AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 2002
REGISTRATION NO. 333-85568
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE WILLIAMS COMPANIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 4922 73-0569878
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
ONE WILLIAMS CENTER WILLIAM G. VON GLAHN, ESQ.
TULSA, OKLAHOMA 74172 ONE WILLIAMS CENTER
(918) 573-2000 TULSA, OKLAHOMA 74172
(Address, Including Zip Code, and Telephone (918) 573-2000
Number, Including Area Code, of Registrant's (Name, Address, Including Zip Code, and
Principal Executive Offices) Telephone Number, Including Area Code, of Agent
For Service)
COPIES TO:
MARLENE ALVA, ESQ. JOHN W. OSBORN, ESQ.
DAVIS POLK & WARDWELL PHYLLIS G. KORFF, ESQ.
450 LEXINGTON AVENUE SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10017 FOUR TIMES SQUARE
(212) 450-4000 NEW YORK, NEW YORK 10036
(212) 735-3000
(212) 735-2000 (FAX)
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable following the effectiveness of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ] ____________
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) FEE(2)
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8.125% Notes due March 15, 2012....... $650,000,000 100% $650,000,000 $59,800
8.750% Notes due March 15, 2032....... $850,000,000 100% $850,000,000 $78,200
Total................................. $1,500,000,000 $1,500,000,000 $138,000
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) promulgated under the Securities Act of 1933, as
amended.
(2) Fee previously paid.
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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.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT EXCHANGE THE OUTSTANDING SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THE NEW SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THE NEW SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 24, 2002.
THE WILLIAMS COMPANIES, INC.
OFFER TO EXCHANGE
UP TO $650,000,000
OF
8.125% NOTES DUE MARCH 15, 2012,
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OUTSTANDING
8.125% NOTES DUE MARCH 15, 2012
AND
UP TO $850,000,000
OF
8.750% NOTES DUE MARCH 15, 2032,
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OUTSTANDING
8.750% NOTES DUE MARCH 15, 2032
------------------
THE NEW SECURITIES ISSUED BY WILLIAMS:
- The terms of the new 8.125% notes and the new 8.750% notes are substantially
the same in all material respects as the terms of the outstanding 8.125% notes
and the outstanding 8.750% notes, respectively, except that the transfer
restrictions, registration rights and additional interest provisions relating
to the outstanding 8.125% notes and the outstanding 8.750% notes do not apply
to the new 8.125% notes and the new 8.750% notes. We will issue up to $650.0
million aggregate principal amount of new 8.125% notes and up to $850.0
million aggregate principal amount of new 8.750% notes.
THE EXCHANGE OFFER:
- Expiration: 5:00 p.m., New York City time, on , 2002, unless we extend
the expiration date.
- Conditions: The exchange offer is not conditioned upon any aggregate
principal amount of outstanding 8.125% notes or outstanding 8.750% notes being
tendered.
- Tendered Securities: All outstanding 8.125% notes and outstanding 8.750%
notes that are validly tendered and not validly withdrawn will be exchanged
for an equal principal amount of new 8.125% notes or new 8.750% notes that are
registered under the Securities Act of 1933. If you fail to tender your
outstanding 8.125% notes and outstanding 8.750% notes, you will continue to
hold unregistered securities, and your ability to transfer them could be
adversely affected.
- Withdrawal: Tenders of outstanding 8.125% notes and outstanding 8.750% notes
may be withdrawn at any time prior to the expiration of the exchange offer.
- Tax Consequences: The exchange of outstanding 8.125% notes or outstanding
8.750% notes for new 8.125% notes or new 8.750% notes, respectively, will not
be a taxable event for U.S. federal income tax purposes.
- Trading: Neither the new 8.125% notes nor the new 8.750% notes will be listed
on any securities exchange.
SEE THE SECTION ENTITLED "RISK FACTORS" THAT BEGINS ON PAGE 11 FOR A DISCUSSION
OF THE RISKS THAT YOU SHOULD CONSIDER PRIOR TO TENDERING YOUR OUTSTANDING 8.125%
NOTES OR 8.750% NOTES FOR EXCHANGE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2002
The information contained in this prospectus was obtained from us and other
sources believed by us to be reliable. This prospectus also incorporates
important business and financial information about us that is not included in or
delivered with this prospectus. The documents containing this information are
listed under the section entitled "Where You Can Find More Information." We will
provide a copy of any and all of these documents to you by first-class mail,
without charge, upon written or oral request. ANY REQUEST FOR DOCUMENTS SHOULD
BE MADE BY , 2002 TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO THE
EXPIRATION DATE OF THE EXCHANGE OFFER. Requests for documents should be directed
to:
The Williams Companies, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Attention: Corporate Secretary
Telephone: (918) 573-2000
You should rely only on the information contained in this prospectus or any
supplement and any information incorporated by reference in this prospectus or
any supplement. We have not authorized anyone to provide you with any
information that is different. If you receive any unauthorized information, you
must not rely on it. You should disregard anything we said in an earlier
document that is inconsistent with what is in or incorporated by reference in
this prospectus.
You should not assume that the information in this prospectus or any
supplement is current as of any date other than the date on the front page of
this prospectus. This prospectus is not an offer to sell nor is it seeking an
offer to buy these securities in any state or jurisdiction where the offer or
sale is not permitted.
None of Williams, the trustee under the indenture or the exchange agent is
making any recommendation to you as to whether or not you should tender your
outstanding 8.125% notes or your outstanding 8.750% notes in connection with
this exchange offer, and no one has been authorized by any of them to make any
such recommendation. You must make your own decision as to whether to tender
your outstanding 8.125% notes or your outstanding 8.750% notes and, if so, the
principal amount of securities to tender.
You should read this document and the letter of transmittal carefully
before making a decision to tender your outstanding 8.125% notes or your
outstanding 8.750% notes.
We include cross references in the prospectus to captions in these
materials where you can find further related discussions. The following table of
contents tells you where to find these captions.
TABLE OF CONTENTS
PAGE
NO.
----
Prospectus Summary.......................................... 1
Risk Factors................................................ 11
Use of Proceeds............................................. 18
The Exchange Offer.......................................... 18
Description of the New Securities........................... 27
Material United States Federal Income Tax Considerations.... 36
Plan of Distribution........................................ 38
Forward-Looking Statements.................................. 39
Legal Matters............................................... 40
Experts..................................................... 40
Where You Can Find More Information......................... 40
Incorporation of Documents by Reference..................... 40
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PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus to help
you understand our business, the new 8.125% notes and the new 8.750% notes. It
likely does not contain all the information that is important to you or that you
should consider in making an investment decision. To understand all of the terms
of the exchange offer and to attain a more complete understanding of our
business and financial situation, you should read carefully this entire
prospectus and should consider consulting with your own legal and tax advisors.
References in this prospectus to "Williams," "we," "us" or "our" refer to The
Williams Companies, Inc.
THE WILLIAMS COMPANIES, INC.
Williams, through Williams Energy Marketing & Trading Company, Williams Gas
Pipeline Company, LLC and Williams Energy Services, LLC, and their respective
subsidiaries, engages in the following types of energy-related activities:
- price risk management services and the purchase and sale, and arranging
of transportation or transmission, of energy and energy-related
commodities including natural gas and gas liquids, crude oil and refined
products and electricity;
- transportation and storage of natural gas and related activities through
the operating and ownership of four wholly-owned interstate natural gas
pipelines, several pipeline joint ventures and a wholly-owned liquefied
natural gas terminal;
- exploration, production and marketing of oil and gas through ownership of
3.2 trillion cubic feet equivalent of proved natural gas reserves
primarily located in the Rocky Mountain, Mid-Continent and Gulf Coast
regions of the United States;
- direct investments in international energy projects located primarily in
South America and Lithuania, investments in energy and infrastructure
development funds in Asia and South America and soda ash mining
operations in Colorado;
- natural gas gathering, treating and processing activities through
ownership and operation of approximately 11,200 miles of gathering lines,
10 natural gas treating plants and 18 natural gas processing plants
(three of which are partially owned) located in the United States and
Canada;
- natural gas liquids transportation through ownership and operation of
approximately 14,300 miles of natural gas liquids pipeline (4,770 miles
of which are partially owned);
- through a majority-owned subsidiary, transportation of petroleum products
and related terminal services through ownership or operation of
approximately 6,747 miles of petroleum products pipeline and 39 petroleum
products terminals;
- light hydrocarbon/olefin transportation through 300 miles of pipeline in
southern Louisiana;
- ethylene production through a 5/12 interest in a 1.3 billion pounds per
year facility in Geismar, Louisiana;
- production and marketing of ethanol and bio-products through operation
and ownership of two ethanol plants (one of which is partially owned) and
ownership of minority interests of investments in four other plants;
- refining of petroleum products through operation and ownership of two
refineries;
- retail marketing through 61 travel centers;
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- through a majority-owned subsidiary, petroleum products terminal services
through the ownership and operation of five marine terminals and 25
inland terminals that form a distribution network for gasoline and other
refined petroleum products throughout the southeastern United States; and
- through a majority-owned subsidiary, ammonia transportation and terminal
services through ownership and operation of an ammonia pipeline and
terminal system that extends for approximately 1,100 miles from Texas and
Oklahoma to Minnesota.
Williams was incorporated under the laws of the State of Nevada in 1949 and
was reincorporated under the laws of the State of Delaware in 1987. Williams
maintains its principal executive offices at One Williams Center, Tulsa,
Oklahoma 74172, telephone (918) 573-2000.
RECENT DEVELOPMENTS
Since the events surrounding the Enron bankruptcy filing in the fourth
quarter of 2001, Williams has been engaged in various discussions with
investors, analysts, rating agencies and financial institutions regarding the
implications of such events on the business strategy for Williams' energy
trading activities. Williams has also been evaluating its contingent obligations
regarding guarantees and payment obligations with respect to certain financial
obligations of Williams Communications Group, Inc., which we refer to in this
prospectus as "Williams Communications," because of uncertainty regarding
Williams Communications' ability to perform and the announcement by Williams
Communications that it is seeking reorganization under the bankruptcy laws.
Although the three major rating agencies continue to maintain investment
grade ratings on Williams' senior unsecured debt, they have all changed their
view to negative as a result of these developments. On June 7, 2002, Moody's
Investors Service, Inc. downgraded Williams' senior unsecured credit ratings to
"Baa3" with negative outlook. On May 28, 2002, Standard and Poor's Ratings
Services downgraded Williams' senior unsecured debt credit rating to "BBB-" with
negative outlook, but removed Williams from its credit watch. The following is a
summary of the steps that are contemplated, are in progress or have been
completed which Williams believes will strengthen its balance sheet and enable
it to retain its investment grade rating:
- On March 5, 2002, Williams received the requisite approvals for its
consent solicitation to amend the terms of $1.4 billion of senior secured
notes issued by entities controlled by Williams Communications. Prior to
the April 2001 spinoff of Williams Communications, Williams had provided
indirect credit support for the senior secured notes through a commitment
to make available proceeds of a Williams equity issuance upon the
occurrence of certain trigger events. The amendment, among other things,
eliminated a bankruptcy by Williams Communications and a Williams credit
ratings downgrade from the enumerated list of events that could cause an
acceleration of the senior secured notes. Williams is liable for all
payments related to the senior secured notes, which bear an interest rate
of 8.25% and mature in March 2004. Williams may now fund such payments
with any available sources. With the exception of the March and September
2002 interest payments, Williams Communications remains obligated to
reimburse Williams for any payments Williams is required to make in
connection with the senior secured notes. However, Williams cannot
provide any assurances as to the recoverability of this reimbursement
obligation or the form it may take. On June 3, 2002, Williams commenced
an exchange offer pursuant to which holders of the senior secured notes
may exchange their notes for registered senior unsecured 9.25% notes to
be issued by Williams.
- In its December 31, 2001 financial statements, Williams recognized a
$2.05 billion charge ($1.84 billion to discontinued operations and $213
million to continuing operations) in connection with its assessment of
certain receivables and guarantee and payment obligations associated with
Williams Communications. In its March 31, 2002 financial statements,
Williams recognized an additional $232 million charge in connection with
receivables of Williams Communications. Investors should refer to the
more detailed discussion on pages 5 and 6 of Williams' Quarterly Report
on Form 10-Q for the quarter ended March 31, 2002 for an explanation of
how these charges were calculated. In addition, Williams may recognize
additional losses relating to Williams Communications in the future.
2
- On March 8, 2002, a unit of Williams Communications exercised its
purchase option for certain leased assets for which Williams was
guarantor. The assets consist of a segment of fiber-optic network and
associated facilities. On March 29, 2002, Williams funded the purchase
price of $754 million and became entitled to an unsecured note from
Williams Communications for the same amount. This event was previously
factored into the earnings, balance sheet and liquidity numbers that
Williams reported in public filings.
- In January 2002, Williams announced its goal of reducing its annual
operating expenses based on its current cost structure by $50 million,
effective 2003 (this goal has been significantly increased as discussed
below). Management is evaluating its organizational structure to
determine effective and efficient ways to align services to meet
Williams' current business requirements as an energy-only company. In
conjunction with this goal, Williams offered an enhanced-benefit early
retirement option to certain employee groups. The impact on 2002 expenses
is expected to be approximately $35 to $70 million. Additionally,
Williams will offer severance and redeployment services to employees
whose positions are eliminated as a result of the organizational changes.
- During the fourth quarter of 2001, Williams announced its intention to
eliminate its exposure to "ratings trigger" clauses incorporated in
certain of its agreements (in addition to the triggers contained in the
senior secured notes). Williams now has approximately $182 million of
total exposure under two such agreements, both of which mature in 2003.
In order to obtain removal of ratings triggers from the Snow Goose
transaction (see Note 14 of Notes to Consolidated Financial Statements
included in our Current Report on Form 8-K dated May 28, 2002 for a
description of the Snow Goose transaction), Williams agreed to guarantee
all payments due under the transaction and to amortize the loan from Snow
Goose to Arctic Fox by paying $112,000,000 quarterly through April 7,
2003.
- On March 27, 2002, Williams closed the sale of its Kern River interstate
natural gas pipeline business to a unit of MidAmerican Energy Holdings
Company for $450 million in cash and the assumption of $510 million in
debt. As a result of the sale, Williams expects that its capital
expenditure requirements will be reduced by approximately $1.26 billion
over the next one and a half years.
- On March 27, 2002, Williams closed the sale of $275 million of its 9 7/8%
cumulative convertible preferred stock to MEHC Investment, Inc., a
wholly-owned subsidiary of MidAmerican Energy Holdings Company, and a
member of the Berkshire Hathaway family of companies. MEHC Investment
acquired 1,466,667 shares of the security at a purchase price of $187.50
per share, pursuant to a stock purchase agreement between the companies.
Each share of the security is convertible into 10 shares of Williams'
common stock.
- On April 11, 2002, Williams Energy Partners L.P., a majority-owned
subsidiary of Williams, acquired Williams Pipe Line for $1 billion from
Williams. Williams Pipe Line is comprised of 6,747 miles of active pipe
that delivers petroleum products to 11 midwestern states. Last year, the
system transported approximately 260 million barrels. Thirty-nine storage
and distribution terminals connected to Williams Pipe Line are included
in the purchase. The facilities have an aggregate storage capacity of
26.5 million barrels.
- On May 28, 2002, Williams announced that, in addition to the significant
steps already taken to strengthen its balance sheet, Williams plans over
the next 12 months to: (i) issue $1 billion to $1.5 billion in common
equity, (ii) sell an additional $1.5 billion to $3 billion in assets,
(iii) continue its focus on monetization of the significant hedged
cash-flow positions in marketing and trading contracts, (iv) reduce
annual costs by $100 million, twice the previously announced goal (this
goal was later increased as discussed below), (v) fund base-level capital
expenditures, including mandatory, efficiency and highest-priority growth
needs, with cash flow from operations, providing for funding of
additional growth opportunities with an appropriate mix of follow-on
equity and debt, and (vi) apply all proceeds from asset sales and initial
equity issuance to pay down debt or increase liquidity. Williams also
announced that it will continue to evaluate the level of its common-stock
dividend, and that an internal team has been formed within its energy
marketing and trading business to evaluate potential "joint venture" or
other alternative structural solutions to enhance that unit's
risk-mitigation tools. In
3
furtherance of its plan to sell an additional $1.5 billion to $3 billion in
assets, Williams announced on June 18, 2002 its intention to offer for sale its
Memphis and Alaska refineries and related petroleum assets, estimated to be sold
by the end of 2002 for more than $1 billion.
- On June 10, 2002, Williams announced that it is scaling back its energy
marketing and trading business by reducing its financial commitment to
that business from $1.5 billion to $1 billion. This move is expected to
produce an estimated $50 million in annual cost reductions, primarily in
work force reductions and deferral of new information systems within the
energy marketing and trading business, in addition to the previously
announced goal of reducing annual costs by $100 million.
SUMMARY OF THE EXCHANGE OFFER
You are entitled to exchange in the exchange offer your outstanding 8.125%
notes for new 8.125% notes with substantially identical terms, and your
outstanding 8.750% notes for new 8.750% notes with substantially identical
terms. You should read the discussion under the heading "Description of the New
Securities" beginning on page 27 for further information regarding the new
8.125% notes and the new 8.750% notes.
We summarize the terms of the exchange offer below. You should read the
discussion under the heading "The Exchange Offer" beginning on page 18 for
further information regarding the exchange offer and resale of the new 8.125%
notes and the new 8.750% notes.
Securities to be Exchanged.... On March 19, 2002, we issued $650.0 million
aggregate principal amount of outstanding
8.125% Notes due March 15, 2012 and $850.0
million aggregate principal amount of
outstanding 8.750% Notes due March 15, 2032 to
initial purchasers in transactions exempt from
the registration requirements of the Securities
Act of 1933.
The terms of the new 8.125% notes and the new
8.750% notes are substantially the same in all
material respects as the terms of the
outstanding 8.125% notes and the outstanding
8.750% notes, except that (1) the new 8.125%
notes and the new 8.750% notes will be freely
transferable by the holders except as otherwise
provided in this prospectus; (2) holders of the
new 8.125% notes and the new 8.750% notes will
have no registration rights.; and (3) neither
the new 8.125% notes nor the new 8.750% notes
will contain provisions for an increase in
their stated interest rate.
The Exchange Offer............ We are offering to exchange up to $650.0
million aggregate principal amount of new
8.125% notes for up to $650.0 million aggregate
principal amount of outstanding 8.125% notes.
We are offering to exchange up to $850.0
million aggregate principal amount of new
8.750% notes for up to $850.0 million aggregate
principal amount of outstanding 8.750% notes.
Outstanding 8.125% notes and outstanding 8.750%
notes may be exchanged only in integral
multiples of $1,000. The new 8.125% notes and
the new 8.750% notes will evidence the same
debt as the outstanding 8.125% notes and the
outstanding 8.750% notes, respectively, and the
new 8.125% notes and the new 8.750% notes will
be governed by the same indenture as the
outstanding 8.125% notes and the outstanding
8.750% notes, respectively.
Resale........................ We believe that the new 8.125% notes and the
new 8.750% notes issued in the exchange offer
may be offered for resale, resold and otherwise
transferred by you without compliance with the
registra-
4
tion and prospectus delivery provisions of the
Securities Act, provided that:
- the new 8.125% notes and the new 8.750% notes
are being acquired in the ordinary course of
your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the new 8.125% notes
and the new 8.750% notes issued to you in the
exchange offer; and
- you are not an "affiliate" of ours.
If any of these conditions is not satisfied and
you transfer any new 8.125% notes or new 8.750%
notes issued to you in the exchange offer
without delivering a prospectus meeting the
requirements of the Securities Act or without
an exemption from registration for your new
8.125% notes and new 8.750% notes from those
requirements, you may incur liability under the
Securities Act. We do not assume or indemnify
you against any of those liabilities.
Each broker-dealer that is issued new 8.125%
notes or new 8.750% notes in the exchange offer
for its own account in exchange for outstanding
8.125% notes or outstanding 8.750% notes which
were acquired by that broker-dealer as a result
of market-making or other trading activities
must acknowledge that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
the new 8.125% notes or the new 8.750% notes. A
broker-dealer may use this prospectus for an
offer to resell, resale or other transfer of
the new 8.125% notes or the new 8.750% notes
issued to it in the exchange offer.
Record Date................... The record date for the exchange offer is
, 2002. Only registered holders of
outstanding 8.125% notes and outstanding 8.750%
notes on the record date will receive materials
relating to the exchange offer.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2002, or such
later date and time to which we extend it.
Withdrawal of Tenders......... You may withdraw your tender of outstanding
8.125% notes or outstanding 8.750% notes at any
time prior to 5:00 p.m., New York City time, on
the expiration date. To withdraw, the exchange
agent must receive a notice of withdrawal at
its address indicated under "The Exchange
Offer -- Exchange Agent" before 5:00 p.m., New
York City time, on the expiration date. We will
return to you, without charge, promptly after
the expiration or termination of the exchange
offer any outstanding 8.125% notes or
outstanding 8.750% notes that you tendered but
that were not accepted for exchange.
Conditions to the Exchange
Offer......................... We will not be required to accept outstanding
8.125% notes or outstanding 8.750% notes for
exchange if various conditions are not
satisfied or waived by us. The exchange offer
is not conditioned upon any minimum aggregate
principal amount of outstanding 8.125% notes or
outstanding 8.750% notes being tendered. Please
5
read the section "The Exchange
Offer -- Conditions to the Exchange Offer" on
page 25 for more information regarding the
conditions to the exchange offer.
Procedures for Tendering
Outstanding Securities........ If your outstanding 8.125% notes or outstanding
8.750% notes are held through The Depository
Trust Company and you wish to participate in
the exchange offer, you may do so through the
automated tender offer program of DTC. By
participating in the exchange offer, you will
agree to be bound by the letter of transmittal
that we are providing with this prospectus as
though you had signed the letter of
transmittal. By signing or agreeing to be bound
by the letter of transmittal, you will
represent to us that, among other things:
- any new 8.125% notes or new 8.750% notes that
you receive will be acquired in the ordinary
course of your business;
- you have no arrangement or understanding with
any person or entity to participate in the
distribution of the new 8.125% notes or the
new 8.750% notes;
- if you are not a broker-dealer, you are not
engaged in and do not intend to engage in the
distribution of the new 8.125% notes or the
new 8.750% notes;
- if you are a broker-dealer that will receive
new 8.125% notes or new 8.750% notes for your
own account in exchange for outstanding
8.125% notes or outstanding 8.750% notes that
were acquired as a result of market-making
activities, you will deliver a prospectus, as
required by law, in connection with any
resale of the new 8.125% notes or new 8.750%
notes; and
- you are not our "affiliate," as defined in
Rule 405 of the Securities Act, or, if you
are our affiliate, you will comply with any
applicable registration and prospectus
delivery requirements of the Securities Act.
We will accept for exchange any and all
outstanding 8.125% notes or outstanding 8.750%
notes which are properly tendered (and not
withdrawn) in the exchange offer prior to the
expiration date. The new 8.125% notes and the
new 8.750% notes issued pursuant to the
exchange offer will be delivered promptly
following the expiration date. See "The
Exchange Offer -- Acceptance of Outstanding
Securities for Exchange."
Effect of Not Tendering....... Outstanding 8.125% notes and outstanding 8.750%
notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, remain
outstanding and will continue to be subject to
the currently applicable transfer restrictions.
Following the completion of the exchange offer,
we will have no obligation to exchange new
8.125% notes and new 8.750% notes for
outstanding 8.125% notes and outstanding 8.750%
notes or to provide for the registration of
those outstanding securities under the
Securities Act.
6
The trading market for outstanding 8.125% notes
and outstanding 8.750% notes not exchanged in
the exchange offer may be significantly more
limited than it is at present. Therefore, if
your outstanding 8.125% notes or outstanding
8.750% notes are not tendered and accepted in
the exchange offer, it may become more
difficult for you to sell or transfer your
unexchanged securities.
Special Procedures for
Beneficial Owners............. If you are the beneficial owner of book-entry
interests and your name does not appear on a
security position listing of DTC as the holder
of those book-entry interests or you own a
beneficial interest in outstanding 8.125% notes
or outstanding 8.750% notes that are registered
in the name of a broker, dealer, commercial
bank, trust company or other nominee, and you
wish to tender that book-entry interest of
outstanding 8.125% notes or outstanding 8.750%
notes in the exchange offer, you should contact
the registered holder promptly and instruct the
registered holder to tender on your behalf.
Guaranteed Delivery
Procedures.................... If you wish to tender your outstanding 8.125%
notes or outstanding 8.750% notes and cannot
comply, prior to the expiration date, with the
applicable procedures under the automated
tender offer program of DTC, you must tender
your outstanding 8.125% notes or outstanding
8.750% notes according to the guaranteed
delivery procedures described in "The Exchange
Offer -- Procedures for Tendering Outstanding
Securities -- Guaranteed Delivery" beginning on
page 23.
Registration Rights
Agreement..................... We sold the outstanding 8.125% notes and the
outstanding 8.750% notes on March 19, 2002 in
transactions exempt from the registration
requirements of the Securities Act. In
connection with these sales, we entered into a
registration rights agreement with the initial
purchasers which grants the holders of the
outstanding 8.125% notes and the outstanding
8.750% notes exchange registration rights. This
exchange offer satisfies those rights, which
terminate upon consummation of this exchange
offer. You will not be entitled to any exchange
or registration rights with respect to the new
8.125% notes or the new 8.750% notes.
U.S. Federal Income Tax
Considerations................ The exchange of outstanding 8.125% notes for
new 8.125% notes or of outstanding 8.750% notes
for new 8.750% notes in the exchange offer will
not be a taxable event for U.S. federal income
tax purposes. Please read "Material United
States Federal Income Tax Considerations" on
page 35.
Use of Proceeds............... We will not receive any cash proceeds from the
issuance of the new 8.125% notes or the new
8.750% notes.
Exchange Agent................ We have appointed Bank One Trust Company, N.A.,
as the exchange agent for the exchange offer.
The mailing address and telephone number of the
exchange agent are 1 Bank One Plaza, Mail Code
IL1-0134, Chicago, Illinois 60670-0134, phone:
(800) 524-9472. See "The Exchange
Offer -- Exchange Agent."
7
SUMMARY OF THE TERMS OF THE NEW SECURITIES
NEW 8.125% NOTES:
New 8.125% Notes Offered...... Up to $650.0 million principal amount of our
8.125% Notes due March 15, 2012.
Interest Rate................. 8.125% per year.
Interest Payment Dates........ March 15 and September 15 of each year,
beginning September 16, 2002. Holders of new
8.125% notes will receive interest from March
19, 2002.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer.
Ranking....................... The new 8.125% notes will be senior unsecured
obligations of Williams that will rank equally
with all of our other outstanding senior
unsecured and unsubordinated indebtedness.
Optional Redemption........... We may redeem some or all of the new 8.125%
notes at any time at the redemption price
described in this prospectus, plus accrued and
unpaid interest, if any, to the redemption
date, as described in "Description of the New
Securities -- Terms and Conditions."
Optional Exchange............. Holders of outstanding 8.125% notes may opt not
to tender their outstanding 8.125% notes in the
exchange offer. Therefore, it is possible that
not all new 8.125% notes offered by this
prospectus will be issued.
Covenants..................... We will issue the new 8.125% notes under an
indenture between us and Bank One Trust
Company, N.A., as trustee. The indenture
contains covenants that, among other things,
limit our ability to:
- create liens; and
- consolidate, merge or sell material assets.
These covenants, which are identical to the
covenants applicable to the outstanding 8.125%
notes, are subject to a number of important
limitations and exceptions. See "Description of
the New Securities -- Covenants" for a more
comprehensive description of the covenants
contained in the indenture.
NEW 8.750% NOTES:
New 8.750% Notes Offered...... Up to $850.0 million principal amount of our
8.750% Notes due March 15, 2032.
Interest Rate................. 8.750% per year.
Interest Payment Dates........ March 15 and September 15 of each year,
beginning September 16, 2002. Holders of new
8.750% notes will receive interest from March
19, 2002.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer.
Ranking....................... The new 8.750% notes will be senior unsecured
obligations of Williams that will rank equally
with all of our other outstanding senior
unsecured and unsubordinated indebtedness.
8
Optional Redemption........... We may redeem some or all of the new 8.750%
notes at any time at the redemption price
described in this prospectus, plus accrued and
unpaid interest, if any, to the redemption
date, as described in "Description of the New
Securities -- Terms and Conditions."
Optional Exchange............. Holders of outstanding 8.750% notes may opt not
to tender their outstanding 8.750% notes in the
exchange offer. Therefore, it is possible that
not all new 8.750% notes offered by this
prospectus will be issued.
Covenants..................... We will issue the new 8.750% notes under an
indenture between us and Bank One Trust
Company, N.A., as trustee. The indenture
contains covenants that, among other things,
limit our ability to:
- create liens; and
- consolidate, merge or sell material assets.
These covenants, which are identical to the
covenants applicable to the outstanding 8.750%
notes, are subject to a number of important
limitations and exceptions. See "Description of
the New Securities -- Covenants" for a more
comprehensive description of the covenants
contained in the indenture.
RISK FACTORS
See "Risk Factors" beginning on page 11 for a discussion of factors that
should be considered by holders of outstanding 8.125% notes and outstanding
8.750% notes before tendering their securities in the exchange offer.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS
The following table presents our consolidated ratio of earnings to combined
fixed charges and preferred stock dividend requirements for the periods shown.
QUARTER ENDED MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------
2002 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ----
1.96 2.66 3.02 1.84 1.64 2.37
For purposes of computing these ratios, earnings means income (loss) from
continuing operations before:
- income taxes;
- extraordinary gain (loss);
- minority interest in income (loss) and preferred returns of consolidated
subsidiaries;
- interest expense, net of interest capitalized;
- interest expense of 50-percent-owned companies;
- that portion of rental expense that we believe to represent an interest
factor;
- pretax effect of dividends on preferred stock of Williams;
- adjustment to equity earnings to exclude equity investments with losses;
and
- adjustment to equity earnings to reflect actual distributions from equity
investments.
9
Fixed charges means the sum of the following:
- interest expense;
- that portion of rental expense that we believe to represent an interest
factor;
- pretax effect of dividends on preferred stock of Williams;
- pretax effect of dividends on preferred stock and other preferred returns
of consolidated subsidiaries; and
- interest expense of 50-percent-owned companies.
10
RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this prospectus, you should carefully consider the following risk
factors in deciding whether to exchange your outstanding 8.125% notes or
outstanding 8.750% notes in the exchange offer.
RISKS ARISING FROM THE EXCHANGE OFFER
THE TRADING MARKET FOR OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES
NOT EXCHANGED IN THE EXCHANGE OFFER MAY BE SIGNIFICANTLY MORE LIMITED THAN IT
IS AT PRESENT.
To the extent that outstanding 8.125% notes and outstanding 8.750% notes
are tendered and accepted for exchange pursuant to the exchange offer, the
trading market for outstanding 8.125% notes and outstanding 8.750% notes that
remain outstanding may be significantly more limited than it is at present. The
outstanding 8.125% notes and the outstanding 8.750% notes have not been
registered under the Securities Act and are subject to customary transfer
restrictions. In addition, a debt security with a smaller outstanding principal
amount available for trading (a smaller "float") may command a lower price than
would a comparable debt security with a larger float. Therefore, the market
price for outstanding 8.125% notes and outstanding 8.750% notes that are not
tendered and accepted for exchange pursuant to the exchange offer may be
affected adversely to the extent that the principal amount of the outstanding
8.125% notes and outstanding 8.750% notes exchanged pursuant to the exchange
offer reduces the float. A reduced float may also make the trading prices of
outstanding 8.125% notes and outstanding 8.750% notes that are not exchanged in
the exchange offer more volatile.
RISKS RELATING TO WILLIAMS AND OUR BUSINESS
OUR ENERGY MARKETING AND TRADING BUSINESS AND OUR LIQUIDITY WOULD BE ADVERSELY
AFFECTED IF OUR CREDIT RATINGS WERE DOWNGRADED.
Our energy marketing and trading business relies upon the credit ratings of
our senior unsecured long-term debt to satisfy credit support requirements of
many counterparties. Any downgrade of our senior unsecured debt credit ratings
could have a material adverse impact on our energy marketing and trading
business. If our credit ratings were to decline below investment grade, our
ability to participate in energy marketing and trading activity could be
significantly limited. Alternate credit support would be required under certain
existing agreements and would be necessary to support future transactions.
Without an investment grade rating, we would be required to fund margin
requirements pursuant to industry standard derivative agreements with cash,
letters of credit or other negotiable instruments. At December 31, 2001, the
total notional amounts that could require such funding, in the event of a credit
rating decline of Williams to below investment grade, was approximately $500
million after consideration of offsetting positions but before consideration of
margin deposits from the same counterparties. Additionally, aside from the
triggers contained in the $1.4 billion of senior secured notes issued by
entities controlled by Williams Communications (which were eliminated as a
result of our recent consent solicitation), we have approximately $182 million
of total exposure under our financing transactions that contain triggers tied to
our credit ratings. In the event our senior unsecured long-term debt ratings
decline below investment grade levels, subject to certain limited exceptions,
our obligations under those financing transactions could be accelerated. On June
7, 2002, Moody's Investors Service, Inc. downgraded Williams' senior unsecured
credit ratings to "Baa3" with negative outlook. On May 28, 2002, Standard and
Poor's Ratings Services downgraded Williams' senior unsecured debt credit rating
to "BBB-" with negative outlook. Our credit ratings will likely come under
greater pressure if we are unsuccessful in timely executing our various
financial enhancement initiatives.
OUR PLANNED ASSET SALES MAY RESULT IN RECOGNITION OF LOSSES AND DECREASED
FUTURE CASH FLOW.
In the process of performing on our plan to sell a large amount of assets,
we may sell certain assets at a loss, and we may be required to recognize
impairments to the current recorded values of some assets even before they are
sold as a result of information revealed in the process of investigating and
preparing for such sales. Additionally, as a result of such asset sales, we may
have reduced cash flow in the future.
11
WE MAY HAVE DIFFICULTY ACCESSING CAPITAL ON ATTRACTIVE TERMS OR AT ALL.
As a result of the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States and the bankruptcy of Enron Corp., one of
our major competitors, the availability and cost of capital for our business and
that of our competitors has been adversely affected. In addition, the bankruptcy
of Enron has caused the credit ratings agencies to more thoroughly review the
capital structure, cash flow and earnings potential of energy companies,
including us. These events have constrained the capital available to the energy
industry and could adversely affect our access to funding for our operations.
Our business is capital intensive and achievement of our growth targets is
dependent, at least in part, upon our ability to access capital at rates and on
terms we determine to be attractive. We currently have a $2.2 billion 364-day
revolving credit facility to support our liquidity needs. That facility will
mature on July 24, 2002. We will be seeking to renew or replace the facility
prior to its maturity. If we are unable to renew or replace this facility, we
will need to find alternative sources of liquidity for which we may have to pay
substantially higher rates of interest than we have paid in the past. If our
ability to access capital on attractive terms becomes significantly constrained,
our cash flow could be materially adversely affected.
CREDIT EXPOSURE TO ENRON MAY ADVERSELY AFFECT OUR CASH FLOW.
Through a variety of contractual arrangements, consisting primarily of
energy commodity and derivative trading contracts, we have credit exposure to
Enron Corp. and certain of its subsidiaries which have sought protection from
creditors under Chapter 11 of the U.S. Bankruptcy Code. During the fourth
quarter of 2001, we recorded a decrease in revenues of approximately $130
million as a part of our valuation of energy commodity and derivative trading
contracts with Enron entities, $91 million of which was recorded pursuant to
events immediately preceding and following the announced bankruptcy of Enron.
Other of our subsidiaries recorded approximately $5 million of bad debt expense
related to amounts receivable from Enron entities in the fourth quarter of 2001,
reflected in selling, general and administrative expenses. At December 31, 2001,
we have reduced our recorded exposure to accounts receivable from Enron
entities, net of margin deposits, to expected recoverable amounts. On March 28,
2002, we sold certain of our claims against Enron North America for $24.5
million. Claims against other Enron affiliates continue to be held by us. If we
are unable to recover these expected amounts, our cash flow could be adversely
affected.
WE MAY BE SUBJECT TO ADDITIONAL LIABILITIES PERTAINING TO OUR SPUN-OFF
TELECOMMUNICATIONS BUSINESS UNIT.
In the fourth quarter of 2001, we recorded $2.05 billion in pre-tax charges
and in the first quarter of 2002 we recorded an additional $232 million pre-tax
charge because we concluded that it is probable that we will not fully realize
$375 million of receivables from Williams Communications and will be required to
perform on $2.21 billion of guarantee and payment obligations of Williams
Communications, including $750 million on the guarantee of the purchase of
certain fiber-optic network assets and associated facilities leased by Williams
Communications, which we paid in full on March 29, 2002, and $1.4 billion on the
senior secured notes issued by entities controlled by Williams Communications.
Although we are an unsecured creditor of Williams Communications with respect to
these receivables and will become an unsecured creditor of Williams
Communications for any amounts paid by us under the guarantee and payment
obligations, we expect that we will be able to recover only a portion of the
amounts we are owed. Based on various factors, we have developed a range of loss
on receivables for which we currently estimate a minimum loss of approximately
90% on certain of the receivables and unsecured balances arising from
performance of the guarantee and payment obligations. Estimating the range of
loss as an unsecured creditor involves complex judgments and assumptions. The
actual recoveries may ultimately differ from the currently estimated recoveries
due to numerous factors, which include, but are not limited to, the future
demand for telecommunications services and the state of the telecommunications
industry, Williams Communications' individual performance, the form of
consideration we may receive from Williams Communications' restructuring under
bankruptcy, the length of time Williams Communications remains in bankruptcy,
customer reaction to Williams Communications' bankruptcy, challenges to our
claims which may be raised in the bankruptcy proceedings, negotiations among
Williams Communications' creditors, its unsecured creditors and us, the
resolution of any related claims, issues or
12
challenges that may be raised in the bankruptcy proceedings and the nature of
any restructuring of Williams Communications' balance sheet. Accordingly, we may
record additional losses in the future with respect to these unsecured claims
against Williams Communications.
Williams Communications is subject to certain lawsuits and settlement
negotiations, including claims for damages, indemnification for royalties and
other contractual claims by third parties. Further, Williams Communications is
subject to a putative class action brought on behalf of all landowners on whose
property the plaintiffs have alleged Williams Communications installed
fiber-optic cable without the permission of the landowner. Another potential
putative class action may challenge Williams Communications' railroad or
pipeline rights of way. We are also named as a defendant in that action and hold
interests under many of those rights of way. If successfully brought against us,
this purported class action and other purported class actions against Williams
Communications, in which we are also named as a defendant, could have a
significant adverse effect on our profitability.
We have received a private letter ruling from the Internal Revenue Service
(IRS) stating that the distribution of Williams Communications common stock
would be tax-free to us and our stockholders. Although private letter rulings
are generally binding on the IRS, we will not be able to rely on this ruling if
any of the factual representations or assumptions that were made to obtain the
ruling are, or become, incorrect or untrue in any material respect. However, we
are not aware of any facts or circumstances that would cause any of the
representations or assumptions to be incorrect or untrue in any material
respect. The distribution could also become taxable to us, but not our
shareholders, under the Internal Revenue Code (IRC) in the event that our or
Williams Communications' business combinations were deemed to be part of a plan
contemplated at the time of distribution and would constitute a total cumulative
change of more than 50 percent of the equity interest in either company. Such a
taxable event could have a material adverse effect on our cash flow.
RECENT AND ONGOING LAWSUITS MAY IMPAIR OUR PROFITABILITY AND LIQUIDITY AND
COULD DIVERT THE ATTENTION OF OUR MANAGEMENT.
Since January 29, 2002, we have been named in numerous shareholder class
action suits that have been filed in the United States District Court for the
Northern District of Oklahoma. The majority of the suits allege that we and
co-defendants, Williams Communications and certain corporate officers, have
acted jointly and separately to inflate the stock price of both companies. Other
suits allege similar causes of action related to a public offering in early
January 2002 known as the FELINE PACS offering and an August 2001 bond offering.
These cases were filed against us, certain corporate officers, all members of
our board of directors and all of the offering's underwriters. In addition,
class action complaints have been filed against us and the members of our board
of directors under the Employee Retirement Income Security Act by participants
in our 401(k) plan and a derivative shareholder suit has been filed in state
court in Oklahoma, all based on similar allegations. The Oklahoma Department of
Securities has also initiated an investigation into the spin off and subsequent
bankruptcy of Williams Communications. In addition, Williams has agreed with
counsel to the unsecured creditors committee for the Williams Communications
bankruptcy to conduct a limited review of documents and conduct a limited number
of interviews of key people related to Williams' claim against Williams
Communications. If any of these cases result in a substantial monetary judgment
against us or are settled on unfavorable terms, our profitability and liquidity
could be materially adversely affected.
PRICING REGULATIONS FOR POWER SOLD IN CALIFORNIA AND THE WESTERN UNITED STATES
MAY ADVERSELY AFFECT OUR PROFITABILITY.
The prices that we charge, and have charged, for power in California
markets have been challenged in various proceedings, including before the
Federal Energy Regulatory Commission, or the "FERC." In December 2000, the FERC
issued an order which provided that for the period between October 2, 2000 and
December 31, 2002, it may order refunds from us and other similarly situated
companies if the FERC finds that the wholesale markets in California are unable
to produce competitive, just and reasonable prices, or that market power or
other individual seller conduct has been exercised to produce an unjust and
unreasonable rate. Beginning on March 9, 2001, the FERC issued a series of
orders directing us and other similarly situated companies to provide refunds
for any prices charged in excess of FERC established proxy prices from
13
January 1, 2001 to May 29, 2001 or to provide justification for the prices
charged during those months. According to the FERC, our total potential refund
liability for this period is approximately $30 million. Commencing May 29, 2001,
a new prospective proxy price methodology was established by FERC that was
further adjusted by an order of June 19, 2001. We have filed justification for
our prices with the FERC and calculated our refund liability under the
methodology used by the FERC to compute refund amounts at approximately $11
million. However, in our FERC filings, we continue our objections to refunds in
any amount. No assurances can be given that the FERC will not seek refunds of
additional amounts for the period commencing October 2, 2000 forward. A FERC
administrative law judge held extensive settlement discussions in June and July
2001 regarding refunds and after failing to reach a settlement, recommended a
refund methodology to the FERC. On July 25, 2001, the FERC adopted, to a
significant extent, the judge's methodology. On December 19, 2001 and further on
May 15, 2002, the FERC clarified the methodology on rehearing. This methodology
will establish the rates for October 2, 2000 through June 19, 2001 and will
determine refunds and offsets for that period. All refund amounts discussed
above will be subsumed within this proceeding. The judge presiding over the
refund proceedings is expected to issue his findings in November 2002 and the
FERC will subsequently issue a refund order based on these findings. This
proceeding could result in a refund liability that could have a material adverse
effect on our cash flow. Certain parties have also asked the FERC to revoke our
authority to sell power from California-based generating units at market-based
rates; to limit us to cost-based rates for future sales from such units; and to
order refunds of excessive rates with interest back to May 1, 2000 and possibly
earlier. Although we believe these requests are ill-founded, if the FERC were to
take such action, it could have a material adverse effect on our profitability.
The June 19, 2001 order discussed above also implements a price mitigation
and market monitoring plan for wholesale power sales by all suppliers of
electricity, including us, in spot markets for a region that includes California
and ten other western states (the "Western Systems Coordinating Council," or
"WSCC"). In general, the plan, which will be in effect from June 20, 2001
through September 30, 2002, establishes a market clearing price for spot sales
in all hours of the day that is based on the bid of the highest-cost gas-fired
California generating unit that is needed to serve the California Independent
System Operator's load. When generation operating reserves fall below 7% in
California (a "reserve deficiency period"), absent cost based justification for
a higher price, the maximum price that we may charge for wholesale spot sales in
the WSCC is the market clearing price. When generation operating reserves rise
to 7% or above in California, absent cost based justification for a higher
price, our maximum price will be limited to 85% of the highest hourly price that
was in effect during the most recent reserve deficiency period. This price
mitigation plan could result in a material adverse effect on our profitability
by requiring us to charge prices that are lower than we would otherwise receive.
The California Public Utilities Commission (CPUC) filed a complaint with
FERC on February 25, 2002, seeking to void or, alternatively, reform a number of
the long-term power purchase contracts entered into between the State of
California and several suppliers in 2001, including us. The CPUC alleges that
the contracts are tainted with the exercise of market power and significantly
exceed "just and reasonable" prices. The Electricity Oversight Board (EOB) made
a similar filing on February 27, 2002. These cases have been set for hearing.
Various civil actions have also been filed in State Court in California seeking
to void these contracts. While we believe these complaints are ill-founded, no
assurance can be provided with respect to any actions that FERC may take in
response to these complaints.
On February 13, 2002, the FERC issued an Order Directing Staff
Investigation commencing a proceeding titled Fact-Finding Investigation of
Potential Manipulation of Electric and Natural Gas Prices. Through the
investigation, the FERC intends to determine whether "any entity, including
Enron Corporation (through any of its affiliates or subsidiaries), manipulated
short-term prices for electric energy or natural gas in the West or otherwise
exercised undue influence over wholesale electric prices in the West, since
January 1, 2000, resulting in potentially unjust and unreasonable rates in
long-term power sales contracts subsequently entered into by sellers in the
West." This investigation does not constitute a Federal Power Act complaint;
rather, results of the investigation will be used by the FERC in any existing or
subsequent Federal Power Act or Natural Gas Act complaint. The FERC Staff is
directed to complete the investigation as soon as "is practicable." We, through
many of our subsidiaries, are a major supplier of natural gas and power in the
West
14
and as such anticipate being the subject of certain aspects of the
investigation. In fact, Williams and others have received numerous inquiries as
of this date including requests for admissions regarding certain trading
practices first revealed with the publication of an internal Enron memorandum
and also regarding natural gas and power "wash" or "round-trip" trading. On May
31, 2002, we received a request from the SEC to voluntarily produce certain
documents and other information relating to round-trip trading. We also
responded to a request from FERC for admissions regarding the Enron memorandum
on May 22, 2002 (see exhibit 99.2 of our Current Report on Form 8-K filed May
22, 2002 for a complete copy of the response). In a subsequent response filed
with FERC on May 31, 2002, Williams denied having engaged in wash or round-trip
trading of power in western markets. A further response denying that Williams
engaged in wash or round-trip trading of natural gas in western markets was
submitted on June 5, 2002 (see Exhibit 99.1 of our Current Report on Form 8-K
filed June 6, 2002 for a complete copy of the response). In that filing,
Williams supplementally reported two gas buy-sell transactions which were
entered into for the purpose of facilitating the hedging of separate risks on
behalf of separate Williams entities and which did not have the effect of
increasing reported volumes or revenues. On June 4, 2002, the FERC issued a Show
Cause Order to Williams and others alleging that our May 22, 2002 response was
inadequate and ordering us to show cause why such alleged inadequacy should not
result in the termination of our market based rates certificate. Williams is
endeavoring to remedy the stated inadequacy and satisfy the Show Cause Order. On
June 19, 2002, Williams filed additional material supplementing our May 22, 2002
response and in response to the Show Cause Order. On June 5, 2002 we announced
that we would voluntarily provide gas trading data for December 2000 through
January 2001 for FERC to review in connection with its investigation of electric
and natural gas prices. Representatives from the FERC came to our offices in
Tulsa to begin their review of this data on June 12, 2002 and their review is
ongoing. If we are named by FERC in a subsequent complaint, and that complaint
is later resolved on terms unfavorable to us, or our market based rates
certificate is revoked, our results of operations and financial condition could
be adversely affected.
CREDIT EXPOSURE IN CALIFORNIA MAY ADVERSELY AFFECT OUR PROFITABILITY.
Through a long-term contractual relationship with affiliates of AES Corp.,
we have marketing rights to nearly 4,000 megawatts of generation capacity in the
Los Angeles basin. We sell much of this capacity on a forward basis through
contracts with various counterparties. The remainder of our available capacity
is sold in the spot and short term market primarily through the California
Independent System Operator. During the period of the summer of 2000 through the
winter of 2000-2001, tight supply and increased demand resulted in higher
wholesale power prices to California utilities. At the same time, two of the
three major utilities have been operating under a retail rate freeze. As a
result, there was significant underrecovery of costs by the utilities, one of
which, Pacific Gas & Electric, has filed for bankruptcy protection. In addition,
Southern California Edison has entered into an agreement with the State of
California regarding various arrangements that could prevent its bankruptcy.
Williams believes that as of March 1, 2002, Southern California Edison has
become current on all of its obligations to the market through payments it made
to the California Power Exchange which is currently in bankruptcy. While we
believe we will eventually be paid by the California Power Exchange, no
assurance can be made. Our credit exposure to the California utilities could
result in a material adverse effect on our profitability, as well as our ability
to predict and manage our cash flow.
CLASS ACTION LAWSUITS AND FEDERAL AND STATE INITIATIVES, INVESTIGATIONS AND
PROCEEDINGS RELATING TO OUR ACTIVITIES IN CALIFORNIA MAY ADVERSELY AFFECT OUR
PROFITABILITY.
A number of federal and state initiatives addressing the issues of the
California electric power industry are also ongoing and may result in
restructuring of various markets in California and elsewhere. Discussions in
California and other states have ranged from threats of re-regulation to
suspension of plans to move forward with deregulation. Allegations have also
been made that wholesale price increases resulted from the exercise of market
power and collusion of the power generators and sellers, such as us. These
allegations have resulted in multiple state and federal investigations. In May
2001, the Department of Justice issued a Civil Investigative Demand commencing
an antitrust investigation relating to an agreement between one of our
subsidiaries and AES Southland alleging that the agreement limits the expansion
of electric generating capacity at or near the AES Southland plants that are
subject to a long-term tolling agreement between us and
15
AES. We are cooperating with the investigation. The Attorney General of
California is also investigating this matter as well as whether AES and Williams
have improperly acted to withhold generation from the market.
The allegations have also resulted in the filing of class action lawsuits
in which we were named as a defendant. Between November 2000 and May 2001, class
actions were filed on behalf of California ratepayers against California power
generators and traders, including Williams Energy Marketing & Trading Company,
one of our subsidiaries. These lawsuits concern the increase in power prices in
California during the summer of 2000 through the winter of 2000-01 and claim
that the defendants acted to manipulate prices in violation of the California
antitrust and business practice statutes and other state and federal laws.
Plaintiffs are seeking injunctive relief as well as restitution, disgorgement,
appointment of a receiver, and damages, including treble damages. These cases
have been consolidated before the San Diego County Superior Court. Related suits
have also been filed by additional plaintiffs in April and May 2002.
In addition, on March 11, 2002, the California Attorney General's office
filed a civil complaint against us. This complaint alleges violations of Section
17200 of the California Business & Professions Code which prohibits acts of
unfair competition. The alleged unfair competition revolves around Williams'
practice under its FERC-approved tariff of selling ancillary services and then
selling the power associated with those services separately. Similar separate
suits were filed against other marketers. We dispute the allegations and intend
to vigorously defend against them. The Attorney General of California has also
brought an action against us in both State Court and at FERC alleging that we
have not properly filed our rates with FERC. On May 29, 2002, FERC approved an
order denying the Attorney General's complaint, but requiring Williams and
others to refile certain quarterly reports of transactions with greater
specificity dating back to October 2000. Most of these initiatives,
investigations and proceedings are in their preliminary stages and their likely
outcome cannot be estimated. There can be no assurance that these initiatives,
investigations and proceedings will not have an adverse effect on Williams'
results of operations or financial condition. We may incur significant costs in
responding to these actions which may have an adverse effect on our cash flows.
Additionally, if these actions result in substantial judgments against us, our
profitability could be materially adversely affected.
OUR PROFITABILITY COULD BE ADVERSELY AFFECTED BY CHANGES IN THE LEVEL OF
ACTIVITY IN THE OIL AND GAS INDUSTRY, AND THIS ACTIVITY IS SIGNIFICANTLY
AFFECTED BY VOLATILE OIL AND GAS PRICES.
Our profitability could be adversely affected by changes in the level of
activity in oil and gas exploration, development and production in markets
worldwide. Oil and gas prices, market expectations of potential changes in these
prices and a variety of political and economic factors significantly affect this
level of activity. Oil and gas prices are extremely volatile and are affected by
numerous factors, including:
- worldwide demand for oil and gas;
- the ability of the Organization of Petroleum Exporting Countries,
commonly called "OPEC," to set and maintain production levels and
pricing;
- the level of production in non-OPEC countries; and
- the policies of the various governments regarding exploration and
development of their oil and gas reserves.
OUR OPERATIONS ARE SUBJECT TO OPERATIONAL HAZARDS, UNINSURED RISKS AND
ENVIRONMENTAL RISKS.
Our exploration, production, transportation, gathering, refining and
processing operations are subject to the inherent risks normally associated with
those operations, including explosions, pollution, release of toxic substances,
fires and other hazards, each of which could result in damage to or destruction
of our facilities or damage to persons and property. If any of these events were
to occur, we could suffer substantial losses. Although we maintain insurance
against these types of risks to the extent and in amounts that we believe are
reasonable, our financial condition and operations could be adversely affected
if a significant event occurs that is not fully covered by insurance.
16
Our current and former operations also involve management of regulated
materials and are subject to various environmental laws and regulations. Certain
of our subsidiaries have been identified as potentially responsible parties at
hazardous materials disposal sites under the federal environmental laws, and
have incurred, or are alleged to have incurred, various other hazardous
materials removal and remediation obligations under environmental laws. Further,
certain of our subsidiaries are currently negotiating settlements with the U.S.
Department of Justice and the U.S. Environmental Protection Agency with respect
to their waste management practices and air emissions. In settlement of several
of these matters, our relevant subsidiary has agreed, during the fourth quarter
of 2001, to pay monetary fines and/or conduct supplemental environmental
projects. These fines and projects are estimated to cost approximately $2.9
million in the aggregate. If we are required to make future expenditures related
to environmental matters, they could have an adverse effect on our cash flow.
TERRORIST ATTACKS, SUCH AS THE ATTACKS THAT OCCURRED ON SEPTEMBER 11, 2001,
AND WAR OR RISK OF WAR MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS, OUR
ABILITY TO RAISE CAPITAL OR OUR FUTURE GROWTH.
The impact that the terrorist attacks of September 11, 2001 may have on the
energy industry in general, and on us in particular, is not known at this time.
Uncertainty surrounding military strikes or a sustained military campaign may
impact our operations in unpredictable ways, including changes in the insurance
markets, disruptions of fuel supplies and markets, particularly oil, and the
possibility that infrastructure facilities, including pipelines, production
facilities, refineries, electric generation, transmission and distribution
facilities, could be direct targets of, or indirect casualties of, an act of
terror. War or risk of war may also have an adverse effect on the economy. The
terrorist attacks on September 11, 2001 and the changes in the insurance markets
attributable to the terrorist attacks have made it difficult for us to obtain
certain types of insurance coverage. We may be unable to secure the levels and
types of insurance we would otherwise have secured prior to September 11, 2001.
There can be no assurance that insurance will be available to us without
significant additional costs. A lower level of economic activity could also
result in a decline in energy consumption which could adversely affect our
revenues or restrict our future growth. Instability in the financial markets as
a result of terrorism or war could also affect our ability to raise capital.
RISK RELATING TO THE NEW SECURITIES
WE DEPEND ON PAYMENTS FROM OUR SUBSIDIARIES, AND CLAIMS OF NOTE HOLDERS RANK
JUNIOR TO THOSE OF CREDITORS OF OUR SUBSIDIARIES.
We are a holding company and we conduct substantially all of our operations
through our subsidiaries. We perform management, legal, financial, tax,
consulting, administrative and other services for our subsidiaries. Our
principal sources of cash are from external financings, dividends and advances
from our subsidiaries, investments, payments by our subsidiaries for services
rendered, and interest payments from our subsidiaries on cash advances. The
amount of dividends available to us from our subsidiaries largely depends upon
each subsidiary's earnings and operating capital requirements. The terms of some
of our subsidiaries' borrowing arrangements limit the transfer of funds to us.
In addition, the ability of our subsidiaries to make any payments to us will
depend on our subsidiaries' earnings, business and tax considerations and legal
restrictions.
As a result of our holding company structure, the new 8.125% notes and the
new 8.750% notes will effectively rank junior to all existing and future debt,
trade payables and other liabilities of our subsidiaries. Any right of Williams
and our creditors to participate in the assets of any of our subsidiaries upon
any liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors, including trade creditors, except
to the extent that we may ourselves be a creditor of such a subsidiary.
THE COVENANTS CONTAINED IN OUR INDENTURE GENERALLY DO NOT LIMIT OUR ABILITY TO
ENGAGE IN TRANSACTIONS THAT COULD ADVERSELY AFFECT OUR OPERATIONS.
Except for the covenant limiting liens contained in our indenture, neither
our indenture nor the new notes contains any covenants or other provisions
designed to afford holders of the new 8.125% notes and the new
17
8.750% notes protection in the event of a highly leveraged transaction involving
us or any restrictions on the amount of additional indebtedness that we may
issue. If we were to engage in a highly leveraged transaction or substantially
increase our outstanding indebtedness, it could negatively affect our operations
in a number of ways, including limiting our ability to obtain additional
financing, reducing funds available for other corporate purposes and limiting
our flexibility to respond to downturns in our business. In addition, we would
be required to repay any additional indebtedness as it matured. We might not
have sufficient funds or might be unable to arrange for additional financing to
repay any additional debt as it became due.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new 8.125%
notes or the new 8.750% notes in exchange for the outstanding 8.125% notes or
the outstanding 8.750% notes, respectively. We are making this exchange solely
to satisfy our obligations under a registration rights agreement. In
consideration for issuing the new 8.125% notes and the new 8.750% notes, we will
receive outstanding 8.125% notes and outstanding 8.750% notes in aggregate
principal amounts equal to the aggregate principal amounts of the new 8.125%
notes and the new 8.750% notes, respectively.
THE EXCHANGE OFFER
EXCHANGE TERMS
An aggregate of $650.0 million principal amount of outstanding 8.125% notes
and an aggregate of $850.0 million principal amount of outstanding 8.750% notes
are currently issued and outstanding. The maximum principal amount of new 8.125%
notes that will be issued in exchange for outstanding 8.125% notes is $650.0
million, and the maximum principal amount of new 8.750% notes that will be
issued in exchange for outstanding 8.750% notes is $850.0 million. The terms of
the new 8.125% notes and the new 8.750% notes and the outstanding 8.125% notes
and the outstanding 8.750% notes, respectively, are substantially the same in
all material respects, except that the transfer restrictions, registration
rights and additional interest provisions relating to the outstanding 8.125%
notes and the outstanding 8.750% notes do not apply to the new 8.125% notes and
the new 8.750% notes.
The new 8.125% notes will bear interest at a rate of 8.125% per year,
payable semiannually on March 15 and September 15 of each year, beginning
September 16, 2002. The new 8.750% notes will bear interest at the rate of
8.750% per year, payable semiannually on March 15 and September 15 of each year,
beginning September 16, 2002. Holders of new 8.125% notes and new 8.750% notes
will receive interest accrued from March 19, 2002, the date of the original
issuance of the outstanding 8.125% notes and the outstanding 8.750% notes, or
from the date of the last payment of interest on the outstanding 8.125% notes or
the outstanding 8.750% notes, whichever is later. Holders of new 8.125% notes
and new 8.750% notes will not receive any payment on account of accrued interest
on outstanding 8.125% notes and outstanding 8.750% notes tendered and accepted
for exchange. In order to exchange your outstanding 8.125% notes or outstanding
8.750% notes for new 8.125% notes or new 8.750% notes in the exchange offer, you
will be required to make the following representations:
- any new 8.125% notes or new 8.750% notes will be acquired in the ordinary
course of your business;
- you have no arrangement with any person to participate in the
distribution of the new 8.125% notes or new 8.750% notes; and
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or if you are our affiliate, you will comply with the applicable
registration and prospectus delivery requirements of the Securities Act.
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any outstanding
8.125% notes and outstanding 8.750% notes properly tendered in the exchange
offer, and the exchange agent will deliver the new 8.125% notes and new 8.750%
notes promptly after the expiration date (as defined below) of the exchange
offer. We expressly reserve the right to delay
18
acceptance of any of the tendered outstanding 8.125% notes or outstanding 8.750%
notes not already accepted if any condition set forth below under "-- Conditions
to the Exchange Offer" has not been satisfied or waived by us.
If you tender your outstanding 8.125% notes or outstanding 8.750% notes,
you will not be required to pay brokerage commissions or fees or, subject to the
instructions in the letter of transmittal, transfer taxes with respect to the
exchange of the outstanding 8.125% notes and outstanding 8.750% notes. We will
pay all charges, expenses and transfer taxes in connection with the exchange
offer, other than certain taxes described below under "-- Transfer Taxes."
You may tender some or all of your outstanding 8.125% notes or outstanding
8.750% notes in connection with this exchange offer. However, outstanding 8.125%
notes and outstanding 8.750% notes may only be tendered in integral multiples of
$1,000.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on ,
2002, the "expiration date," unless extended by us. We expressly reserve the
right to extend the exchange offer on a daily basis or for such period or
periods as we may determine in our sole discretion from time to time by giving
oral, confirmed in writing, or written notice to the exchange agent and by
making a public announcement by press release to the Dow Jones News Service
prior to 9:00 a.m., New York City time, on the first business day following the
previously scheduled expiration date. During any extension of the exchange
offer, all outstanding 8.125% notes and outstanding 8.750% notes previously
tendered, not validly withdrawn and not accepted for exchange will remain
subject to the exchange offer and may be accepted for exchange by us.
To the extent we are legally permitted to do so, we expressly reserve the
absolute right, in our sole discretion, to:
- waive any condition to the exchange offer; and
- amend any of the terms of the exchange offer.
Any waiver or amendment to the exchange offer will apply to all outstanding
8.125% notes and outstanding 8.750% notes tendered, regardless of when or in
what order the outstanding 8.125% notes and outstanding 8.750% notes were
tendered. If we make a material change in the terms of the exchange offer or if
we waive a material condition of the exchange offer, we will disseminate
additional exchange offer materials. If the amendment of waiver is made less
than ten business days before the expiration of the exchange offer, we will
extend the exchange offer so that holders of outstanding 8.125% notes and
outstanding 8.750% notes have at least ten business days to tender or withdraw.
We expressly reserve the right, in our sole discretion, to terminate the
exchange offer if any of the conditions set forth under "-- Conditions to the
Exchange Offer" exists. Any such termination will be followed promptly by a
public announcement. In the event we terminate the exchange offer, we will give
immediate notice to the exchange agent, and all outstanding 8.125% notes and
outstanding 8.750% notes previously tendered and not accepted for payment will
be returned promptly to the tendering holders.
In the event that the exchange offer is withdrawn or otherwise not
completed, new 8.125% notes and new 8.750% notes will not be given to holders of
outstanding 8.125% notes and outstanding 8.750% notes who have tendered their
outstanding 8.125% notes and outstanding 8.750% notes.
RESALE OF NEW SECURITIES
Based on interpretations of the SEC staff set forth in no action letters
issued to third parties, we believe that new 8.125% notes and new 8.750% notes
issued under the exchange offer in exchange for outstanding 8.125% notes and
outstanding 8.750% notes, respectively, may be offered for resale, resold and
otherwise
19
transferred by you without compliance with the registration and prospectus
delivery provisions of the Securities Act, if:
- you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act;
- you are acquiring new 8.125% notes or new 8.750% notes in the ordinary
course of your business; and
- you do not intend to participate in the distribution of the new 8.125%
notes or new 8.750% notes.
If you tender outstanding 8.125% notes or outstanding 8.750% notes in the
exchange offer with the intention of participating in any manner in a
distribution of the new 8.125% notes or new 8.750% notes:
- you cannot rely on those interpretations by the SEC staff; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
Unless an exemption from registration is otherwise available, any security
holder intending to distribute new 8.125% notes and new 8.750% notes will need
to rely on an effective registration statement under the Securities Act
containing the selling security holder's information required by Item 507 of
Regulation S-K under the Securities Act. This prospectus may be used for an
offer to resell, a resale or other transfer of new 8.125% notes and new 8.750%
notes only as specifically set forth in this prospectus. Broker-dealers may
participate in the exchange offer only if they acquired their outstanding 8.125%
notes or outstanding 8.750% notes as a result of market-making activities or
other trading activities. Each broker-dealer that receives new 8.125% notes or
new 8.750% notes for its own account in exchange for outstanding 8.125% notes or
outstanding 8.750% notes, where such outstanding 8.125% notes or outstanding
8.750% notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of the new 8.125% notes or new 8.750%
notes. We have agreed to allow such broker-dealers and other persons, if any,
subject to similar prospectus delivery requirements, to use this prospectus in
connection with the resale of new 8.125% notes and new 8.750% notes. Please read
the section captioned "Plan of Distribution" for more details regarding the
transfer of new 8.125% notes and new 8.750% notes.
ACCEPTANCE OF OUTSTANDING SECURITIES FOR EXCHANGE
If the conditions specified below under "-- Conditions to the Exchange
Offer" have been satisfied or waived on or prior to the expiration date of the
exchange offer, we will accept for exchange outstanding 8.125% notes and
outstanding 8.750% notes validly tendered pursuant to the exchange offer, or
defectively tendered, if such defect has been waived by us, and not withdrawn
prior to the expiration date of the exchange offer. We will not accept
outstanding 8.125% notes or outstanding 8.750% notes for exchange subsequent to
the expiration date of the exchange offer. Tenders of outstanding 8.125% notes
and outstanding 8.750% notes will be accepted only in principal amounts equal to
$1,000 or integral multiples thereof.
We expressly reserve the right, in our sole discretion, to:
- delay acceptance for exchange of outstanding 8.125% notes and outstanding
8.750% notes tendered under the exchange offer, subject to Rule 14e-1
under the Exchange Act, which requires that an offeror pay the
consideration offered or return the securities deposited by or on behalf
of the holders promptly after the termination or withdrawal of a tender
offer; or
- terminate the exchange offer and not accept for exchange any outstanding
8.125% notes or outstanding 8.750% notes not theretofore accepted for
exchange, if any of the conditions set forth below under "-- Conditions
to the Exchange Offer" has not been satisfied or waived by us or in order
to comply, in whole or in part, with any applicable law. In all cases,
new 8.125% notes and new 8.750% notes will be issued only after timely
receipt by the exchange agent of certificates representing outstanding
8.125% notes or outstanding 8.750% notes, or confirmation of book-entry
transfer, a properly completed
20
and duly executed letter of transmittal, or a manually signed facsimile
thereof, and any other required documents. For purposes of the exchange
offer, we will be deemed to have accepted for exchange validly tendered
outstanding 8.125% notes and outstanding 8.750% notes, or defectively
tendered outstanding 8.125% notes and outstanding 8.750% notes with
respect to which we have waived such defect, if, as and when we give
oral, confirmed in writing, or written notice to the exchange agent.
Promptly after the expiration date, we will deposit the new 8.125% notes
and the new 8.750% notes with the exchange agent, who will act as agent
for the tendering holders for the purpose of receiving the new 8.125%
notes and new 8.750% notes and transmitting them to the holders. The
exchange agent will deliver the new 8.125% notes and new 8.750% notes to
holders of outstanding 8.125% notes and outstanding 8.750% notes accepted
for exchange after the exchange agent receives the new 8.125% notes and
new 8.750% notes.
If for any reason, we delay acceptance for exchange of validly tendered
outstanding 8.125% notes or outstanding 8.750% notes or we are unable to accept
for exchange validly tendered outstanding 8.125% notes or outstanding 8.750%
notes, then the exchange agent may, nevertheless, on our behalf, retain tendered
outstanding 8.125% notes and outstanding 8.750% notes, without prejudice to our
rights described under "-- Expiration Date; Extensions; Termination;
Amendments," "-- Withdrawal of Tenders" and "-- Conditions to the Exchange
Offer," subject to Rule 14e-1 under the Exchange Act, which requires that an
offeror pay the consideration offered or return the securities deposited by or
on behalf of the holders thereof promptly after the termination or withdrawal of
a tender offer.
If any tendered outstanding 8.125% notes or outstanding 8.750% notes are
not accepted for exchange for any reason, including if certificates are
submitted evidencing more outstanding 8.125% notes or outstanding 8.750% notes
than those that are tendered, certificates evidencing outstanding 8.125% notes
or outstanding 8.750% notes that are not exchanged will be returned, without
expense, to the tendering holder, or, in the case of outstanding 8.125% notes or
outstanding 8.750% notes tendered by book-entry transfer into the exchange
agent's account at a book-entry transfer facility under the procedure set forth
under "-- Procedures for Tendering Outstanding Securities -- Book-Entry
Transfer," such outstanding 8.125% notes and outstanding 8.750% notes will be
credited to the account maintained at such book-entry transfer facility from
which such outstanding 8.125% notes or outstanding 8.750% notes were delivered,
unless otherwise required by such holder under "Special Delivery Instructions"
in the letter of transmittal, promptly following the expiration date or the
termination or withdrawal of the exchange offer.
Tendering holders of outstanding 8.125% notes and outstanding 8.750% notes
exchanged in the exchange offer will not be obligated to pay brokerage
commissions or transfer taxes with respect to the exchange of their outstanding
8.125% notes or outstanding 8.750% notes other than as described in "-- Transfer
Taxes" or in Instruction 9 to the letter of transmittal. We will pay all other
charges and expenses in connection with the exchange offer.
PROCEDURES FOR TENDERING OUTSTANDING SECURITIES
Any beneficial owner whose outstanding 8.125% notes or outstanding 8.750%
notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee or held through a book-entry transfer facility and who
wishes to tender outstanding 8.125% notes or outstanding 8.750% notes should
contact such registered holder promptly and instruct such registered holder to
tender outstanding 8.125% notes or outstanding 8.750% notes on such beneficial
owner's behalf.
Tender of Outstanding Securities Held Through DTC. The exchange agent and
DTC have confirmed that the exchange offer is eligible for the DTC automated
tender offer program. Accordingly, DTC participants may electronically transmit
their acceptance of the exchange offer by causing DTC to transfer outstanding
8.125% notes or outstanding 8.750% notes to the exchange agent in accordance
with DTC's automated tender offer program procedures for transfer. DTC will then
send an agent's message to the exchange agent.
The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which states
that DTC has received an express acknowledgement
21
from the participant in DTC tendering outstanding 8.125% notes or outstanding
8.750% notes that are the subject of that book-entry confirmation that the
participant has received and agrees to be bound by the terms of the letter of
transmittal, and that we may enforce such agreement against such participant. In
the case of an agent's message relating to guaranteed delivery, the term means a
message transmitted by DTC and received by the exchange agent, which states that
DTC has received an express acknowledgement from the participant in DTC
tendering outstanding 8.125% notes or outstanding 8.750% notes that they have
received and agree to be bound by the notice of guaranteed delivery.
Tender of Outstanding Securities Held in Physical Form. For a holder to
validly tender outstanding 8.125% notes or outstanding 8.750% notes held in
physical form:
- the exchange agent must receive at its address set forth in this
prospectus a properly completed and validly executed letter of
transmittal, or a manually signed facsimile thereof, together with any
signature guarantees and any other documents required by the instructions
to the letter of transmittal; and
- the exchange agent must receive certificates for tendered outstanding
8.125% notes or outstanding 8.750% notes at such address, or such
outstanding 8.125% notes or outstanding 8.750% notes must be transferred
pursuant to the procedures for book-entry transfer described above. A
confirmation of such book-entry transfer must be received by the exchange
agent prior to the expiration date of the exchange offer. A holder who
desires to tender outstanding 8.125% notes or outstanding 8.750% notes
and who cannot comply with the procedures set forth in this prospectus
for tender on a timely basis or whose outstanding 8.125% notes or
outstanding 8.750% notes are not immediately available must comply with
the procedures for guaranteed delivery set forth below.
LETTERS OF TRANSMITTAL AND OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750%
NOTES SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO US OR TO ANY
BOOK-ENTRY TRANSFER FACILITY.
THE METHOD OF DELIVERY OF OUTSTANDING 8.125% NOTES, OUTSTANDING 8.750%
NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING OUTSTANDING 8.125%
NOTES AND OUTSTANDING 8.750% NOTES. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY
MAIL, WE SUGGEST THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE OF THE EXCHANGE OFFER TO PERMIT DELIVERY TO THE EXCHANGE
AGENT PRIOR TO SUCH DATE. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF
OUTSTANDING 8.125% NOTES OR OUTSTANDING 8.750% NOTES WILL BE ACCEPTED.
Signature Guarantees. Signatures on the letter of transmittal must be
guaranteed by an eligible institution unless:
- the letter of transmittal is signed by the registered holder of the
outstanding 8.125% notes or outstanding 8.750% notes tendered therewith,
or by a participant in one of the book-entry transfer facilities whose
name appears on a security position listing it as the owner of those
outstanding 8.125% notes or outstanding 8.750% notes, or if any
outstanding 8.125% notes or outstanding 8.750% notes for principal
amounts not tendered are to be issued directly to the holder, or, if
tendered by a participant in one of the book-entry transfer facilities,
any outstanding 8.125% notes or outstanding 8.750% notes for principal
amounts not tendered or not accepted for exchange are to be credited to
the participant's account at the book-entry transfer facility, and
neither the "Special Issuance Instructions" nor the "Special Delivery
Instructions" box on the letter of transmittal has been completed, or
- the outstanding 8.125% notes or outstanding 8.750% notes are tendered for
the account of an eligible institution.
An eligible institution is a firm that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchanges Medallion Program,
which is generally a member of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office in the United States.
22
Book-Entry Transfer. The exchange agent will seek to establish a new
account or utilize an outstanding account with respect to the outstanding 8.125%
notes and outstanding 8.750% notes at DTC promptly after the date of this
prospectus. Any financial institution that is a participant in the book-entry
transfer facility system and whose name appears on a security position listing
it as the owner of the outstanding 8.125% notes or outstanding 8.750% notes may
make book-entry delivery of outstanding 8.125% notes or outstanding 8.750% notes
by causing the book-entry transfer facility to transfer such outstanding 8.125%
notes or outstanding 8.750% notes into the exchange agent's account. HOWEVER,
ALTHOUGH DELIVERY OF OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES MAY
BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S ACCOUNT AT A
BOOK-ENTRY TRANSFER FACILITY, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER
OF TRANSMITTAL, OR A MANUALLY SIGNED FACSIMILE THEREOF, MUST BE RECEIVED BY THE
EXCHANGE AGENT AT ITS ADDRESS SET FORTH IN THIS PROSPECTUS ON OR PRIOR TO THE
EXPIRATION DATE OF THE EXCHANGE OFFER, OR ELSE THE GUARANTEED DELIVERY
PROCEDURES DESCRIBED BELOW MUST BE COMPLIED WITH. The confirmation of a
book-entry transfer of outstanding 8.125% notes or outstanding 8.750% notes into
the exchange agent's account at a book-entry transfer facility is referred to in
this prospectus as a "book-entry confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THAT BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Guaranteed Delivery. If you wish to tender your outstanding 8.125% notes
or outstanding 8.750% notes and:
- certificates representing your outstanding 8.125% notes or outstanding
8.750% notes are not lost but are not immediately available;
- time will not permit your letter of transmittal, certificates
representing your outstanding 8.125% notes or outstanding 8.750% notes
and all other required documents to reach the exchange agent on or prior
to the expiration date of the exchange offer; or
- the procedures for book-entry transfer cannot be completed on or prior to
the expiration date of the exchange offer,
then, you may tender if both of the following are complied with:
- your tender is made by or through an eligible institution; and
- on or prior to the expiration date of the exchange offer, the exchange
agent has received from the eligible institution a properly completed and
validly executed notice of guaranteed delivery, by manually signed
facsimile transmission, mail or hand delivery, in substantially the form
provided with this prospectus.
The notice of guaranteed delivery must:
- set forth your name and address, the registered number(s) of your
outstanding 8.125% notes or outstanding 8.750% notes and the principal
amount of outstanding 8.125% notes or outstanding 8.750% notes tendered;
- state that the tender is being made thereby;
- guarantee that, within three New York Stock Exchange trading days after
the expiration date of the exchange offer, the letter of transmittal or
facsimile thereof properly completed and validly executed, together with
certificates representing the outstanding 8.125% notes or outstanding
8.750% notes, or a book-entry confirmation, and any other documents
required by the letter of transmittal and the instructions thereto, will
be deposited by the eligible institution with the exchange agent; and
- the exchange agent receives the properly completed and validly executed
letter of transmittal or facsimile thereof with any required signature
guarantees, together with certificates for all outstanding 8.125% notes
or outstanding 8.750% notes in proper form for transfer, or a book-entry
confirmation, and any other required documents, within three New York
Stock Exchange trading days after the date of the notice of guaranteed
delivery.
23
Other Matters. New 8.125% notes and new 8.750% notes will be issued in
exchange for outstanding 8.125% notes and outstanding 8.750% notes accepted for
exchange only after timely receipt by the exchange agent of:
- certificates for (or a timely book-entry confirmation with respect to)
your outstanding 8.125% notes or outstanding 8.750% notes, a properly
completed and duly executed letter of transmittal or facsimile thereof
with any required signature guarantees, or, in the case of a book-entry
transfer, an agent's message; and
- any other documents required by the letter of transmittal.
All questions as to the form of all documents and the validity, including
time of receipt, and acceptance of all tenders of outstanding 8.125% notes or
outstanding 8.750% notes will be determined by us, in our sole discretion, the
determination of which shall be final and binding. ALTERNATIVE, CONDITIONAL OR
CONTINGENT TENDERS OF OUTSTANDING 8.125% NOTES OR OUTSTANDING 8.750% NOTES WILL
NOT BE CONSIDERED VALID. We reserve the absolute right to reject any or all
tenders of outstanding 8.125% notes and outstanding 8.750% notes that are not in
proper form or the acceptance of which, in our opinion, would be unlawful. We
also reserve the right to waive any defects, irregularities or conditions of
tender as to particular outstanding 8.125% notes or outstanding 8.750% notes.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding.
Any defect or irregularity in connection with tenders of outstanding 8.125%
notes or outstanding 8.750% notes must be cured within the time we determine,
unless waived by us. Tenders of outstanding 8.125% notes and outstanding 8.750%
notes will not be deemed to have been made until all defects and irregularities
have been waived by us or cured. Neither we, the exchange agent nor any other
person will be under any duty to give notice of any defects or irregularities in
tenders of outstanding 8.125% notes or outstanding 8.750% notes, or will incur
any liability to holders for failure to give any such notice.
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
- any new 8.125% notes or new 8.750% notes that you receive will be
acquired in the ordinary course of your business;
- you have no arrangement or understanding with any person or entity to
participate in the distribution of the new 8.125% notes or new 8.750%
notes;
- if you are not a broker-dealer, you are not engaged in and do not intend
to engage in the distribution of the new 8.125% notes or new 8.750%
notes;
- if you are a broker-dealer that will receive new 8.125% notes or new
8.750% notes for your own account in exchange for outstanding 8.125%
notes or outstanding 8.750% notes that were acquired as a result of
market-making activities, you will deliver a prospectus, as required by
law, in connection with any resale of those new 8.125% notes or new
8.750% notes; and
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or, if you are an affiliate, you will comply with any applicable
registration and prospectus delivery requirements of the Securities Act.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender of outstanding 8.125% notes or outstanding 8.750% notes at any time prior
to 5:00 p.m., New York City time, on the expiration date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice of withdrawal at its
address set forth below under "-- Exchange Agent," or
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- you must comply with the appropriate procedures of DTC's automated tender
offer program system.
Any notice of withdrawal must:
- specify the name of the person who tendered the outstanding 8.125% notes
or outstanding 8.750% notes to be withdrawn; and
- identify the outstanding 8.125% notes or outstanding 8.750% notes to be
withdrawn, including the principal amount of the outstanding 8.125% notes
or outstanding 8.750% notes.
If outstanding 8.125% notes or outstanding 8.750% notes have been tendered
pursuant to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawn outstanding 8.125% notes or outstanding 8.750% notes and
otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal, and our determination shall be final
and binding on all parties. We will deem any outstanding 8.125% notes or
outstanding 8.750% notes so withdrawn not to have been validly tendered for
exchange for purposes of the exchange offer.
Any outstanding 8.125% notes or outstanding 8.750% notes that have been
tendered for exchange but that are not exchanged for any reason will be returned
to their holder without cost to the holder or, in the case of outstanding 8.125%
notes or outstanding 8.750% notes tendered by book-entry transfer into the
exchange agent's account at DTC according to the procedures described above,
such outstanding 8.125% notes or outstanding 8.750% notes will be credited to an
account maintained with DTC for the outstanding 8.125% notes or outstanding
8.750% notes. This return or crediting will take place as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer. You
may retender properly withdrawn outstanding 8.125% notes or outstanding 8.750%
notes by following one of the procedures described under "-- Procedures for
Tendering Outstanding Securities" at any time on or prior to the expiration
date.
CONDITIONS TO THE EXCHANGE OFFER
We will not be required to accept for exchange, or exchange any new 8.125%
notes for, any outstanding 8.125% notes tendered, nor will we be required to
accept for exchange, or exchange any new 8.750% notes for, any outstanding
8.750% notes tendered, and we may terminate, extend or amend the exchange offer
and may, subject to Rule 14e-1 under the Exchange Act, which requires that an
offeror pay the consideration offered or return the securities deposited by or
on behalf of the holders thereof promptly after the termination or withdrawal of
a tender offer, postpone the acceptance for exchange of outstanding 8.125% notes
and outstanding 8.750% notes so tendered if, on or prior to the expiration date
of the exchange offer, the following shall have occurred:
- we have determined that the offering and sales under the registration
statement, the filing of such registration statement or the maintenance
of its effectiveness would require disclosure of or would interfere in
any material respect with any material financing, merger, offering or
other transaction involving us or would otherwise require disclosure of
nonpublic information that could materially and adversely affect us;
- we have determined that the exchange offer would violate any applicable
law or interpretation of the staff of the SEC; or
- any legal action has been instituted or threatened that would impair our
ability to proceed with the exchange offer.
We previously agreed with holders of our debt not to issue any debt
securities that have been registered with the SEC until the earlier of (1) the
completion of a transaction or set of transactions the net effect of which is
(A) the opportunity for holders of the 8.25% Senior Secured Notes due 2004 of
WCG Note Trust and WCG Note Corp., Inc. to tender such notes and (B) the receipt
by tendering holders of newly issued Williams senior unsecured notes that have
been registered with the SEC or (2) August 1, 2002. Accordingly,
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we will be unable to consummate this exchange offer until this condition is
satisfied. On June 3, 2002, we commenced an exchange offer pursuant to which
holders of the senior secured notes may exchange their notes for registered
senior unsecured 9.25% notes to be issued by Williams. We expect to complete the
exchange offer on July 1, 2002, at which time this condition will be satisfied.
The conditions to the exchange offer are for our sole benefit and may be
asserted by us in our sole discretion or may be waived by us, in whole or in
part, in our sole discretion, whether or not any other condition of the exchange
offer also is waived. We have not made a decision as to what circumstances would
lead us to waive any condition, and any waiver would depend on circumstances
prevailing at the time of that waiver. Any determination by us concerning the
events described in this section shall be final and binding upon all persons.
ALTHOUGH WE HAVE NO PRESENT PLANS OR ARRANGEMENTS TO DO SO, WE RESERVE THE
RIGHT TO AMEND, AT ANY TIME, THE TERMS OF THE EXCHANGE OFFER. WE WILL GIVE
HOLDERS NOTICE OF ANY AMENDMENTS IF REQUIRED BY APPLICABLE LAW.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your outstanding 8.125% notes for new 8.125% notes
or exchange your outstanding 8.750% notes for new 8.750% notes in the exchange
offer, your outstanding 8.125% notes and outstanding 8.750% notes will remain
outstanding and will continue to be subject to the currently applicable
restrictions on transfer:
- as set forth in the legend printed on the outstanding 8.125% notes and
the outstanding 8.750% notes as a consequence of the issuance of the
outstanding 8.125% notes or outstanding 8.750% notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws;
and
- otherwise set forth in the offering memorandum distributed in connection
with the private offerings of the outstanding 8.125% notes and
outstanding 8.750% notes.
In general, you may not offer or sell the outstanding 8.125% notes or
outstanding 8.750% notes unless they are registered under the Securities Act, or
unless the offer or sale is exempt from registration under the Securities Act
and applicable state securities laws. Except as required by the registration
rights agreement, we do not intend to register resales of the outstanding 8.125%
notes or outstanding 8.750% notes under the Securities Act. Based on
interpretations of the SEC staff, you may offer for resale, resell or otherwise
transfer new 8.125% notes and new 8.750% notes issued in the exchange offer
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that (1) you are not our "affiliate" within the
meaning of Rule 405 under the Securities Act, (2) you acquired the new 8.125%
notes or new 8.750% notes in the ordinary course of your business and (3) you
have no arrangement or understanding with respect to the distribution of the new
8.125% notes or new 8.750% notes to be acquired in the exchange offer. If you
tender outstanding 8.125% notes or outstanding 8.750% notes in the exchange
offer for the purpose of participating in a distribution of the new 8.125% notes
or new 8.750% notes:
- you cannot rely on the applicable interpretations of the SEC; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
The trading market for outstanding 8.125% notes and outstanding 8.750%
notes not exchanged in the exchange offer may be significantly more limited than
it is at present. Therefore, if your outstanding 8.125% notes and outstanding
8.750% notes are not tendered and accepted in the exchange offer, it may become
more difficult for you to sell or transfer your unexchanged securities. See
"Risk Factors -- Risks Arising from the Exchange Offer."
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EXCHANGE AGENT
Bank One Trust Company, N.A., has been appointed as exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus, the letter of transmittal or
any other documents to the exchange agent. You should send certificates for
outstanding 8.125% notes, outstanding 8.750% notes, letters of transmittal and
any other required documents to the exchange agent addressed as follows:
Bank One Trust Company, N.A.
1 Bank One Plaza
Mail Code IL1-0134
Chicago, Illinois 60670-0134
Attention: Exchanges Floor
Global Corporate Trust Services
(800) 524-9472 (call toll free)
TRANSFER TAXES
We will pay all transfer taxes applicable to the transfer and exchange of
outstanding 8.125% notes and outstanding 8.750% notes pursuant to the exchange
offer. If, however:
- delivery of the new 8.125% notes or new 8.750% notes and/or certificates
for outstanding 8.125% notes or outstanding 8.750% notes for principal
amounts not exchanged, are to be made to any person other than the record
holder of the outstanding 8.125% notes or outstanding 8.750% notes
tendered;
- tendered certificates for outstanding 8.125% notes or outstanding 8.750%
notes are recorded in the name of any person other than the person
signing any letter of transmittal; or
- a transfer tax is imposed for any reason other than the transfer and
exchange of outstanding 8.125% notes or outstanding 8.750% notes to us or
our order,
then the amount of any such transfer taxes, whether imposed on the record holder
or any other person, will be payable by the tendering holder prior to the
issuance of the new 8.125% notes or new 8.750% notes.
DESCRIPTION OF THE NEW SECURITIES
We will issue the new 8.125% notes and the new 8.750% notes under an
indenture dated as of November 10, 1997, as amended by a seventh supplemental
indenture between us and Bank One Trust Company, N.A., as trustee. The
outstanding 8.125% notes and the outstanding 8.750% notes were also issued under
this indenture and supplemental indenture. The terms of the outstanding 8.125%
notes and the outstanding 8.750% notes are identical in all material respects to
the terms of the new 8.125% notes and the new 8.750% notes, respectively, except
that the outstanding 8.125% notes and the outstanding 8.750% notes contain terms
with respect to transfer restrictions (and therefore are not freely tradeable).
The terms of the 8.125% notes and the 8.750% notes include those set forth
in the indenture and those made a part of the indenture by reference to the
Trust Indenture Act of 1939. The following description is a summary of the
material provisions of the 8.125% notes, the 8.750% notes and the indenture. It
does not restate the indenture in its entirety. We urge you to read the
indenture and each of the supplemental indentures because it, and not this
description, defines your rights as holders of the 8.125% notes and the 8.750%
notes. Copies of the indenture and the seventh supplemental indenture are
available at the offices of the trustee and have been filed or incorporated by
reference as exhibits to the registration statement of which this prospectus is
a part.
TERMS AND CONDITIONS
The new 8.125% notes will mature on March 15, 2012. The new 8.125% notes
will bear interest from their date of issuance at the rate of 8.125% per year.
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The new 8.750% notes will mature on March 15, 2032. The new 8.750% notes
will bear interest from their date of issuance at the rate of 8.750% per year.
Interest will be payable semi-annually on March 15 and September 15 of each
year, beginning September 16, 2002, to the person in whose names the new 8.125%
notes or the new 8.750% notes are registered at the close of business on the
preceding March 1 and September 1, respectively, subject to certain exceptions.
Holders of new 8.125% notes and new 8.750% notes will receive interest from
March 19, 2002, the date of original issuance of the outstanding 8.125% notes
and the outstanding 8.750% notes, or from the date of the last payment of
interest on the outstanding 8.125% notes or the outstanding 8.750% notes,
whichever is later. Interest on the new 8.125% notes and the new 8.750% notes
will be computed on the basis of a 360-day year consisting of twelve 30-day
months.
The new 8.125% notes and the new 8.750% notes will be our unsecured and
unsubordinated obligations ranking equally with our other outstanding unsecured
and unsubordinated indebtedness.
The new 8.125% notes and the new 8.750% notes will be redeemable, in whole
or in part, at any time, at our option, at a redemption price equal to the
greater of:
- 100% of the principal amount of the new 8.125% notes or the new 8.750%
notes then outstanding to be redeemed, or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate, as defined below, plus 37.5 basis points,
plus accrued interest thereon to the date of redemption.
We will mail notice of redemption at least 30 days but not more than 60
days before the applicable redemption date to each holder of the new 8.125%
notes or new 8.750% notes to be redeemed.
Upon the payment of the redemption price, plus accrued and unpaid interest,
if any, to the date of redemption, interest will cease to accrue on and after
the applicable redemption date on the new 8.125% notes and the new 8.750% notes
or portions thereof called for redemption.
There is no provision for a sinking fund applicable to the notes.
We may, from time to time, without the consent of the existing holders of
the relevant series of notes, issue additional notes under the indenture having
the same ranking and the same interest rate, maturity and other terms as the
notes of such series in all respects except the issue date, the issue price and
the initial interest payment date. Any additional notes will, together with the
applicable notes, constitute a single series of notes under the indenture.
COVENANTS
Liens. The indenture refers to any of our instruments securing
indebtedness, such as a mortgage, pledge, lien, security interest or encumbrance
on any of our property, as a "mortgage." The indenture further provides that,
subject to certain exceptions, we will not, nor will we permit any subsidiary
to, issue, assume or guarantee any indebtedness secured by a mortgage unless we
provide equal and proportionate security for the senior debt securities,
including new 8.125% notes and the new 8.750% notes, we issue under the
indenture. Among these exceptions are:
- certain purchase money mortgages;
- certain preexisting mortgages on any property acquired or constructed by
us or a subsidiary;
- certain mortgages created within one year after completion of such
acquisition or construction;
- certain mortgages created on any contract for the sale of products or
services related to the operation or use of any property acquired or
constructed within one year after completion of such acquisition or
construction;
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- mortgages on property of a subsidiary existing at the time it became our
subsidiary; and
- mortgages, other than as specifically excepted, in an aggregate amount
which, at the time of, and after giving effect to, the incurrence does
not exceed five percent of Consolidated Net Tangible Assets, as defined
below.
Consolidation, Merger, Conveyance of Assets. The indenture provides, in
general, that we will not consolidate with or merge into any other entity or
convey, transfer or lease our properties and assets substantially as an entirety
to any person, unless:
- the corporation, limited liability company, limited partnership, joint
stock company or trust formed by such consolidation or into which we are
merged or the person which acquires such assets expressly assumes our
obligations under the indenture and the debt securities issued under the
indenture; and
- immediately after giving effect to such transaction, no event of default,
and no event which, after notice or lapse of time or both, would become
an event of default, shall have happened and be continuing.
MODIFICATION OF THE INDENTURE
The indenture provides that we and the trustee may enter into supplemental
indentures which conform to the provisions of the Trust Indenture Act of 1939
without the consent of the holders to, in general:
- secure any debt securities;
- evidence the assumption by a successor person of our obligations;
- add further covenants for the protection of the holders;
- cure any ambiguity or correct any inconsistency in the indenture, so long
as such action will not adversely affect the interests of the holders;
- establish the form or terms of debt securities of any series; and
- evidence the acceptance of appointment by a successor trustee.
The indenture also permits us and the trustee to:
- add any provisions to the indenture;
- change in any manner the indenture;
- eliminate any of the provisions of the indenture; and
- modify in any way the rights of the holders of debt securities of each
series affected.
The above actions require the consent of the holders of at least a majority
in principal amount of debt securities of each series issued under the indenture
then outstanding and affected. These holders will vote as one class to approve
such changes. The 8.125% notes and the 8.750% notes will constitute two
different series under the indenture.
Such changes must, however, conform to the Trust Indenture Act of 1939 and
we and the trustee may not, without the consent of each holder of outstanding
debt securities affected thereby:
- extend the final maturity of the principal of any debt securities;
- reduce the principal amount of any debt securities;
- reduce the rate or extend the time of payment of interest on any debt
securities;
- reduce any amount payable on redemption of any debt securities;
- change the currency in which the principal, including any amount in
respect of original issue discount, or interest on any debt securities is
payable;
29
- reduce the amount of any original issue discount security payable upon
acceleration or provable in bankruptcy;
- alter certain provisions of the indenture relating to debt securities not
denominated in U.S. dollars or for which conversion to another currency
is required to satisfy the judgment of any court;
- impair the right to institute suit for the enforcement of any payment on
any debt securities when due; or
- reduce the percentage in principal amount of debt securities of any
series issued under the indenture, the consent of the holders of which is
required for any such modification.
EVENTS OF DEFAULT
In general, the indenture defines an event of default with respect to debt
securities of any series issued under the indenture as being:
(a) default in payment of any principal of the debt securities of such
series, either at maturity, upon any redemption, by declaration or
otherwise;
(b) default for 30 days in payment of any interest on any debt
securities of such series unless otherwise provided;
(c) default for 90 days after written notice in the observance or
performance of any covenant or warranty in the debt securities of such
series or the indenture other than
- default in or breach of a covenant which is dealt with otherwise
below, or
- if certain conditions are met, if the events of default described in
this clause (c) are the result of changes in generally accepted
accounting principles; or
(d) certain events of bankruptcy, insolvency or reorganization of us.
In general, the indenture provides that if an event of default described in
clauses (a), (b) or (c) above occurs and does not affect all series of debt
securities then outstanding, the trustee or the holders of debt securities may
then declare the following amounts to be due and payable immediately:
- the entire principal of all debt securities of each series affected by
the event of default; and
- the interest accrued on such principal.
Such a declaration by the holders requires the approval of at least 25
percent in principal amount of the debt securities of each series issued under
the indenture and then outstanding, treated as one class, which are affected by
the event of default.
The indenture also generally provides that if a default described in clause
(c) above which is applicable to all series of debt securities then outstanding
or certain events of bankruptcy, insolvency and reorganization of us occur and
are continuing, the trustee or the holders of debt securities may declare the
entire principal of all such debt securities and interest accrued thereon to be
due and payable immediately. This declaration by the holders requires the
approval of at least 25 percent in principal amount of all debt securities
issued under the indenture and then outstanding, treated as one class. Upon
certain conditions, the holders of a majority in aggregate principal amount of
the debt securities of all such affected series then outstanding may annul such
declarations and waive the past defaults. However, the majority holders may not
annul or waive a continuing default in payment of principal of, premium, if any,
or interest on such debt securities.
The indenture provides that the holders of debt securities issued under the
indenture, treated as one class, will indemnify the trustee before the trustee
exercises any of its rights or powers under the indenture. This indemnification
is subject to the trustee's duty to act with the required standard of care
during a default. The
30
holders of a majority in aggregate principal amount of the outstanding debt
securities of each series affected, treated as one class, issued under the
indenture may direct the time, method and place of:
- conducting any proceeding for any remedy available to the trustee, or
- exercising any trust or power conferred on the trustee.
This right of the holders of debt securities is, however, subject to the
provisions in the indenture providing for the indemnification of the trustee and
other specified limitations.
In general, the indenture provides that holders of debt securities issued
under the indenture may only institute an action against us under the indenture
if the following four conditions are fulfilled:
- the holder previously has given to the trustee written notice of default
and the default continues;
- the holders of at least 25 percent in principal amount of the debt
securities of each affected series (treated as one class) issued under
the indenture and then outstanding have both (1) requested the trustee to
institute such action and (2) offered the trustee reasonable indemnity;
- the trustee has not instituted such action within 60 days of receipt of
such request; and
- the trustee has not received direction inconsistent with such written
request by the holders of a majority in principal amount of the debt
securities of each affected series (treated as one class) issued under
the indenture and then outstanding.
The above four conditions do not apply to actions by holders of the debt
securities under the indenture against us for payment of principal or interest
on or after the due date provided. The indenture contains a covenant that we
will file annually with the trustee a certificate of no default or a certificate
specifying any default that exists.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We can discharge or defease our obligations under the indenture as set
forth below.
Under terms satisfactory to the trustee, we may discharge certain
obligations to holders of any series of debt securities issued under the
indenture which have not already been delivered to the trustee for cancellation.
Such debt securities must also:
- have become due and payable;
- be due and payable by their terms within one year; or
- be scheduled for redemption by their terms within one year.
We may discharge any series of debt securities by irrevocably depositing an
amount certified to be sufficient to pay at maturity or upon redemption the
principal of and interest on such debt securities. We may make such deposit in
cash or, in the case of debt securities payable only in U.S. dollars, U.S.
government obligations, as defined in the indenture.
We may also, upon satisfaction of the conditions listed below, discharge
certain obligations to holders of any series of debt securities issued under the
indenture at any time ("Defeasance"). Under terms satisfactory to the trustee,
we may be released with respect to any outstanding series of debt securities
issued under the indenture from the obligations imposed by sections 3.6 and 9.1
of the indenture. These sections contain the covenants described above limiting
liens and consolidations, mergers and conveyances of assets. Also, under terms
satisfactory to the trustee, we may avoid compliance with these sections without
creating an event of default ("Covenant Defeasance"). Defeasance or Covenant
Defeasance may be effected only if, among other things:
- we irrevocably deposit with the trustee cash or, in the case of debt
securities payable only in U.S. dollars, U.S. government obligations as
trust funds in an amount certified to be sufficient to pay at
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maturity or upon redemption the principal of and interest on all
outstanding debt securities of such series issued under the indenture;
and
- we deliver to the trustee an opinion of counsel to the effect that the
holders of this series of debt securities will not recognize income, gain
or loss for United States federal income tax purposes as a result of such
Defeasance or Covenant Defeasance. Such opinion must further state that
these holders will be subject to United States federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if Defeasance or Covenant Defeasance had not occurred. In the
case of a Defeasance, this opinion must be based on a ruling of the
Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the indenture, since this result would
not occur under current tax law.
CONCERNING THE TRUSTEE
The trustee is one of a number of banks with which we and our subsidiaries
maintain ordinary banking relationships and with which we and our subsidiaries
maintain credit facilities.
GOVERNING LAW
The indenture, the new 8.125% notes and the new 8.750% notes are governed
by, and construed in accordance with, the laws of the State of New York.
DEFINED TERMS
Set forth below are some of the definitions of the defined terms used in
this prospectus in describing the new 8.125% notes and the new 8.750% notes.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if we obtain fewer than four such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations.
"Consolidated Funded Indebtedness" means the aggregate of all outstanding
Funded Indebtedness of Williams and its consolidated subsidiaries, determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Net Tangible Assets" means the total assets appearing on a
consolidated balance sheet of Williams and its consolidated subsidiaries less,
in general:
- intangible assets;
- current and accrued liabilities (other than Consolidated Funded
Indebtedness and capitalized rentals or leases), deferred credits,
deferred gains and deferred income;
- reserves;
- advances to finance oil or natural gas exploration and development to the
extent that the indebtedness related thereto is excluded from Funded
Indebtedness;
32
- an amount equal to the amount excluded from Funded Indebtedness
representing the "production payment" financing of oil and gas
exploration and development; and
- minority stockholder interests.
"Funded Indebtedness" means any indebtedness which matures more than one
year after the date the amount of Funded Indebtedness is being determined, less
any such indebtedness as will be retired by any deposit or payment required to
be made within one year from such date under any prepayment provision, sinking
fund, purchase fund or otherwise. Funded Indebtedness does not, however, include
indebtedness of Williams or any of its subsidiaries incurred to finance
outstanding advances to others to finance oil or natural gas exploration and
development, to the extent that the latter are not in default in their
obligations to Williams or such subsidiary. Funded Indebtedness also does not
include indebtedness of Williams or any of its subsidiaries incurred to finance
oil or natural gas exploration and development through what is commonly referred
to as a "production payment" to the extent that Williams or any of its
subsidiaries have not guaranteed the repayment of the production payment.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by us.
"Reference Treasury Dealers" means Lehman Brothers Inc. and J.P. Morgan
Securities Inc. and their respective successors and, at our option, additional
primary U.S. Government securities dealers ("Primary Treasury Dealers");
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, we shall substitute another nationally recognized investment
banking firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
us, of the bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in writing to us by
such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to a maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount equal to the Comparable Treasury Price for
such redemption date).
Investors should note that the term "subsidiary," as used in this section
describing the notes, refers only to a corporation of which Williams, or another
subsidiary or subsidiaries of Williams, own at least a majority of the
outstanding securities which have voting power.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The new 8.125% notes and new 8.750% notes will be evidenced by one or more
certificates in registered global form, which will be deposited with, or on
behalf of, The Depository Trust Company (DTC) in New York, New York and
registered in the name of Cede & Co., DTC's nominee. Except as set forth below,
a global note may be transferred, in whole or in part, only to another nominee
of DTC or to a successor to DTC or its nominee.
DEPOSITARY PROCEDURES
DTC has advised us that it is a:
- limited-purpose trust company organized under the laws of the State of
New York;
- banking organization within the meaning of the laws of the State of New
York;
- member of the Federal Reserve System;
- clearing corporation within the meaning of the New York Uniform
Commercial Code; and
- clearing agency registered pursuant to the provisions of Section 17A of
the Exchange Act.
33
DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
through electronic book-entry changes in their accounts, thereby eliminating the
need for physical movement of securities certificates. DTC's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations. Banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant also have access to DTC's book-entry system.
Holders of new 8.125% notes and new 8.750% notes may hold their beneficial
interests in the securities directly as a participant in DTC or indirectly
through organizations that are participants in DTC.
Upon deposit of the global notes with DTC, DTC will credit, on its
book-entry registration and transfer system, the accounts of those participants
designated by the Exchange Agent with the principal amounts of the global notes
held by or through the participants. The records of DTC will show ownership and
effect the transfer of ownership of the global notes by its participants. The
records of the participants will show ownership and effect the transfer of
ownership of the global notes by persons holding beneficial interests in the
global notes through them. In the case of beneficial interests held by or though
participants in Euroclear Bank S.A./N.V., as operator of the Euroclear System
and Clearstream Banking, societe anonyme, DTC will credit the accounts of their
respective depositaries with the principal amounts of the global notes
beneficially owned by or through Euroclear and Clearstream, respectively. These
records of DTC will show ownership and effect the transfer of ownership of the
global notes by the respective depositaries for Euroclear and Clearstream. The
records of these depositaries will show ownership and effect the transfer of
ownership of the global notes by Euroclear and Clearstream, respectively. The
records of Euroclear and Clearstream will show ownership and effect the transfer
of ownership of the global notes by their participants. The records of the
participants will show ownership or transfer of ownership of the global notes by
persons holding through them.
So long as DTC or its nominee is the registered owner of the global notes,
it will be considered the sole owner and holder of the securities for all
purposes under the indenture. Except as set forth below, if you own a beneficial
interest in global notes, you will not:
- be entitled to have the securities registered in your name;
- receive or be entitled to receive physical delivery of a certificate in
definitive form representing the securities; or
- be considered the owner or holder of the securities under the indenture
for any purpose, including with respect to the giving of any directions,
approvals or instructions to the trustee.
Therefore, if you are required by state law to take physical delivery of
the securities in definitive form, you may not be able to own, transfer or
pledge beneficial interests in the global notes. In addition, the lack of a
physical certificate evidencing your beneficial interests in the global notes
may limit your ability to pledge the interests to a person or entity that is not
a participant in DTC.
If you own beneficial interests in a global note, you will have to rely on
the procedures of DTC and, if you are not a participant in DTC, the procedures
of the participant through which you hold your beneficial interests, to exercise
your rights as a holder under the indenture. DTC has advised us that it will
take any action permitted to be taken by a holder of beneficial interests in the
global notes only at the direction of one or more of the participants to whose
accounts the interests are credited. We understand that, under existing industry
practice, when a beneficial owner of a global note wants to give any notice or
take any action that a registered holder is entitled to take, at our request or
under the indenture, DTC will authorize the participant to give the notice or
take the action, and the participant will authorize its beneficial owners to
give the notice or take the action. Accordingly, we and the trustee will treat
as a holder anyone designated as such in writing by DTC for purposes of
obtaining any consents or directions required under the indenture.
We will pay the principal of, and interest on, the global notes through the
trustee or paying agent to DTC or its nominee, as the registered holder of the
global notes, in immediately available funds. We expect DTC or its nominee, upon
receipt of any payments, to immediately credit each participant's account with
payments in amounts proportionate to that participant's beneficial interest as
shown on the records of DTC or its nominee.
34
We also expect each participant to pay each owner of beneficial interests in the
global notes held through that participant in accordance with standing customer
instructions and customary practices. These payments will be the sole
responsibility of the participants.
We will not, and the trustee and paying agent will not, assume any
responsibility or liability for any aspect of the records relating to payments
made on account of or actions taken with respect to the beneficial ownership
interests in global notes, or for any other aspect of the relationship between
DTC and its participants, Euroclear or Clearstream and their participants, or
between the participants and the owners of beneficial interests. We, the trustee
and the paying agent may conclusively rely on instructions from DTC for all
purposes. We obtained the above information about DTC, Euroclear and Clearstream
and their book-entry systems from sources we believe are reliable, but we take
no responsibility for the accuracy of the information.
SETTLEMENT PROCEDURES
Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and procedures and will be settled
in immediately available funds using DTC's Same-Day Funds Settlement System.
Secondary market trading between participants of Euroclear and/or
Clearstream will occur in the ordinary way in accordance with each of its rules
and procedures and will be settled using the procedures applicable to
conventional Eurobonds in immediately available funds. The respective
depositaries for Euroclear and Clearstream will effect transfers in global notes
between DTC participants, on the one hand, and Euroclear or Clearstream
participants, on the other hand, in accordance with DTC's procedures and will
settle them in same-day funds. These depositaries must deliver instructions to
Euroclear or Clearstream in accordance with Euroclear's or Clearstream's
procedures. If the transfer meets its settlement requirements, Euroclear or
Clearstream will instruct its respective depositary to effect final settlement
on its behalf by delivering or receiving interests in the global notes in its
accounts with DTC and making or receiving payment in accordance with normal
procedures of same-day funds settlement applicable to DTC. Participants in
Euroclear and Clearstream may not deliver instructions directly to the
depositaries for Euroclear and Clearstream.
Because of time zone differences, the accounts of Euroclear and Clearstream
participants purchasing beneficial interests in the global notes from DTC
participants will be credited with the securities purchased, and the crediting
will be reported to the Euroclear and Clearstream participants, on the
securities settlement processing day immediately following the DTC settlement
processing day. Likewise, the accounts of Euroclear and Clearstream participants
selling beneficial interests in the global notes to DTC participants will be
credited with the cash received on the DTC settlement processing day, but the
cash will not be available until the settlement processing day immediately
following the DTC settlement processing day.
Although DTC, Euroclear and Clearstream have agreed to the procedures to
facilitate transfers of interests in the global notes among participants in DTC,
Euroclear and Clearstream, they are under no obligation to perform or to
continue to perform these procedures. These procedures may be changed or
discontinued at any time. We take no responsibility for the performance by DTC,
Euroclear or Clearstream or their respective participants of their respective
obligations under the rules and procedures governing their operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
We will exchange beneficial interests in global notes for certificated
notes only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
for the global notes;
- DTC ceases to be a clearing agency registered under the Exchange Act; or
- we decide at any time not to have the securities represented by global
notes and so notify the trustee.
If there is an exchange, we will issue certificated notes in authorized
denominations and registered in the names which DTC directs.
35
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material U.S. federal income tax
consequences associated with the exchange of outstanding securities for the new
securities in the exchange offer. The discussion is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, judicial
authorities, published positions of the Internal Revenue Service (the "IRS") and
other applicable authorities, all as in effect on the date hereof and all of
which are subject to change or differing interpretations (possibly with
retroactive effect). The discussion does not address all of the tax consequences
that may be relevant to a particular holder or to certain holders subject to
special treatment under U.S. federal income tax laws. This discussion is limited
to persons that hold their outstanding securities and new securities as capital
assets. We have not sought, and do not intend to seek, a ruling from the IRS
regarding the matters discussed herein. No assurance can be given that the IRS
would not assert, or that a court would not sustain, a position contrary to any
of the tax aspects set forth below. PROSPECTIVE INVESTORS MUST CONSULT THEIR OWN
TAX ADVISORS AS TO THE FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, HOLDING AND
DISPOSING OF NEW SECURITIES, AS WELL AS THE EFFECTS OF STATE, LOCAL AND NON-U.S.
TAX LAWS.
For purposes of this discussion, a holder who is a U.S. person means any
one of the following:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any political
subdivision thereof;
- an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or
- a trust, the administration of which is subject to the primary
supervision of the U.S. courts and that has one or more U.S. persons who
have the authority to control all substantial decisions of the trust, or
that was in existence on August 20, 1996 and properly elected to continue
to be treated as a U.S. person.
If a partnership (including any entity treated as a partnership for U.S. federal
income tax purposes) is a beneficial owner of new securities, the U.S. federal
income tax treatment of a partner in the partnership will generally depend on
the status of the partner and the activities of the partnership.
As used herein, the term "U.S. holder" means a holder that is a U.S. person
and the term "non-U.S. holder" means a holder that is not a U.S. person.
As used herein, the term "new securities" means the new 8.125% notes and
the new 8.750% notes.
As used herein, the term "outstanding securities" means the outstanding
8.125% notes and the outstanding 8.750% notes.
EXCHANGE OF OUTSTANDING SECURITIES FOR NEW SECURITIES
The exchange of the outstanding securities for the new securities issued in
the exchange offer will not be treated as an "exchange" for U.S. federal income
tax purposes because the new securities issued in the exchange offer will not be
considered to differ materially in kind or extent from the outstanding
securities. Rather, the new securities issued in the exchange offer received by
a holder will be treated as a continuation of the outstanding securities in the
hands of such holder. As a result, no gain or loss will be recognized by a
holder who exchanges outstanding securities for new securities in the exchange
offer and any exchanging holder of outstanding securities will have the same tax
basis and holding period in, and income in respect of, the new securities as
such holder had in the outstanding securities immediately prior to the exchange.
U.S. HOLDERS
Payments of Interest. Payments of interest on new securities generally
will be taxable to a U.S. holder as ordinary interest income at the time such
payments are accrued or received (in accordance with the U.S. holder's method of
accounting for U.S. federal income tax purposes).
36
Disposition of New Securities. Upon the sale or other disposition of a new
security, a U.S. holder will generally recognize capital gain or loss equal to
the difference between the amount realized on the sale or other disposition and
the holder's adjusted tax basis in the new security. For these purposes, the
amount realized on the sale or other disposition of a new security does not
include any amount received attributable to accrued but unpaid interest, which
will be taxable as ordinary income unless previously taken into account. Capital
gain or loss on the sale or other disposition of a new security will be
long-term capital gain or loss if the holder's holding period in the new
security is more than one year at the time of the sale or other disposition.
NON-U.S. HOLDERS
Payments of Interest. Subject to the discussion below concerning
information reporting and backup withholding, payments of interest on a new
security to any non-U.S. holder will generally not be subject to U.S. federal
income tax or withholding tax, provided that all of the following are true:
- the interest on the new security is not effectively connected with the
non-U.S. holder's conduct of a trade or business within the United
States;
- the non-U.S. holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock;
- the non-U.S. holder is not a "controlled foreign corporation" with
respect to which we are a "related person" for U.S. federal income tax
purposes; and
- the non-U.S. holder either (A) certifies, on Form W-8BEN (or a
permissible substitute or successor form) under penalties of perjury,
that it is a non-U.S. holder and provides its name and address, or (B) a
securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the new securities,
certifies under penalties of perjury that an IRS Form W-8BEN (or a
permissible substitute or successor form) has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof.
Interest paid to a non-U.S. holder that does not qualify for exemption from
withholding tax generally will be subject to withholding of U.S. federal income
tax unless the non-U.S. holder of the new securities provides us or our paying
agent, as the case may be, with a properly executed:
(i) IRS Form W-8BEN (or a permissible substitute or successor form)
claiming an exemption from (or reduction in) withholding under the benefit
of an applicable income tax treaty; or
(ii) IRS Form W-8ECI (or a permissible substitute or successor form)
stating that the interest paid on new securities is not subject to
withholding tax because it is effectively connected with the non-U.S.
holder's conduct of a trade or business in the United States.
Non-U.S. holders should consult any applicable income tax treaties, which
may provide for exemption from (or reduction in) U.S. withholding and other for
other rules different from those described above.
Interest that is effectively connected with the conduct of a trade or
business within the United States by the non-U.S. holder will be subject to U.S.
federal income tax imposed on a net income on the same basis that applies to
U.S. persons generally and, for corporate holders, under certain circumstances,
the branch profits tax, but will generally not be subject to withholding.
Non-U.S. holders should consult any applicable income tax treaties that may
provide for different rules.
Disposition of New Securities. Subject to the discussion below concerning
information reporting and backup withholding, any gain realized by a non-U.S.
holder on the sale or other disposition of new securities generally will not be
subject to U.S. federal income tax, unless (i) such gain is effectively
connected with the conduct by such non-U.S. holder of a trade or business within
the U.S. or (ii) the non-U.S. holder is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition and
certain other conditions are satisfied.
37
Gain that is effectively connected with the conduct of a trade or business
within the United States by the non-U.S. holder will be subject to U.S. federal
income tax imposed on a net income on the same basis that applies to U.S.
persons generally and, for corporate holders, under certain circumstances, the
branch profits tax, but will generally not be subject to withholding. Non-U.S.
holders should consult any applicable income tax treaties that may provide for
different rules.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, we must report annually to the IRS and to each holder the
amounts of interest that we paid to that holder, and the amount of tax, if any,
that we withheld on the interest. This information may also be made available to
the tax authorities of a country in which a non-U.S. holder resides.
Under current U.S. Treasury regulations, backup withholding will generally
apply to payments to persons that fail to furnish certain required information.
Backup withholding generally will not apply to payments made in respect of new
securities held by a non-U.S. holder, if the holder properly certifies as to its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption. Generally, a non-U.S. holder will provide this information on IRS
Form W-8BEN.
The payment of proceeds from the disposition of new securities to or
through the U.S. office of any broker, U.S. or foreign, will be subject to
information reporting (and possible backup withholding unless the owner
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes an exemption). In the case of the payment of proceeds from the
disposition of new securities to or through a non-U.S. office of a U.S. broker,
or foreign brokers with certain types of relationships to the United States,
information reporting, but not backup withholding, will be required on the
payment, unless the broker has documentary evidence in its files that the owner
is a non-U.S. holder and certain other conditions are met, or the holder
otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts we withhold under
the backup withholding rules will be allowed as a refund or credit against such
non-U.S. holder's federal income tax liability, provided that the requisite
procedures are followed and certain information is provided to the IRS.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC in no-action letters
issued to third parties, we believe that you may transfer new 8.125% notes and
new 8.750% notes issued under the exchange offer in exchange for the outstanding
8.125% notes and outstanding 8.750% notes if:
- you acquire the new 8.125% notes or new 8.750% notes in the ordinary
course of your business; and
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the new 8.125% notes or new 8.750% notes.
Broker-dealers receiving new 8.125% notes or new 8.750% notes in the
exchange offer will be subject to a prospectus delivery requirement with respect
to resales of the new 8.125% notes and new 8.750% notes.
We believe that you may not transfer new 8.125% notes or new 8.750% notes
issued under the exchange offer in exchange for the outstanding 8.125% notes or
outstanding 8.750% notes if you are:
- our "affiliate" within the meaning of Rule 405 under the Securities Act;
- a broker-dealer that acquired outstanding 8.125% notes or outstanding
8.750% notes directly from us; or
- a broker-dealer that acquired outstanding 8.125% notes or outstanding
8.750% notes as a result of market-making or other trading activities
without compliance with the registration and prospectus delivery
provisions of the Securities Act.
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this
38
exchange offer, other than a resale of an unsold allotment from the original
sale of the outstanding 8.125% notes or outstanding 8.750% notes, with the
prospectus contained in the exchange offer registration statement. We have
agreed to permit participating broker-dealers to use this prospectus in
connection with the resale of new 8.125% notes and new 8.750% notes.
If you wish to exchange your outstanding 8.125% notes for new 8.125% notes
or your outstanding 8.750% notes for new 8.750% notes in the exchange offer, you
will be required to make representations to us as described in "The Exchange
Offer -- Exchange Terms" and "-- Procedures for Tendering Outstanding
Securities -- Other Matters" in this prospectus and in the letter of
transmittal. In addition, if you are a broker-dealer who receives new 8.125%
notes or new 8.750% notes for your own account in exchange for outstanding
8.125% notes or outstanding 8.750% notes that were acquired by you as a result
of market-making activities or other trading activities, you will be required to
acknowledge that you will deliver a prospectus in connection with any resale by
you of such new 8.125% notes or new 8.750% notes. See "The Exchange
Offer -- Resale of New Securities."
We will not receive any proceeds from any sale of new 8.125% notes or new
8.750% notes by broker-dealers or from any other person. Broker-dealers who
receive new 8.125% notes or new 8.750% notes for their own account in the
exchange offer may sell them from time to time in one or more transactions:
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on the new 8.125% notes or new 8.750%
notes or a combination of such methods of resale;
- at market prices prevailing at the time of resale; and
- at prices related to such prevailing market prices or negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any new 8.125% notes or new 8.750%
notes. Any broker-dealer that resells new 8.125% notes or new 8.750% notes it
received for its own account in the exchange offer and any broker or dealer that
participates in a distribution of such new 8.125% notes or new 8.750% notes may
be deemed to be an "underwriter" within the meaning of the Securities Act. Any
profit on any resale of new 8.125% notes or new 8.750% notes and any commissions
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers. We will indemnify
holders of the outstanding 8.125% notes and outstanding 8.750% notes, including
any broker-dealers, against certain liabilities, including liabilities under the
Securities Act, as provided in the registration rights agreement.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this prospectus, excluding historical
information, include forward-looking statements -- statements that discuss our
expected future results based on current and pending business operations.
Forward-looking statements can be identified by words such as "anticipates,"
"believes," "expects," "planned," "scheduled" or similar expressions. Although
we believe these forward-looking statements are based on reasonable assumptions,
statements made regarding future results are subject to a number of assumptions,
uncertainties and risks that could cause future results to be materially
different from the results stated or implied in this prospectus. Additional
information about issues that could lead to material changes in performance is
contained in our Annual Report on Form 10-K/A for the year ended December 31,
2001 which is incorporated by reference in this prospectus.
39
LEGAL MATTERS
The validity of the new 8.125% notes and the new 8.750% notes will be
passed upon by William G. von Glahn, Esq., Senior Vice President and General
Counsel of Williams. As of March 31, 2002, Mr. von Glahn was the beneficial
holder of 402,402 shares of Williams common stock (including 268,010 shares
subject to stock options exercisable within 60 days, deferred stock awards and
Williams' 401(k) retirement plan). Mr. von Glahn is a participant in Williams'
stock option plan and various other employee benefit plans offered to employees
of Williams. Skadden, Arps, Slate, Meagher & Flom (Illinois), special tax
counsel for Williams, will pass upon the discussion set forth under the heading
"Material United States Federal Income Tax Considerations" on page 35.
EXPERTS
The consolidated financial statements and schedule of Williams at December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001 appearing in Williams' Form 8-K filed with the Securities and Exchange
Commission on May 28, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The registration statement of
which this prospectus forms a part and these reports, proxy statements and other
information can be inspected and copied at the public reference room maintained
by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the SEC's regional offices at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and at 233 Broadway, New York, New York 10005.
Copies of these materials may also be obtained from the SEC at prescribed rates
by writing to the public reference room maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act with respect to this offering. This prospectus, which forms a
part of the registration statement, does not contain all the information
included in the registration statement and the attached exhibits.
The SEC maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding us. The reports, proxy and information statements
and other information about us can be downloaded from the SEC's website and can
also be inspected and copied at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under section 13(a), 13(c), 14 or 15(d) of the
Exchange Act until the exchange offer is completed:
- our annual report on Form 10-K for the year ended December 31, 2001;
- our annual report on Form 10-K/A for the year ended December 31, 2001;
- our quarterly report on Form 10-Q for the quarter ended March 31, 2002;
40
- our current reports on Form 8-K filed January 4, 2002, January 23, 2002,
January 30, 2002, February 5, 2001, February 19, 2002, March 7, 2002 (two
filed on this date), March 8, 2002, March 13, 2002 (two filed on this
date), March 20, 2002, March 27, 2002, March 28, 2002 (two filed on this
date) and April 1, 2002, April 15, 2002, April 25, 2002, April 26, 2002,
May 3, 2002, May 22, 2002 (two filed on this date), May 28, 2002 (two
filed on this date), June 6, 2002, June 12, 2002 and June 24, 2002 (two
filed on this date);
- our current report on Form 8-K/A filed March 20, 2002; and
- our definitive proxy statement on Schedule 14A filed March 29, 2002.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address:
The Williams Companies, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Attention: Corporate Secretary
Telephone: (918) 573-2000
ANY REQUEST FOR THESE FILINGS SHOULD BE MADE BY , 2002 TO ENSURE
TIMELY DELIVERY OF THE FILINGS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE
OFFER.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with any information. You should not assume that the information in this
document is current as of any date other than the date on the front page of this
prospectus.
41
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Williams, a Delaware corporation, is empowered by Section 145 of the
General Corporation Law of the State of Delaware, subject to the procedures and
limitations stated therein, to indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by them in connection with any threatened, pending, or
completed action, suit, or proceeding in which such person is made party by
reason of their being or having been a director, officer, employee, or agent of
Williams. The statute provides that indemnification pursuant to its provisions
is not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise. The By-laws of Williams provide for indemnification by
Williams of its directors and officers to the fullest extent permitted by the
General Corporation Law of the State of Delaware. In addition, Williams has
entered into indemnity agreements with its directors and certain officers
providing for, among other things, the indemnification of and the advancing of
expenses to such individuals to the fullest extent permitted by law, and to the
extent insurance is maintained, for the continued coverage of such individuals.
Policies of insurance are maintained by Williams under which the directors
and officers of Williams are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits, or proceedings, and certain liabilities which might
be imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following instruments and documents are included as Exhibits to this
Registration Statement.
EXHIBIT
NUMBER EXHIBIT
------- -------
3.1 Restated Certificate of Incorporation, as supplemented
(filed as Exhibit 3.1 to the Registration Statement on Form
S-3 filed April 4, 2002, file number 333-85540).*
3.2 Restated Bylaws (filed as Exhibit 99.1 to Form 8-K filed
January 19, 2000).*
4.1 Form of Senior Debt Indenture between the registrant and
Bank One Trust Company, N.A. (formerly The First National
Bank of Chicago), as trustee (filed as Exhibit 4.1 to the
Registration Statement on Form S-3 filed September 8, 1997,
file number 333-35099).*
4.2 Seventh Supplemental Indenture, dated March 19, 2002,
between the registrant and Bank One Trust Company, N.A., as
trustee.**
4.3 Registration Rights Agreement, dated March 19, 2002, among
the registrant and the initial purchasers named therein.**
5.1 Opinion of William G. von Glahn, Esq., as to the validity of
the new 8.125% notes and the new 8.750% notes.**
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois),
as to certain tax matters.**
10.1 Purchase Agreement, dated March 14, 2002, among the
registrant and the initial purchasers named therein.**
12.1 Statement regarding Computation of Ratios of Earnings to
Combined Fixed Charges and Preferred Stock Dividend
Requirements (filed as Exhibit 12 to the Current Report on
Form 8-K filed May 28, 2002 and Exhibit 12 to the Quarterly
Report filed on Form 10-Q for the quarter ended March 31,
2002).*
21 Subsidiaries of the registrant (filed as Exhibit 21 to the
Annual Report on Form 10-K for the year ended December 31,
2001).*
II-1
EXHIBIT
NUMBER EXHIBIT
------- -------
23.1 Consent of Ernst & Young LLP.
23.2 Consent of William G. von Glahn, Esq. (contained in Exhibit
5.1).
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(contained in Exhibit 8.1).
24.1 Power of Attorney.**
24.2 Certified copy of resolutions authorizing signatures
pursuant to Power of Attorney.**
25.1 Statement of Eligibility of Bank One Trust Company, N.A., as
trustee, on Form T-1 with respect to the issuance of 8.125%
Notes due March 15, 2012 and 8.750% Notes due March 15,
2032, by the registrant pursuant to the Indenture between
the registrant and Bank One Trust Company, N.A., as
trustee.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Letter to Registered Holders and DTC Participants.**
99.4 Form of Letter to Clients.**
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.**
---------------
* Indicates exhibits incorporated by reference as indicated.
** Previously filed.
ITEM 22. 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 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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.
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 that 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 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual
II-2
report pursuant to 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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tulsa
and State of Oklahoma on the 24th day of June, 2002.
THE WILLIAMS COMPANIES, INC.
By: /s/ SUZANNE H. COSTIN
------------------------------------
Name: Suzanne H. Costin
Title: Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEVEN J. MALCOLM* President, Chief Executive Officer June 24, 2002
------------------------------------------------ and Director (Principal Executive
Steven J. Malcolm Officer)
/s/ JACK D. MCCARTHY* Senior Vice President -- Finance June 24, 2002
------------------------------------------------ (Principal Financial Officer)
Jack D. McCarthy
/s/ GARY R. BELITZ* Controller (Principal Accounting June 24, 2002
------------------------------------------------ Officer)
Gary R. Belitz
/s/ HUGH M. CHAPMAN* Director June 24, 2002
------------------------------------------------
Hugh M. Chapman
/s/ THOMAS H. CRUIKSHANK* Director June 24, 2002
------------------------------------------------
Thomas H. Cruikshank
/s/ WILLIAM E. GREEN* Director June 24, 2002
------------------------------------------------
William E. Green
/s/ IRA D. HALL* Director June 24, 2002
------------------------------------------------
Ira D. Hall
/s/ W. R. HOWELL* Director June 24, 2002
------------------------------------------------
W. R. Howell
/s/ JAMES C. LEWIS* Director June 24, 2002
------------------------------------------------
James C. Lewis
/s/ CHARLES M. LILLIS* Director June 24, 2002
------------------------------------------------
Charles M. Lillis
II-4
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GEORGE A. LORCH* Director June 24, 2002
------------------------------------------------
George A. Lorch
/s/ FRANK T. MACINNIS* Director June 24, 2002
------------------------------------------------
Frank T. MacInnis
/s/ GORDON R. PARKER* Director June 24, 2002
------------------------------------------------
Gordon R. Parker
/s/ JANICE D. STONEY* Director June 24, 2002
------------------------------------------------
Janice D. Stoney
/s/ JOSEPH H. WILLIAMS* Director June 24, 2002
------------------------------------------------
Joseph H. Williams
*By: /s/ SUZANNE H. COSTIN
-----------------------------------------
Suzanne H. Costin
Attorney-in-Fact
Dated: June 24, 2002
II-5
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------- -------
3.1 Restated Certificate of Incorporation, as supplemented
(filed as Exhibit 3.1 to the Registration Statement on Form
S-3 filed April 4, 2002, file number 333-85540).*
3.2 Restated Bylaws (filed as Exhibit 99.1 to Form 8-K filed
January 19, 2000).*
4.1 Form of Senior Debt Indenture between the registrant and
Bank One Trust Company, N.A. (formerly The First National
Bank of Chicago), as trustee (filed as Exhibit 4.1 to the
Registration Statement on Form S-3 filed September 8, 1997,
file number 333-35099).*
4.2 Seventh Supplemental Indenture, dated March 19, 2002,
between the registrant and Bank One Trust Company, N.A., as
trustee.**
4.3 Registration Rights Agreement, dated March 19, 2002, among
the registrant and the initial purchasers named therein.**
5.1 Opinion of William G. von Glahn, Esq., as to the validity of
the new 8.125% notes and the new 8.750% notes.**
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois),
as to certain tax matters.**
10.1 Purchase Agreement, dated March 14, 2002, among the
registrant and the initial purchasers named therein.**
12.1 Statement regarding Computation of Ratios of Earnings to
Combined Fixed Charges and Preferred Stock Dividend
Requirements (filed as Exhibit 12 to the Quarterly Report on
Form 8-K filed May 28, 2002 and Exhibit 12 to the Quarterly
Report filed on Form 10-Q for the quarter ended March 31,
2002).*
21 Subsidiaries of the registrant (filed as Exhibit 21 to the
Annual Report on Form 10-K for the year ended December 31,
2001).*
23.1 Consent of Ernst & Young LLP.
23.2 Consent of William G. von Glahn, Esq. (contained in Exhibit
5.1).
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(contained in Exhibit 8.1).
24.1 Power of Attorney.**
24.2 Certified copy of resolutions authorizing signatures
pursuant to Power of Attorney.**
25.1 Statement of Eligibility of Bank One Trust Company, N.A., as
trustee, on Form T-1 with respect to the issuance of 8.125%
Notes due March 15, 2012 and 8.750% Notes due March 15,
2032, by the registrant pursuant to the Indenture between
the registrant and Bank One Trust Company, N.A., as
trustee.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Letter to Registered Holders and DTC Participants.**
99.4 Form of Letter to Clients.**
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.**
---------------
* Indicates exhibits incorporated by reference as indicated.
** Previously filed.