be determined); (n) any variation
from the application of the provisions of the Indenture described under
"Defeasance and Covenant Defeasance--Defeasance and Discharge" or "Defeasance
and Covenant Defeasance--Defeasance of Certain Covenants" or under both such
captions and the manner in which any election of the Company to defease such
Debt Securities shall be evidenced (if other than by a Board Resolution); (o)
whether any of such Debt Securities will initially be issuable in whole or in
part in the form of a temporary Global Security representing such Debt
Securities and provisions for the exchange of such temporary Global Security
for definitive Debt Securities; (p) whether any of such Debt Securities will
be issuable in whole or in part in the form of one or more Global Securities
and, if so, the respective Depositaries for such Global Securities, the form
of any legend or legends to be borne by any such Global Security, any
circumstances under which any such Global Security may be exchanged, in whole
or in part, for Debt Securities registered, and whether and under what
circumstances any transfer of such Global Security, in whole or in part, may
be registered, in the names of Persons other than the Depositary for such
Global Security or its nominee; (q) whether any of such Debt Securities will
be subject to certain optional interest rate reset provisions; (r) whether any
of such Debt Securities will be subject to certain optional extension of
maturity provisions; (s) any addition to or change in the Events of Default
applicable to any of such Debt Securities and any change in the right of the
Trustee or the Holders of any of such Debt Securities to declare the principal
amount of any of such Debt Securities due and payable; (t) any addition to or
change in the covenants in the Indenture applicable to any of such Debt
Securities; (u) the additions or changes, if any, to the Indenture with
respect to such Debt Securities as shall be necessary to permit or facilitate
the issuance of such Debt Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (v) the
appointment of any Paying Agent or Agents for such Debt Securities, if other
than Houston Industries; (w) the terms of any right to convert or exchange
such Debt Securities into any other securities or property of the Company, and
the additions or changes, if any, to the Indenture with respect
6
to such Debt Securities to permit or facilitate such conversion or exchange;
(x) the terms and conditions, if any, pursuant to which such Debt Securities
are secured; (y) any restriction or condition on the transferability of such
Debt Securities; and (z) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States income tax considerations (if any) applicable to Debt Securities sold
at an original issue discount may be described in the applicable Prospectus
Supplement. In addition, certain special United States federal income tax or
other considerations (if any) applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars
may be described in the applicable Prospectus Supplement.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in registered form,
without coupons, and, unless otherwise specified in the applicable Prospectus
Supplement, only in denominations of $1,000 and integral multiples thereof.
(Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series, of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Company may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Sections 305 and 1002)
Neither the Trustee nor the Company will be required to (a) issue, register
the transfer of or exchange any Debt Security of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing, or (b) register
the transfer of or exchange any Debt Security so selected for redemption, in
whole or in part, except, in the case of any such Debt Security to be redeemed
in part, any portion not to be redeemed. (Section 305)
GLOBAL SECURITIES
Unless otherwise provided in the Prospectus Supplement, some or all of the
Debt Securities of any series may be represented, in whole or in part, by one
or more Global Securities which will have an aggregate principal amount equal
to that of the Debt Securities represented thereby. Unless otherwise provided
in the Prospectus Supplement, the Global Security representing Debt Securities
will be deposited with, or on behalf of, The Depository Trust Company ("DTC"),
or other successor depository appointed by the Company (DTC or such other
depository is herein referred to as the "Depositary") and registered in the
name of the Depositary or its nominee and such Global Security will bear a
legend regarding the restrictions on exchange and registration of transfer
thereof referred to below and any such other matters as may be provided for
pursuant to the Indenture. Unless otherwise provided in the Prospectus
Supplement, Debt Securities will not be issued in definitive form.
7
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged, in whole or in part,
for Debt Securities registered, and no transfer of a Global Security, in whole
or in part, may be registered in the name of any Person other than the
Depositary for such Global Security or any nominee of such Depositary unless
(a) the Depositary has notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or has ceased to be qualified
to act as such as required by the Indenture, (b) there shall have occurred and
be continuing an Event of Default with respect to the Debt Securities
represented by such Global Security, (c) the Company in its sole discretion
determines that such Global Security will be so exchangeable or transferable,
or (d) there shall exist such circumstances, if any, in addition to or in lieu
of those described above as may be described in the applicable Prospectus
Supplement. All Debt Securities issued in exchange for a Global Security or
any portion thereof will be registered in such names as the Depositary may
direct. (Sections 204 and 305)
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 ("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
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 DTC's book-entry 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 Commission.
Upon the issuance by the Company of Debt Securities represented by a Global
Security, purchases of Debt Securities under the DTC System must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("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
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Debt Securities 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 Debt Securities, except in the event
that use of the book-entry system for the Debt Securities is discontinued. The
laws of some states 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 a Global Security.
So long as the Depositary for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as described above, Beneficial Owners will not be entitled
to have Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities in definitive form and will not be considered the owners or
holders thereof under the Indenture.
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debt Securities 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 Debt Securities; DTC's
records reflect only the identity of the Direct Participants
8
to whose accounts such Debt Securities 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 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 Debt
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company 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 Debt Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Payments of principal of and interest, if any, on the Debt Securities
represented by the Global Security registered in the name of the Depositary or
its nominee will be made by the Company through the Trustee under the
Indenture or a paying agent (the "Paying Agent"), which may also be the
Trustee under the Indenture, to the Depositary or its nominee, as the case may
be, as the registered owner of the Global Security. Neither the Company, the
Trustee, nor the Paying Agent will have any responsibility or liability for
any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company has been advised that DTC will credit Direct Participants'
accounts on the payable 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 payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as
in 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 Paying Agent, or the Company, 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 the Company
or the Paying Agent, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of such Debt Securities, except that, unless
otherwise provided in such Debt Securities, interest payable on the Stated
Maturity of the principal of a Debt Security shall be paid to the Person to
whom principal is paid. The initial payment of interest on any Debt Security
of any series which is issued between a Regular Record Date and the related
Interest Payment Date shall be payable as provided in such Debt Security.
(Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made (a) by
check mailed to the address of the Person entitled thereto as such address
appears in the Security Register, or (b) by wire transfer in immediately
available funds at such place and to such account as designated in writing by
the Person entitled thereto as specified in the Security Register. Unless
otherwise indicated in the applicable Prospectus Supplement, Houston
Industries, the Company's parent company, will be designated as the Company's
sole Paying Agent for payments with respect to Debt Securities of each series.
Any other Paying Agents initially designated by the Company for the Debt
9
Securities of a particular series will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent, except that the Company at all
times will be required to maintain a Paying Agent in each Place of Payment for
the Debt Securities of a particular series. (Sections 307 and 1002)
Any money deposited by the Company with the Trustee or any Paying Agent for
the payment of the principal of or any premium or interest on any Debt
Security which remains unclaimed at the end of two years after such principal,
premium or interest has become due and payable may be repaid to the Company at
the Company's request and the Holder of such Debt Security will thereafter, as
an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, will
thereupon cease. (Section 1003)
COVENANTS
The applicable Prospectus Supplement will set forth any restrictive
covenants applicable with respect to any series of Debt Securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person
("Successor Person"), and may not permit any Person to consolidate with or
merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, the Company, unless (a) the Successor Person
(if any) is a corporation, partnership, trust or other entity organized and
validly existing under the laws of any domestic jurisdiction and assumes the
Company's obligations on the Debt Securities and under the Indenture, (b)
immediately after giving effect to the 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 occurred and be continuing and (c) the Company has
delivered to the Trustee the certificates and opinions required under the
Indenture. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of that series; (d) failure to perform,
or breach in any material respect of, any other covenant or warranty of the
Company in the Indenture with respect to Debt Securities of that series (other
than a covenant or warranty included in the Indenture solely for the benefit
of a series other than that series), continued for 90 days after written
notice has been given to the Company by the Trustee or the Holders of at least
25% in principal amount of the Outstanding Securities of that series, as
provided in the Indenture; (e) certain events involving bankruptcy, insolvency
or reorganization; and (f) any other Event of Default provided with respect to
Debt Securities of that series; provided, however, that no event described in
clause (d), (e) or (f) above shall constitute an Event of Default until an
officer of the Trustee, assigned to and working in the Trustee's corporate
trust department has actual knowledge thereof or until a written notice of any
such event is received by the Trustee at its Corporate Trust Office, and such
notice refers to the Debt Securities generally, the Company or the Indenture.
(Section 501)
Notwithstanding the foregoing provisions, if the principal or any premium or
interest on any Debt Security is payable in a currency other than the currency
of the United States of America and such currency is not available to the
Company for making payment thereof due to the imposition of exchange controls
or other circumstances beyond the control of the Company, the Company will be
entitled to satisfy its obligations to Holders of the Debt Securities by
making such payment in the currency of the United States of America in an
amount equal to the currency of the United States of America equivalent of the
amount payable in such other currency, as determined by the Trustee by
reference to the noon buying rate in The City of New York for cable
10
transfers for such currency ("Exchange Rate"), as such Exchange Rate is
reported or otherwise made available by the Federal Reserve Bank of New York
on the date of such payment, or, if such rate is not then available, on the
basis of the most recently available Exchange Rate. Notwithstanding the
foregoing, any payment made under such circumstances in the currency of the
United States of America where the required payment is in a currency other
than the currency of the United States of America will not constitute an Event
of Default under the Indenture. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(d) above or another Event of Default specified in clause (f) above that is
applicable to all Outstanding Debt Securities, or an Event of Default
specified in clause (e) above) with respect to the Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series by notice as provided in the
Indenture may declare the principal amount of the Debt Securities of that
series (or, in the case of any Debt Security that is an Original Issue
Discount Security, such portion of the principal amount of such Debt Security,
as may be specified in the terms of such Debt Security) to be due and payable
immediately, and upon any such declaration such principal amount shall become
immediately due and payable. If an Event of Default described in clause (d)
above or another Event of Default specified in clause (f) above that is
applicable to all Outstanding Debt Securities shall occur and be continuing,
or an Event of Default specified in clause (e) above shall occur and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of all the Debt Securities then Outstanding (treated as one
class) by notice as provided in the Indenture may declare the principal amount
(or, if any Debt Securities are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms thereof) of
all the Debt Securities then Outstanding to be due and payable immediately,
and upon any such declaration such principal amount shall become immediately
due and payable. After any such acceleration of a series, but before a
judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal (or
other specified amount), have been cured or waived as provided in the
Indenture. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver" below.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to 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 with respect to the
Debt Securities of that series, provided that, (a) such direction shall not be
in conflict with any rule of law or the Indenture, (b) the Trustee may take
any other action deemed proper by the Trustee which is not inconsistent with
such direction, and (c) subject to the provisions of the Indenture relating to
the duties of the Trustee, the Trustee will have the right to decline to
follow such direction if an officer of the Trustee determines, in good faith,
that the proceeding so directed would involve the Trustee in personal
liability or would otherwise be contrary to applicable law. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver, assignee, trustee, liquidator or sequestrator (or other similar
official), or for any other remedy thereunder, unless (a) such Holder has
previously given to the Trustee written notice of a continuing Event of
Default with respect to the Debt Securities of that series, (b) the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series have made written request to the Trustee, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding and (c) the Trustee has failed to institute such proceeding, and
has not received from the Holders of a majority in aggregate principal amount
of the Outstanding Debt Securities of that series a direction inconsistent
with such request, within 60 days after such notice, request and offer.
(Section 507) However, such
11
limitations do not apply to a suit instituted by a Holder of a Debt Security
for the enforcement of payment of the principal of or any premium or interest
on such Debt Security on or after the applicable due date specified in such
Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions, covenants and conditions of the Indenture and, if so, specifying
all such known defaults. (Section 1004)
MODIFICATION AND WAIVER
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (a) to evidence the succession
of another corporation to the Company, or successive successions and the
assumption of the covenants, agreements and obligations of the Company by a
successor to the Company; (b) to add to the covenants of the Company for the
benefit of the Holders or surrender any right or power of the Company; (c) to
add additional Events of Default with respect to any series of Debt
Securities; (d) to add or change any provisions of the Indenture to such
extent as necessary to facilitate the issuance of Debt Securities in bearer
form; (e) to add to, change or eliminate any provision of the Indenture in
respect of one or more series of Debt Securities, provided that if such action
adversely affects the interests of any Holders of Debt Securities of any
series, such addition, change or elimination will become effective with
respect to such series only when no Security of such series remains
Outstanding; (f) to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee or to surrender any right or power herein conferred
upon the Company; (g) to establish the form or terms of Debt Securities; (h)
to provide for uncertificated securities in addition to certificated
securities; (i) to evidence and provide for successor Trustees or to add or
change any provisions to such extent as necessary to permit or facilitate the
appointment of a separate Trustee or Trustees for specific series of Debt
Securities; (j) to cure any ambiguity, to correct any defect or supplement any
inconsistent provisions or to make any other provisions with respect to
matters or questions arising under the Indenture, provided that such action
does not adversely affect the interests of the Holders of Debt Securities of
any series; (k) to supplement any provisions of the Indenture necessary to
permit or facilitate the defeasance and discharge of any series of Debt
Securities, provided that such action does not adversely affect the interests
of the Holders of Debt Securities of such series or any other series; (l) to
comply with the rules or regulations of any securities exchange or automated
quotation system on which any of the Debt Securities may be listed or traded;
or (m) to add, change or eliminate any provisions of the Indenture as is
necessary or desirable in accordance with any amendments to the Trust
Indenture Act, provided that such action does not adversely affect the rights
or interests of any Holder of Debt Securities. (Section 901)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such supplemental indenture (treated as one class), to execute
supplemental indentures adding any provisions to or changing or eliminating
any of the provisions of the Indenture or modifying the rights of the Holders
of Debt Securities of such series, except that no such supplemental indenture
may, without the consent of the Holder of each Outstanding Debt Security so
affected, (a) except to the extent permitted pursuant to the Indenture, change
the Stated Maturity of the principal of, or any installment of principal of or
interest on, any Debt Security, (b) reduce the principal amount of, or any
premium or interest on, any Debt Security, (c) reduce the amount of principal
of an Original Issue Discount Security or any other Debt Security payable upon
acceleration of the Maturity thereof, (d) change the place or currency of
payment of principal of, or any premium or interest on, any Debt Security, (e)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security, (f) reduce the percentage in principal
amount of Outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture, (g) reduce
the percentage in principal amount of Outstanding Debt Securities of any
series necessary for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults, (h) make certain modifications to
such provisions with respect to modification and waiver, (i) with respect to
any series of Debt
12
Securities that are convertible or exchangeable into any other securities or
property of the Company, make any change that adversely affects the right to
convert or exchange any such Debt Security or decrease the conversion or
exchange rate or increase the conversion price of any such Debt Security, or
(j) with respect to any series of Debt Securities that are secured, change the
terms and conditions pursuant to which such Debt Securities are secured in a
manner adverse to the Holders of such Debt Securities. (Section 902)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may waive any past default or
compliance with certain restrictive provisions under the Indenture, except a
default in the payment of principal, premium or interest and certain covenants
and provisions of the Indenture which cannot be amended without the consent of
the Holder of each Outstanding Debt Security of such series affected.
(Sections 513 and 1006)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the
Indenture as of any date, (a) the principal amount of an Original Issue
Discount Security that will be deemed to be Outstanding will be the amount of
the principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (b) if, as of such date,
the principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be
an amount determined in the manner prescribed for such Debt Security, (c) the
principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will be the
U.S. dollar equivalent, determined as of such date in the manner prescribed
for such Debt Security, of the principal amount of such Debt Security (or, in
the case of a Debt Security described in clause (a) or (b) above, of the
amount described in such clause) and (d) Debt Securities owned by the Company
or any other obligor upon the Debt Securities or any of their Affiliates will
be disregarded and deemed not to be Outstanding. Certain Debt Securities,
including those for whose payment or redemption money has been deposited or
set aside in trust for the Holders and those that have been fully defeased
pursuant to Section 1402, will not be deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Debt securities of any series entitled to give or take any
direction, notice, consent, waiver or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by
Holders of a particular series, such action may be taken only by persons who
are Holders of Outstanding Debt Securities of that series on the record date.
To be effective, such action must be taken by Holders of the requisite
principal amount of such Debt Securities within a specified period following
the record date. For any particular record date, this period will be 180 days
or such shorter period as may be specified by the Company (or the Trustee, if
it set the record date) and may be shortened or lengthened (but not beyond 180
days) from time to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise provided in the applicable Prospectus Supplement, the
provisions of Section 1402, relating to defeasance and discharge of
indebtedness, or Section 1403, relating to defeasance of certain restrictive
covenants, in the Indenture, shall apply to the Debt Securities of any series
or to any specified part of a series. (Section 1401)
Defeasance and Discharge. Section 1402 of the Indenture provides that the
Company will be discharged from all its obligations with respect to such Debt
Securities (except for certain obligations to exchange or register the
transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the
13
principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. Such defeasance or discharge may occur only if, among
other things, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Company has received from, or there has been published
by, the United States Internal Revenue Service a ruling, or there has been a
change in tax law, in either case to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes as
a result of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge
were not to occur. (Sections 1402 and 1404)
Defeasance of Certain Covenants. Section 1403 of the Indenture provides
that, in certain circumstances, the Company may omit to comply with certain
restrictive covenants, including any that may be described in the applicable
Prospectus Supplement, and that in those circumstances the occurrence of
certain Events of Default, which are described above in clause (d) (with
respect to such restrictive covenants) under "Events of Default" and any that
may be described in the applicable Prospectus Supplement, will be deemed not
to be or result in an Event of Default, in each case with respect to such Debt
Securities. The Company, in order to exercise such option, will be required to
deposit, in trust for the benefit of the Holders of such Debt Securities,
money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. The
Company will also be required, among other things, to deliver to the Trustee
an opinion of Counsel to the effect that Holders of such Debt Securities will
not recognize gain or loss for federal income tax purposes as a result of such
deposit and defeasance of certain obligations and will be subject to federal
income tax on the same amount, in the same manner and at the same times as
would have been the case if such deposit and defeasance were not to occur. In
the event the Company exercised this option with respect to any Debt
Securities and such Debt Securities were declared due and payable because of
the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations so deposited in trust would be sufficient to pay
amounts due on such Debt Securities at the time of their respective Stated
Maturities, but might not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Company would remain liable for such payments. (Sections 1403 and
1404)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered on the applicable
record date as the owner thereof (whether or not such Debt Security may be
overdue) for the purpose of making payment and for all other purposes.
(Section 309)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflicts
of laws principles thereof. (Section 112)
REGARDING THE TRUSTEE
The Trustee serves as trustee for (i) Houston Industries' first mortgage
bonds aggregating $2.1 billion (as of June 30, 1998), (ii) Houston Industries'
collateralized medium-term notes which are secured as to payment of principal,
interest and premium, if any, by Houston Industries' first mortgage bonds and
(iii) pollution control bonds previously issued on behalf of Houston
Industries aggregating $927.9 million, a portion of which is
14
collateralized by Houston Industries' first mortgage bonds. The Company and
Houston Industries also maintain depositary and other normal banking
relationships with the Trustee.
The Chase Manhattan Bank ("Chase"), a subsidiary of the Chase Manhattan
Corporation, the sole indirect shareholder of the Trustee, is a party to
credit agreements under which the Company, Houston Industries and certain of
their affiliates have bank lines of credit. Mr. Don D. Jordan, Chairman and
Chief Executive Officer of the Company and Chairman, Chief Executive Officer
and director of Houston Industries, and Mr. R. Steve Letbetter, President and
Chief Operating Officer of the Company and President, Chief Operating Officer
and director of Houston Industries, each serve on the Trustee's Advisory Board
of Directors.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities (a) through an underwriter or
underwriters, (b) through dealers, (c) through agents, (d) directly to
purchasers, including affiliates of the Company, or (e) through a combination
of any such methods of sale. The applicable Prospectus Supplement will set
forth the terms of the offerings of any Debt Securities, including the method
of distribution, the name or names of any underwriters, dealers or agents, any
managing underwriter or underwriters, the purchase price of the Debt
Securities and the proceeds to the Company from the sale, any underwriting
discounts, agency fees and other items constituting underwriters' compensation
and any discounts and concessions allowed, reallowed or paid to dealers or
agents. Any initial public offering price and any discount or concessions
allowed or reallowed to dealers may be changed from time to time. The expected
time of delivery of the Debt Securities in respect of which this Prospectus is
delivered will be set forth in the applicable Prospectus Supplement.
If underwriters are used in the sale of the Debt Securities, the
underwriting agreement will provide that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters with
respect to a sale of Debt Securities will be obligated to purchase all such
Debt Securities if any are purchased. In connection with the sale of Debt
Securities, underwriters may receive compensation from the Company or from
purchasers of Debt Securities for whom they may act as agents in the form of
discounts, concessions or commissions. Underwriters may sell Debt Securities
to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale. Any such dealer may be deemed to be an underwriter, as such term is
defined in the Securities Act, of the Debt Securities so offered and sold. The
name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Underwriters, agents or dealers participating in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Debt
Securities may be deemed to be underwriting discounts and commissions under
the Securities Act.
The Debt Securities may be sold in one or more transactions either at a
fixed price or prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company may also offer and sell the Debt Securities in
exchange for one or more of its outstanding issues of debt or convertible debt
securities or in the satisfaction of indebtedness.
Underwriters, agents or dealers who participate in the distribution of Debt
Securities may be entitled, under agreements which may be entered into with
the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution by the
Company to payments that such underwriters, dealers or agents or any of their
controlling persons may be required to make in respect thereof.
15
Underwriters, agents or dealers may be customers of, engage in transactions
with or perform services for the Company or affiliates of the Company in the
ordinary course of business.
Each series of Debt Securities will be a new issue with no established
trading market. The Company may elect to list any series of Debt Securities on
an exchange, but the Company shall not be obligated to do so. It is possible
that one or more underwriters may make a market in a series of Debt
Securities, but will not be obliged to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of the trading market for the Debt Securities.
In connection with the offering, the underwriters or agents, as the case may
be, may purchase and sell the Debt Securities in the open market. These
transactions may include over-allotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for
the purpose of preventing or retarding a decline in the market price of the
Debt Securities; and syndicate short positions involve the sale by the
underwriters or agents, as the case may be, of a greater number of Debt
Securities than they are required to purchase from the Company in the
offering. The underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker dealers in respect of
the Debt Securities sold in the offering for their account may be reclaimed by
the syndicate if such Debt Securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Debt Securities, which may be
higher than the price that might otherwise prevail in the open market, and
these activities, if commenced, may be discontinued at any time. These
transactions may be effected on the NYSE, in the over-the-counter market or
otherwise.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Debt Securities from the Company pursuant to delayed delivery
contracts providing for payment and delivery on the date stated in the
Prospectus Supplement. Such contracts will be subject only to those conditions
set forth in the Prospectus Supplement. The Prospectus Supplement will also
set forth the commission payable for solicitation of such contracts.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto. Except
as set forth in the applicable Prospectus Supplement, no director, officer or
employee of the Company will solicit or receive a commission in connection
with direct sales by the Company of the Debt Securities, although such persons
may respond to inquiries by potential purchasers and perform ministerial and
clerical work in connection with any such direct sales.
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, as such term is defined in the Securities
Act, in connection with the Debt Securities remarketed thereby. Remarketing
firms may be entitled under agreements which may be entered into with the
Company to indemnification or contribution 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.
16
EXPERTS
The consolidated balance sheet of the Company as of December 31, 1997, and
the related statements of consolidated income, consolidated stockholders'
equity and consolidated cash flows for the five months ended December 31, 1997
and the seven months ended July 31, 1997 and the Company's financial statement
schedule for the year ended December 31, 1997, incorporated by reference in
this Prospectus, have been audited by Deloitte & Touche LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements and financial statement schedule of
the Company as of December 31, 1996 and for each of the two years in the
period ended December 31, 1996, 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
that firm in accounting and auditing.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Debt Securities will be passed upon for the Company by Baker &
Botts, L.L.P., Houston, Texas. Certain legal matters will be passed upon for
the Company by Hugh Rice Kelly, Esq., Executive Vice President, General
Counsel and Corporate Secretary of the Company, and for the underwriters,
dealers, or agents, if any, by Dewey Ballantine LLP, New York, New York. James
A. Baker, III, a senior partner in the law firm of Baker & Botts, L.L.P., is
currently a director of Houston Industries, the Company's sole stockholder,
and beneficial owner of 2,500 shares of Houston Industries' common stock.
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
Securities and Exchange Commission filing fee................... $ 59,000
Blue Sky expenses............................................... 2,000
Attorney's fees and expenses.................................... 100,000
Independent Auditor's fees and expenses......................... 15,000
Printing and engraving expenses................................. 15,000
Rating Agency fees.............................................. 107,000
Trustee's fees and expenses..................................... 3,000
Miscellaneous expenses.......................................... 9,000
--------
Total......................................................... $310,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware (the "DGCL") gives
corporations the power to indemnify officers and directors under certain
circumstances.
Article V of the Company's By-Laws provides for indemnification of officers
and directors to the extent permitted by the DGCL. The Company also has
policies insuring its officers and directors against certain liabilities for
action taken in such capacities, including liabilities under the Securities
Act.
Article Ninth of the Company's Certificate of Incorporation adopted the
provision of Delaware law limiting or eliminating the potential monetary
liability of directors to the Company or its stockholders for breaches of a
director's fiduciary duty of care. However, the provision does not limit or
eliminate the liability of a director for disloyalty to the Company or its
stockholders, failing to act in good faith, engaging in intentional misconduct
or a knowing violation of the law, obtaining an improper personal benefit or
paying a dividend or approving a stock repurchase that was illegal under
section 174 of the DGCL.
Article Ninth also provides that if the DGCL is subsequently amended to
authorize further limitation or elimination of the liability of directors,
such subsequent limitation or elimination of director's liability will be
automatically implemented without further stockholder action. Furthermore,
repeal or modification of the terms of the Article Ninth will not adversely
affect any right or protection of a director existing at the time of such
repeal or modification.
Any agents, dealers or underwriters who execute any of the Agreements filed
as Exhibit 1 to this Registration Statement will agree to indemnify the
Company's directors and their officers who signed the Registration Statement
against certain liabilities that may arise under the Securities Act with
respect to information furnished to NorAm by or on behalf of any such
indemnifying party.
See "Item 17. Undertakings" for a description of the Commission's position
regarding such indemnification provisions.
ITEM 16. EXHIBITS.
See Index to Exhibits at page II-4.
II-1
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-2
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NORAM ENERGY
CORP. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF
THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON AUGUST
26, 1998.
NORAM ENERGY CORP.
(Registrant)
By: /s/ Don D. Jordan
----------------------------------
(Don D. Jordan,
Chairman and Chief Executive
Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Don D. Jordan Chairman and Chief August 26, 1998
- ----------------------------------- Executive Officer
Don D. Jordan (Principal
Executive Officer)
/s/ Stephen W. Naeve Executive Vice August 26, 1998
- ----------------------------------- President and Sole
Stephen W. Naeve Director (Principal
Financial Officer)
/s/ Mary P. Ricciardello Vice President and August 26, 1998
- ----------------------------------- Comptroller
Mary P. Ricciardello (Principal Accounting
Officer)
II-3
INDEX TO EXHIBITS
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NUMBER DOCUMENT DESCRIPTION STATEMENT NUMBER REFERENCE
------- -------------------- -------------- ------------ ---------
1* Form of Underwriting Agreement
4.1** Indenture governing the Debt Form 8-K of 1-13265 4.1
Securities, dated as of the Company
February 1, 1998, between the dated February
Company and Chase Bank of 5, 1998
Texas, National Association,
as Trustee
4.2** Form of Debt Security Form 8-K of 1-13265 4.1
(included in Exhibit 4.1) the Company
dated February
5, 1998
5 Opinion of Baker & Botts,
L.L.P.
12 Statement regarding
Computation of Ratios
23.1 Consent of Deloitte & Touche
LLP
23.2 Consent of
PricewaterhouseCoopers LLP
23.3 Consent of Baker & Botts,
L.L.P. (included in Exhibit 5)
25 Statement of Eligibility of
Trustee on Form T-1
- --------
* To be filed by amendment or by a report on Form 8-K pursuant to Regulation
S-K, Item 601(b).
** Incorporated herein by reference as indicated.
II-4
EXHIBIT 5
[Letterhead of Baker & Botts, L.L.P.]
064363.0111 August 27, 1998
NorAm Energy Corp.
Houston Industries Plaza
1111 Louisiana Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for NorAm Energy Corp., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement"), filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), on August 27, 1998, relating to the proposed issuance and
sale from time to time of up to $200,000,000 in aggregate principal amount of
the Company's debt securities (the "Debt Securities"), each series of which will
be issued under an Indenture (the "Indenture"), dated as of February 1, 1998,
between the Company and Chase Bank of Texas, National Association, as Trustee
(the "Trustee").
In our capacity as your counsel in the connection referred to above, we
have examined the Certificate of Incorporation and Bylaws of the Company, as
amended to date, and the Indenture, as supplemented to date, and have examined
the originals, or copies certified or otherwise identified, of corporate records
of the Company, including minute books of the Company as furnished to us by the
Company, certificates of public officials and of representatives of the Company,
statutes and other instruments or documents, as a basis for the opinions
hereinafter expressed. In giving such opinions, we have relied upon certificates
of officers of the Company with respect to the accuracy of the material factual
matters contained in such certificates. In making our examination, we have
assumed that all signatures on documents examined by us are genuine, that all
documents submitted to us as originals are authentic and that all documents
submitted to us as certified or photostatic copies conform with the original
copies of such documents.
NorAm Energy Corp. -2- August 27, 1998
On the basis of the foregoing, and subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
When (i) the Registration Statement has become effective under the
Securities Act and the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended, and (ii) the Debt Securities have been duly authorized,
executed and authenticated in accordance with the terms of the Indenture and the
applicable supplemental indenture creating such series of Debt Securities, and
delivered against payment of the agreed consideration therefor, the Debt
Securities will be legal, valid and binding obligations of the Company
enforceable in accordance with their terms, except as such enforceability is
subject to (x) any applicable bankruptcy, insolvency, reorganization or other
laws relating to or affecting creditors' rights generally and (y) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
The opinions set forth above are limited in all respects to matters of
Texas law, Delaware corporate law and the contract law of the State of New York
as in effect on the date hereof. At your request, this opinion is being
furnished to you for filing as Exhibit 5 to the Registration Statement.
Additionally, we hereby consent to the reference to our Firm under the caption
"Validity of Securities" in the Registration Statement. In giving such consent,
we do not thereby concede that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
Baker & Botts, L.L.P.
EXHIBIT 12
NORAM ENERGY CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands of dollars)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- ------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
_______ ________ ________ ________ ________ ________ ________
Income from continuing operations $ 58,456 $ 69,112 $ 66,722 $ 95,138 $ 65,529 $ 51,291 $ 39,935
Income taxes for continuing operations 54,863 45,411 55,781 66,352 55,379 34,372 46,481
Non-utility interest capitalized 0 0 0 0 0 0 0
________ ________ ________ ________ ________ ________ ________
113,319 114,523 122,503 161,490 120,908 85,663 86,416
________ ________ ________ ________ ________ ________ ________
Fixed charges
Interest 51,199 66,379 126,912 130,592 155,584 167,384 169,857
Distribution on trust securities 427
Amortization of debt discount and
expense 1,180 1,616 3,086 3,582 3,483 3,312 3,421
Portion of rents considered to
represent an interest factor 4,630 3,994 7,988 10,083 16,215 11,292 10,402
________ ________ ________ ________ ________ ________ ________
Total fixed charges 57,436 71,989 137,986 144,257 175,282 181,988 183,680
________ ________ ________ ________ ________ ________ ________
Income from continuing operations
before income taxes and fixed
charges $170,755 $186,512 $260,489 $305,747 $296,190 $267,651 $270,096
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges 2.97 2.59 1.89 2.12 1.69 1.47 1.47
======== ======== ======== ======== ======== ======== ========
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of NorAm Energy Corp. ("NorAm") on Form S-3 of our report dated February 20,
1998 appearing in the Annual Report on Form 10-K of NorAm for the year ended
December 31, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
August 25, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of NorAm Energy Corp. on Form S-3 (File No. 333-________) of our report dated
March 25, 1997, on our audits of the consolidated financial statements and
financial statement schedule of NorAm Energy Corp. and Subsidiaries as of
December 31, 1996, and for the years ended December 31, 1996 and 1995, which
report is included in the NorAm Energy Corp. Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts".
PricewaterhouseCoopers LLP
Houston, Texas
August 25, 1998
EXHIBIT 25
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
____________________
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
74-0800980
(I.R.S. Employer Identification Number)
712 MAIN STREET, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR
HOUSTON, TEXAS 77002 (713) 216-2448
(Name, address and telephone number of agent for service)
NORAM ENERGY CORP.
(Exact name of obligor as specified in its charter)
DELAWARE 76-0511406
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1111 LOUISIANA, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)
DEBT SECURITIES
(Title of indenture securities)
========================================================================
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee. (See Note on Page 7.)
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE.
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:
(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
1
ITEM 4. (CONTINUED)
(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM
THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(b)(1) OF THE
ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE,
INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS
COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER INDENTURE.
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH OBLIGOR OR
UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF THE
TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE
OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON
HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE
TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND
EXECUTIVE OFFICER OF THE OBLIGOR.
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
------------- -------------- ------------ ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
2
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE
TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
------------- -------------- ------------ ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE OBLIGOR
OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY
THE TRUSTEE.
COL. A COL. B COL. C COL. D
AMOUNT OWNED
WHETHER THE BENEFICIALLY OR PERCENT OF
SECURITIES HELD AS COLLATERAL CLASS
ARE VOTING SECURITY FOR REPRESENTED BY
OR NONVOTING OBLIGATIONS IN AMOUNT GIVEN IN
TITLE OF CLASS SECURITIES DEFAULT COL. C
-------------- ---------- ------- ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
3
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH
THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY
OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN IN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE COL. C
-------------- ----------- ------------------ ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF
THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR OR (2)
IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING
INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN IN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE COL. C
-------------- ----------- ------------------ ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
4
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE
TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE
FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR SUCH PERSON ANY OF WHICH
ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
TITLE OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN IN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE COL. C
-------------- ----------- ------------------ ------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE
TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
COL. A COL. B COL. C
NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
------------ ----------- --------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There is not, nor has there been, a default with respect to the securities
under this indenture. (See Note on Page 7.)
5
ITEM 13. (CONTINUED)
(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There has not been a default under any such indenture or series. (See Note
on Page 7.)
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
ITEM 15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS
AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED
UNDER THE ACT.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
. 1. A copy of the articles of association of the trustee now in
effect.
# 2. A copy of the certificate of authority of the trustee to
commence business.
* 3. A copy of the certificate of authorization of the trustee to
exercise corporate trust powers issued by the Board of Governors of
the Federal Reserve System under date of January 21, 1948.
+ 4. A copy of the existing bylaws of the trustee.
5. Not applicable.
6. The consent of United States institutional trustees required by
Section 321(b) of the Act.
6
** 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority.
8. Not applicable.
9. Not applicable.
NOTE REGARDING INCORPORATED EXHIBITS
Effective January 20, 1998, the name of the Trustee was changed from Texas
Commerce Bank National Association to Chase Bank of Texas, National Association.
The exhibits incorporated herein by reference, except for Exhibit 7, were filed
under the former name of the Trustee.
. Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-56195.
# Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-42814.
* Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-11 File No. 33-25132.
+ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-65055.
** Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 333-52197.
____________________
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Items 2 and 13, the
answers to said Items are based on incomplete information. Such Items may,
however, be considered as correct unless amended by an amendment to this
Form T-1.
7
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE
TRUSTEE, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, A NATIONAL BANKING
ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF
AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF
HOUSTON, AND STATE OF TEXAS, ON THE 24 DAY OF AUGUST, 1998.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Trustee)
By: /s/ Debbie Miller
----------------------------------
Debbie Miller
Vice President and Trust Officer
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is trustee under an indenture between NorAm Energy Corp., a
Delaware corporation (the "Corporation") and Chase Bank of Texas, National
Association (formerly known as Texas Commerce Bank National Association), as
Trustee, entered into in connection with the issuance of the Corporation's Debt
Securities.
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /s/ DEBBIE MILLER
--------------------------------
Debbie Miller
Vice President and Trust Officer
